Merkle’s Digital Marketing Report found Q3 2021 to be, like its recent predecessors, one marked by unusual digital performance. A changed online landscape, the evolving pandemic, and recent privacy updates impacted key metrics across search, programmatic, paid social, and Amazon. To understand how these underlying factors translated into actual numbers, let’s explore each trend in more depth.

Changes in online activity in 2020 impacted performance and assessment in 2021

The pandemic accelerated the growth of ecommerce in 2020 as consumers moved nearly all non-essential (and some essential) shopping activity online. To meet customers where they were, retailers also needed to move online, with many smaller businesses launching ecommerce efforts for the first time. As a result, US ecommerce grew by a whopping 32.4 percent in 2020.

Fast forward to Q3 2021, and we’re still seeing impacts from these major landscape changes. Greater demand from consumers and a more crowded shopping arena left advertisers competing fiercely for precious advertising real estate. This translated to double-digit year-over-year increases in cost per click (CPC) across digital channels, including:

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• 41% higher CPC on Google Ads and Microsoft Ads
• 43% higher CPC on Amazon Sponsored Products
• 76% higher CPC on Amazon Sponsored Brands

The ecommerce explosion made 2020 an unusual year of performance for retailers, but, as we know, they weren’t the only businesses impacted by the pandemic. Travel also saw abnormal performance in 2020, with limited activity across both business and leisure travel. By mid-2021, both industries were seeing more typical behavior, even if neither quite returned to 2019 levels.

As a result, marketers encountered unique challenges when assessing year-over-year performance in Q3 2021. Organic search, for example, experienced 28% visit growth from Q3 2019 to Q3 2020. At first glance, then, the 4% year-over-year traffic decline in Q3 2021 looks like poor performance. But in reality, it means that traffic levels are still 23% higher now than they were in Q3 2019. Year-over-year performance has always been an important measuring stick for digital marketers, but with 2020 muddying the picture, they needed to view success in other ways – whether that was looking at customer-focused indicators (e.g., improved backorder / cancellation rates or new customer acquisition) or using a different date range for period-to-period comparisons.

Consumer behavior aligned with the evolving realities of the pandemic

In Q3 of this year, more people were venturing outside of their homes again, whether that meant resuming old hobbies, taking a much-needed vacation, or enjoying the outdoors in their local area. With that increased movement, mobile’s share of paid search activity reached a new record of 72 percent.

Throughout the pandemic, we’ve seen correlation between where people are spending their time and what type of device they’re using for paid search. When folks are at home more often, desktop usage increases; when they’re out and about, they spend more time on mobile. In 2020, this translated to increased desktop share during two key periods. The first was from mid-March through mid-April during early lockdowns and stay-at-home orders. Desktop usage spiked again in late November and December, while COVID cases surged and consumers were at home for the holidays. In Q3 2021, we saw the other side of this coin; with vaccines available and more data about the risks of different activities, people were leaving the house with greater frequency and turned to mobile while away from home.

Within the quarter, we also saw that month-to-month retail and travel search behavior aligned with COVID case trends. COVID cases were worst in September as the delta variant continued to spread. At the same time, retail saw its strongest year-over-year traffic performance of the quarter in September on organic search, paid search, and Amazon Sponsored Products. Travel saw similar alignment, with organic visit growth at its worst in September. While we can’t determine whether there’s a causal relationship, the correlation, combined with trends observed in previous quarters, hints at COVID case numbers as a potential contributing factor to these vertical-specific search behaviors.

Paid social advertisers felt the impact of privacy updates

In Q3, advertisers across the Meta ecosystem continued to work through the aftermath of App Tracking Transparency (ATT), introduced through Apple’s iOS 14.5 update. In short, ATT requires users to opt in before a company can track their data across other apps or websites. For Meta advertisers, this meant less tracking visibility, murkier reporting, and more limited targeting pools. To compete for those targeting pools and meet performance goals, advertisers had to bid more aggressively, driving Facebook and Instagram CPM up 46 percent and 11 percent year over year, respectively. This will likely continue to be a factor for paid social advertisers in future quarters.

With Q3 2021 in the rearview mirror, advertisers are now deep into the Q4 holiday season, where sustained competition, the evolving pandemic, and privacy regulations continue to influence performance. While past trends don’t always predict future behavior, they can equip us with the knowledge to understand why we’re seeing certain performance and how we can adjust accordingly.

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