While Google rolled out Expanded Text Ads last year to offer retailers and other advertisers a more appealing ad unit than the search engine’s traditional text ads, there’s little evidence the ads are accomplishing that objective.
Google text ads, which include ETAs and traditional text ads, grew 12% in the first quarter, while Product Listing Ads grew 32%, according to search marketing firm Merkle RKG’s “Merkle Digital Marketing Report Q1 2017.”
PLAs’ strong growth is thanks in part to Google’s move to add PLAs to image search results in May 2016, as well as the ongoing shift in traffic to mobile devices, where PLAs make up a larger share of search ad clicks, Merkle says in the report.
Early in the first quarter Google retired its traditional text ads, which means that while the ads can continue to run, advertisers will not be able to load any new copy using the format moving forward. Even so, traditional text ads accounted for more than 40% of text ad impressions.
[infogram id=”copy_a_decade_of_us_e_commerce_growth” prefix=”VRb” format=”interactive” title=”Google ETA share of text ad impressions”]
While ETAs comprise a growing share of text ad impressions, the ads aren’t producing a clear click-rate advantage compared with the traditional text ads, Merkle finds. For high-traffic ad groups with both formats active in the first quarter, ETAs produced a slightly lower click-through rate (down 4% among desktop, 3% on smartphones and 4% on tablets) across devices for ads at the top of organic search results. Results were mixed for ads at the bottom of the page (up 4% on desktop, down 4% on smartphones and down 0.5% on tablets).
“There was a lot of optimism when ETAs were first announced,” says Mark Ballard, Merkle’s senior director of research. “When we initially looked at the ads we thought they might be able to produce click-through rates that were up to 20% higher than standard text ads. But it turns out that when you account for factors like device type (and) location, the benefits go away. The results end up being very similar to standard text ads.”
Meanwhile, PLAs continue to make up a larger share of retailers’ Google ad spending. PLAs produced 52% of retailers’ search-ad clicks in the first quarter, up from 48% in the fourth quarter. The first quarter was the first time that PLAs share topped 50%. Moreover, PLAs accounted for 75% of clicks from nonbrand Google search ads, which are searches that don’t include a brand or retailer’s name.
Marketers’ increased spending on PLAs helped drive a 39% rise in PLA clicks and a 5% decline in the cost per PLA click. For the sake of comparison, Google text-ad clicks rose 9% and the cost per click rose 3%.
The report also found rapid growth among Google’s local inventory ads, the ad format that lets a retailer make inventory in local stores accessible to online shoppers—particularly among smartphone users. In the first quarter, for instance, LIAs accounted for 19% of all smartphone Google Shopping traffic for the median brand deploying them. The impact was smaller on desktop and tablet, at 3%, as shoppers are more likely to head to a store when on a phone.
However, some brands see significantly higher shares of Google Shopping traffic stemming from LIAs, Ballard says, noting that one Merkle client had 68% of its Google Shopping traffic stem from the ads and 25% of desktop traffic.
Overall, Google search ad spending rose 21% in the first quarter, while clicks rose 20% and the average cost per click rose less than 1%. Looking specifically at the retail and consumer goods vertical, Google search ad spending rose 22%, clicks increased 19% while the cost per click rose 2%.
Search on smartphones
Moreover, 37% of retailers’ Google search ad spend was dedicated to smartphones, which accounted for 54% of ad clicks. Tablets accounted for 9% of retailers’ ad spending and 10% of clicks, with desktop and laptops accounting for 54% of spending and 36% of clicks.
The report also shows that Google dominates the smartphone search ad market, accounting for 97% of smartphone paid search clicks in the first quarter, with Bing accounting for 2% and Yahoo Gemini 1%. That compares with desktop, where Google accounted for 81% of paid search clicks, with Bing at 16% and Yahoo Gemini 2%. Overall, Google accounted for 90% of paid search clicks, Bing 9% and Yahoo Gemini 2% (the percentages do not add up to 100% due to rounding).
Merkle also notes that overall organic Google search visits grew slightly in the first quarter, which is the first time that’s happened since the third quarter of 2015.
Google’s strong showing is stark contrast to its competition. Spending on Bing Ads and Yahoo Gemini search ad platforms, where spending fell 14% year over year, clicks declined 17% and the cost per click rose 4%. Bing Product Ad spending was flat and nonbrand keyword and product ad spending fell 18% and clicks declined 23%, while the cost per click rose 6%.
“Bing is hurting as traffic shifts to mobile,” Ballard says.
The report also finds that social media sites accounted for 3.3% of all site visits in the first quarter and 3.8% of mobile site visits. Looking specifically at social media advertising, Merkle reports that Facebook ad spending rose 71% during the quarter. Facebook Inc.’s cost per click fell 4% during the quarter, marking the sixth straight quarter of declines in the cost of Facebook ad clicks. Meanwhile the cost per thousand impressions rose 13%.