Report: Improving Economy Stimulates Ad Spend
New research published by marketing technology company Skai (formerly Kenshoo) reveals the digital marketing trends that defined the second quarter of 2023.
The “Q2 2023 Digital Marketing Quarterly Trends Report” analysis was drawn from about $9 billion in ad spend over five quarters, with more than 3,000 advertiser and agency accounts across 40 vertical industries. Some key findings include:
- Year-over-year (YoY) spending grew 35% for retail media, up 30% from Q1.
- YoY cost-per-click (CPC) in retail media and paid search are approaching zero.
- Overall social spending was down, but some segments saw growth in Q2.
- Comparing Q2 to Q1 suggested an improving economy.
- Retail media showed signs of accelerating spending growth.
Skai said in a media release that while the pattern of more ads at lower prices mostly continued to affect YoY trends, comparing Q2 2023 to the previous quarter suggests an improving economy on numerous fronts.
Retail Media Growth Accelerates
YoY spending grew 35% for retail media, up from 30% in Q1, while paid search and paid social only shifted slightly from last quarter's trend, per the release. Paid search spending increased 3% YoY while paid social spending declined by 4%.
“Virtuous Cycle” Drives Retail Media, Paid Search
Retail media and paid search CPC both grew 11% quarter-over-quarter (QoQ), while conversion rate was up 8% in retail media and 10% in search. Skai notes that higher conversion rates translate to fewer clicks leading to a purchase, which then offset the higher click costs without negatively affecting ROAS. Higher CPC then also allows for higher-quality placements on search results or product description pages, Skai said in the release.
Positive Outlook for Paid Social
While overall social spending was down, several segments saw YoY growth over Q2 2022. Video ads grew 12% and both Instagram ads and “awareness and engagement campaign objectives” were up 5% over last year, per the release.
Ad Formats & Placements Evolve
Across channels, Skai says commerce ads that are taking new forms and reaching new audiences showed robust QoQ growth. Amazon DSP spending increased 56% from Q1 to Q2, while Google Performance Max campaigns and Meta Advantage Shopping Campaigns+ grew 34% and 38%, respectively, according to the report.
Other QoQ and YoY findings outlined in the report include:
"Retail media is already showing signs of accelerating spending growth, while both paid search and paid social look like they are hitting the end of recent deceleration trends,” Chris Costello, senior director of marketing research at Skai, said in the release.
“This all bodes well for a strong Q2 for digital marketing spend as economic conditions improve. Meanwhile, digital publishers are consolidating disparate elements of campaign management and then expanding those campaigns to new audiences and properties to reinforce their value to advertisers."
View a snapshot of more trends and data points from Q2 in Skai’s interactive infographic.
More on Methodology
Skai’s analysis was drawn from $9 billion in advertising spend over five quarters, comprising more than 3,000 advertiser and agency accounts across 40 vertical industries and more than 150 countries running on the Skai platform on Google, Microsoft, Baidu, Yandex, Yahoo! Japan, Verizon Media, Amazon, Walmart, Instacart, Criteo, Kroger, Apple Search Ads, Pinterest, Snapchat, Facebook and Instagram. Except where noted in the report, only advertisers with 15 consecutive months of performance data were included.