Retailers are increasingly leveraging the information they know about their customers to drive shoppers to click on Google ads, according to digital marketing firm Merkle RKG’s “Merkle Digital Marketing Report Q3 2017.”
Google has steadily rolled out a number of targeting tools over the past year, including Customer Match, which enables a retailer to upload its email lists to find its customers when they search on Google; remarketing lists for search ads (RLSA), which let a retailer customize its search ads campaign for consumers who have previously visited its site; and Similar Audiences, in which Google targets users who are searching the same terms as users recently added to the merchant’s RLSA lists.
“It’s almost universal that our clients are using one or two of these products,” says Mark Ballard, senior director of research at Merkle.
That’s reflected in the data:
- 22% of desktop clicks in the third quarter came from ads that leveraged customer match, RLSA or similar audiences, up from 14% during the same period a year earlier.
- 20% of smartphone clicks stemmed from ads that used those tools, up from 11%.
- 20% of tablet clicks stemmed from ads that used those tools, up from 14%.
Those clicks are more valuable than other clicks because consumers who click on a targeted ad convert at higher rates than non-targeted ads and spend more per order, on average. For instance, a targeted non-brand text ad has a 212% higher click-through rate than a non-targeted, text ad. A targeted brand text ad, which means the ad includes a brand or product name, has a 39% higher click-through rate than non-targeted brand text ad and a Shopping ad has a 71% higher click-through rate.
The average order value for a targeted non-brand text ad is 28% higher than a non-targeted ad, a brand text ad is 7% higher and a Shopping ad is 35% higher.
The increased use of targeting helped drive up spending on Google search ads in the third quarter. Google search ad spending rose 24% in the third quarter, thanks in large part to strong growth among Product Listing Ads, or PLAs, the visually-oriented ads that present product images, prices and business names to users searching on Google. That’s up a tick from 23% growth in the second quarter.
During the quarter, Google paid search clicks grew 19% and the cost per click accelerated for the fifth straight quarter, rising 4% over the same period a year earlier. Looking specifically at the retail and consumer goods vertical, Google search ad spending rose 24%, clicks increased 18% and the cost per click rose 5%.
PLA spending grew 47% during the quarter and Google text ad spending jumped 15%. And the cost per click for Google ads rose 4%, a four percentage point increase from the previous quarter when CPCs were flat.
PLAs accounted for 53% of Google search ad clicks among U.S. advertisers, up from 48% a year earlier, and the same percentage as the second quarter.
For non-brand searches, PLAs accounted for 77% of Google search ad clicks for retailers in the third quarter, up two percentage points from the previous quarter and five percentage points from a year ago.
36% of retailers’ Google search ad spend was dedicated to smartphones, which accounted for 57% of ad clicks. Tablets accounted for 10% of retailers’ ad spending and 10% of clicks, with desktop and laptops accounting for 54% of spending and 33% 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. That compares with desktop, where Google accounted for 78% of paid search clicks. Overall, Google accounted for 88% of paid search clicks.
Merkle also notes that overall organic Google search visits fell 3% in the third quarter compared to the same period a year earlier.
Google’s growth stands in stark contrast to its competition. While spending on Bing Ads and Yahoo Gemini search ad platforms grew 6% year over year, it still pales in comparison to Google. That 6% growth was the first positive quarter of growth since 2015’s third quarter. Meanwhile, clicks on those platforms grew 1% and the cost per click rose 5%. Bing Product Ad spending rose 27%, thanks in part to weak year-over-year comparisons.
The report also finds that Facebook ad spending rose 40% year over year during the quarter, a marked decline from 56% year over year growth in the second quarter. The social network’s news feed ads accounted for 84% of its ad revenue, while right-hand rail ads generated 6% of revenue, Instagram 3% and other assorted formats 6% (the percentages don’t add up to 100% due to rounding).Favorite