Advertiser interest in specialised product focused ads on the likes of Facebook, Instagram and Google is soaring. Video advertising on social media is showing dramatic increases, while mobile continues to attract an increasing slice of digital ad budgets. Ad engagement is also on the rise, with people much more likely to click on social and search ads now than a year ago.
Each quarter, we at Kenshoo analyse global advertising spend and performance on our platform to identify key developments and changes. Looking back on the third quarter of 2016 the following five trends stand out:
1. Product Ads on social are catching on like wildfire
Spend on Dynamic Product Ads (DPAs) on Facebook and Instagram, introduced in 2015 to help online retailers promote multiple products through social, has nearly doubled (up 95%) since the traditionally busy fourth quarter of last year. They, now make up more than four out of every ten clicks (42%) and 21% of spend on online retailers’ social ads.
DPAs can display single or multiple product images in a carousel format or video. What makes them particularly effective is their ability automatically retarget people on Facebook or Instagram who have viewed specific products on your website – they could be shown other similar products or given incentives to help trigger a purchase, for example.
2. Search is not going to be left behind in Product Ads
Not to be outdone by social, search has its own very successful product ad format: Product Listing Ads (PLAs) - which have seen spend increase by 87% since last year. These ads appear in Google’s ‘shop for’ box outs in search results - displaying product images and prices - when the search engine senses that the searcher is looking for a product. And they now account for 37% of online retail search clicks and 22% of spend, with 59% of clicks coming from smartphones.
When you click on a PLA you are taken directly to the retailer’s site where you can make a purchase, making them very popular.
3. Social Video is booming
Spend on social video ads, available on both Facebook and Instagram, has increased 155% in a year and video now accounts for 22% of social ad spend. 500 million people watch videos on Facebook every day so perhaps it’s not surprising that their popularity is extending to video advertising. One Kenshoo customer found that ROI on video ads was 3x higher than standard formats so they can be very effective. There’s evidence to indicate that some smaller advertisers are less inclined to use video – perhaps because they think they need to have big production budgets. But this is not necessarily the case. For examples, carousels of images and gifs can work very effectively and are affordable.
4. People are engaging more with social and search ads
Not only are advertisers spending more on social and search advertising, but consumers are engaging more with ads in both channels.
The click-through rate (CTR) on social ads is up 21% since last year. Specialised formats such as product ads are likely to be playing a role here. Facebook has also improved targeting options and many social advertisers have gained more experience, so are more likely to be getting it right!
In search CTR is up 38% in a year – influenced partly by the way Google’s search listings page has changed as it becomes more unified around the mobile experience. Earlier this year Google took away the ads it used to display on the right hand side of the page in desktop results (to make the desktop page more similar to the mobile page). With fewer ads on display you’d expect that people would be more likely to click on the ads that are shown.
5. Mobile has still not peaked!
Ads directed at mobile devices have been the engine of growth in digital advertising for many successive quarters now, and that trend doesn’t look like stopping anytime soon. Social advertising spend targeted at smartphone and tablets has increased by 61% YoY, with mobile devices now accounting for 70% of all paid social clicks. In search, mobile spend and clicks are up 39% and 48% respectively since last year and mobile now accounts for 35% of all search advertising spend and 43% of all clicks.
All in all the data shows that both social and search are continuing to evolve and change throwing up new opportunities for marketers to exploit.
The findings come from an analysis of on five quarters of performance data managed on the Kenshoo platform, resulting in a sample that includes more than 750 billion impressions, 13 billion clicks and $6 billion (USD) in advertiser spend.
About Michelle Urwin
Michelle Urwin has over ten years experience in technology marketing and joined Kenshoo in September 2016 to head up EMEA Marketing. She has a genuine passion for marketing and has spoken at a number of events on topics related to Social Media measurement and strategy.
Prior to joining Kenshoo Michelle spent three years in client side roles at IBM and Basware, as well as seven years on the agency side with OgilvyOne Business. She studied Management at Lancaster University and at weekends you will find me travelling the country watching Southport FC home and away.