The 2020 holiday season was riddled with many challenges as a result of the coronavirus pandemic, and comparing digital marketing growth to the previous year became difficult.

Kicking off the holiday season was Amazon.com Inc.’s annual sale, Prime Day, in mid-October. Amazon shifted the event to Q4 2020 from its normal July date, and Cyber Monday 2020 fell in November from December in 2019, skewing yearly comparisons. Despite the shifts in key online shopping dates, many digital marketing performance metrics began pointing toward a recovery of the market, according to marketing agency Merkle’s latest “Digital Marketing Report.”

Paid search returns to pre-coronavirus levels

Overall U.S. paid search growth in Q4 2020 returned to similar levels as Q1-Q4 2019, likely the result of brick-and-mortar stores reopening across the country, according to Merkle. Ad spend grew 10.0% year over year, while cost-per-click settled to a 0.3% decline compared with an 11% decrease in the previous quarter and a 38% decrease in Q2 2020. This means online retailers are beginning to pay similar rates for each click as they were prior to the pandemic.

Google U.S. paid search cost-per-click had a decrease of 0.3% in Q4 2020. In contrast, ad spend and clicks both increased 11.8% and 12.1%, respectively.

As a result of Cyber Monday falling in November last year, retailers had a 20% increase in clicks year over year, but only 6% growth in December. By industry, overall Google paid search spending increased the most for retailers at 14% compared with B2B and travel, which both decreased. Clicks also grew for retailers in Q4 2020 at 11% as did cost-per-click at 3%

Overall U.S. paid search for Microsoft Bing, however, decreased across the board. Ad spend fell 13.4%, clicks 4.7% and cost-per-click 9.1%. According to Merkle, this shows a trend of decelerated growth for three quarters in a row now. Prior to the coronavirus pandemic, ad spend for Microsoft paid search had built on its year-over-year growth from Q4 2018 through Q3 2019 with a peak growth of 18%, falling slightly in Q4 2019 at a 17% increase.

Organic search skyrockets

U.S. organic Google search visits continued to skyrocket, growing 30.5% in Q4 2020 compared with the previous year. Mobile search visits grew 32.7%. While there was a significant increase year over year, the quarterly growth flattened, with overall organic Google search visits down almost 3 percentage points compared with the Q2 peak of 33% growth.

The retail category continues to have exponential growth in organic Google search visits, up nearly 40% in Q4 2020, compared with travel, which was down almost 19% in the same quarter.

Meanwhile, search visits by retail category reveal a similar trend as last quarter. Essential goods retailers grew organic search visits 63%, and other non-essential retailers grew 33%. Apparel retailers finally saw positive growth at 2%. 

Amazon Sponsored Brands fall short of Q3 growth

Amazon Prime Day fell in Q4 2020 instead of its typical date in Q3, which skewed year-over-year comparisons. Ad spend, clicks, cost-per-click and sales all increased for Amazon Sponsored Products and Amazon Sponsored Brands year over year. However, these metrics decreased quarter over quarter for Amazon Sponsored Brands, while sales and cost-per-click increased for Sponsored Products.

Amazon Sponsored Products account for the largest section of Amazon Sponsored ads, consisting of 78.9% of Amazon Sponsored ad spend. Product ads represent the individual products that brands can promote. Brand ads advertise marketplace merchants’ entire shop or brand.

Smaller social channels receive sizeable share of ad spend

Across display and social media platforms, paid social accounted for over half of all ad spend in Q4 2020.

Spending remained steady quarter over quarter for Facebook, growing 12.4% year over year in Q4 2020 and 12% in Q3. Impressions increased 2.0% in Q4 2020, a sharp decline from 25% in Q3. Instagram, continuing to outperform Facebook, grew ad spend nearly 30% in Q4, impressions 14.0% and cost-per-impression 13.7%, which are similar rates as the previous two quarters.

For those advertising with both social platforms, Instagram accounted for 19.7% of total Facebook ad spend, and represented 20.2% of all impressions.

Pinterest, Snapchat and Twitter all received over 10% of total paid social spending for participating brands in Q4, with Pinterest receiving nearly a 14% share of participating brands’ social advertising budget. The trend in spending more on smaller social channels “shows continued interest from advertisers to expand their paid social programs beyond the Facebook ecosystem,” Merkle writes.

The Q4 2020 Digital Advertising report by Merkle is based on the clients that have actively worked with the digital marketing vendor for at least 19 months, haven’t significantly changed their strategic objectives or product offers, and have met a minimum ad-spend threshold not disclosed.