Improving economic conditions are beginning to spur digital ad spending growth

Long-term and short-term trends showed evidence of stronger consumer demand over the past six months, particularly in retail media and paid search, according to Skai's Quarterly Trends Report.

SAN FRANCISCO, Aug. 1, 2023 /PRNewswire/ -- Today, Skai, an omnichannel platform for performance marketing, published its Q2 2023 Digital Marketing Quarterly Trends Report, an in-depth analysis of the digital marketing trends that defined the second quarter of this year, along with an interactive infographic detailing key analysis. While the pattern of more ads at lower prices mostly continued to affect year-over-year (YoY) trends, comparing Q2 2023 to the previous quarter suggests an improving economy on numerous fronts.

Retail media growth accelerates while other channels hold
Year-over-year (YoY) spending grew 35% for retail media, up from 30% last quarter, while paid search and paid social only varied slightly from last quarter's trend. Paid search spending increased 3% YoY while paid social spending declined by 4%, both down one percentage point from Q1 YoY levels.

Virtuous cycle drives retail media, paid search
Retail media and paid search cost-per-click (CPC) both grew 11% quarter-over-quarter (QoQ) while conversion rate (CVR) was up 8% in retail media and 10% in search. Higher conversion rates translate to fewer clicks leading to a purchase, which then offset the higher click costs without negatively affecting return on ad spend (ROAS). Higher CPC then also allows for higher-quality placements on search results or product description pages.

Bright spots in 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 & Engagement campaign objectives were up 5% over last year.

Expansion of formats and placements for commerce ads
In each channel, 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.

Other QoQ and YoY findings 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. This all bodes well for a strong H2 for digital marketing spend as economic conditions improve," said Chris Costello, Senior Director of Marketing Research at Skai. "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."

For more information and to view the infographic, visit skai.io/digital-marketing-trends/.

Methodology
Analysis is drawn from a population of approximately $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, only advertisers with 15 consecutive months of performance data are included. Some additional outliers have been excluded. Ad spending and pricing have been translated to USD at the time the spending was incurred, where applicable.

About Skai™
Skai (formerly Kenshoo) is a leading omnichannel marketing platform that uniquely connects data and media for informed decisions, high efficiencies, and optimal returns. Its partners include Google, Meta, Amazon Ads, TikTok, Snap, Walmart Connect, Instacart, Roundel, Criteo, CitrusAd, Pinterest, Microsoft, Apple Search Ads, and more. For over 15 years Skai has been trusted by an impressive roster of brands including Pepsico, Michaels, Reckitt, Daimler, LG, and Vodafone. The company is headquartered out of Tel Aviv, with seven international locations, and is backed by Sequoia Capital, Arts Alliance, Tenaya Capital, Bain Capital Ventures, Pitango, and Qumra Capital. Visit skai.io for more information.

Contact: Steph Hadas, [email protected]

SOURCE Skai