Report: Retail Media, Paid Social Spend Up

Skai's “Q4 2023 Digital Marketing Quarterly Trends Report” offers an in-depth analysis of the digital marketing trends that defined the fourth quarter of 2023, which included the holiday season.

According to the marketing technology company, the holiday season saw increased spending across key digital channels, with each of those channels taking a slightly different path to that growth. 

Increased spending across channels 
The holiday surge drove quarter-over-quarter (QOQ) spending higher in all channels. Year-over-year (YOY) spending was also up everywhere in Q4, led by retail media at +27%, paid social at +15% and paid search at +4%. (Skai is now including TikTok, YouTube and LinkedIn in its paid social analysis, so growth rates may not be directly comparable to previous reports.)

Ad prices, conversion rates up in retail media, search
Average cost-per-click (CPC) grew 18% in retail media and 13% in paid search over Q4 2022, but Skai says these increases were offset by conversion rates that rose by more than 10% in both channels. “Higher conversion rates can lead to higher click prices as algorithms adjust to meet performance goals,” per a media release on the results. The opposite can also be true, where higher CPCs drive better performance.

Increased lower-funnel spending
Spending on product ads on Meta grew 70% from Q3 to Q4 and spending on sales-focused campaigns increased 63% as the lower part of the sales funnel activated in the holiday season. Facebook’s new Advantage+ Shopping Campaigns offering, which leverages machine learning to help advertisers reach audiences with less set up time and greater efficiency, saw spending more than double QOQ in the format's first full holiday season as part of this wave of lower-funnel spending in the social channel.

Shopping campaigns evolve in paid search
Q4 saw a significant decline in impressions and clicks within the search channel, largely driven by the transition from legacy shopping campaigns to Google’s Performance Max, which allows advertisers to access all of their Google Ads inventory from a single campaign. Skai says the newer ads suggest a change in targeting, ad inventory or a combination of both, where fewer impressions with higher clickthrough rates and higher click prices result in similar overall spending trends.

"The fourth quarter is always going to be primarily about the role of commerce media, and this year was no different,” Chris Costello, senior director of marketing research at Skai, said in the release. "Advertisers continue to see the value of these programs and reward them with increased investment. But while the role of commerce media is consistent across channels, the details in Q4 were very different. New ad products like Performance Max in paid search and Advantage Shopping Campaigns Plus in paid social have transformed those channels in ways we are just beginning to understand, while retail media has expanded into programmatic display to provide a more full-funnel approach. It's an exciting time to be in this space.”

Methodology
Skai’s analysis is drawn from the roughly $9 billion in advertising spend from its more than 3,000 advertiser and agency accounts across 40 vertical industries and more than 150 countries. The accounts are tracked on the Skai platform which runs on Google, Microsoft, Baidu, Yandex, Yahoo Japan, Verizon Media, Amazon, Walmart, Instacart, Criteo, Kroger, Apple Search Ads, Pinterest, Snapchat, Facebook and Instagram. Mostly only advertisers with 15 consecutive months of performance data were included in the research.