Merkle’s Q1 2020 Digital Marketing Report Reveals Initial COVID-19 Impacts on Search, Social, and Display Ad Spend Across Major Platforms

Amazon YoY Growth surged at 118% for Sponsored Brands; Google Records Weak Growth for Search Ad Spend

Merkle, a leading technology-enabled, data-driven performance marketing agency, released its Q1 2020 Digital Marketing Report (DMR), a quarterly research report that analyzes and highlights key metrics and trends within paid and organic search, paid social, and display ad spend. The report provides insights into year-over-year (YoY) growth for Amazon, Google, Facebook, Instagram, and YouTube, and illustrates the impacts emerging from the COVID-19 pandemic. The findings indicate overall positive performance for Amazon, steady growth for Facebook and Instagram, and weaker growth for Google and YouTube. Merkle will be presenting a webinar on Thursday, April 30 at 2 p.m. ET to discuss the report and share forward-looking insights for marketers to assist in navigating the COVID-19 recovery phase.

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According to the report, Amazon Sponsored Products experienced impressive results in Q1 with 87% YoY click growth, and sales produced by the ads rising 70% YoY. Conversion rates for Amazon Sponsored Products ads were also about five times higher compared to Google Shopping ads in Q1. Additionally, Amazon Sponsored Brands spend growth accelerated significantly to 118% YoY.

Analyzing paid search, Google search ad spend grew 11% YoY in Q1, down from 16% growth in Q4 2019, which is the weakest growth Merkle has seen over the eight years the DMR has been published. In March, growth fell to just 4% YoY, with travel advertisers cutting their budgets by nearly 80% by the end of the month. Retail spend, however, has trended flat to higher since early March.

Visits to brand sites generated by organic search fell 15% YoY and phones produced 52% of organic search visits in Q1. Towards the end of the quarter, impacts from COVID-19 were mixed. Essential retailers like grocers and drugstores saw organic search grow 53% in mid-March. For the same period, non-essential retailers like apparel and specialty merchandisers saw organic clicks fall 31% YoY.

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“Each quarter we strive to provide a resource for marketers to help achieve their yearly goals, and the data is demonstrating that Q1 2020 is pivotal for most brands,” said Mark Ballard, vice president of research at Merkle. “Mid-March marked a clear boundary between pre and post-COVID-19 results, but exactly how different these periods looked varied considerably depending on the channel, the industry of the advertiser, and other key factors. This impact is evident in our findings and further emphasizes the importance of using these data points to inform strategic planning and marketing initiatives moving forward.”

Analyzing paid social and display, the report highlights Facebook, Instagram, and YouTube’s YoY ad growth. Spending on Facebook ads, excluding Instagram, grew 19% YoY in Q1, and advertiser spending on Instagram grew 39%. For brands running ads on both Facebook and Instagram in Q1, Instagram accounted for 27% of total spending across the two platforms and 34% of impressions. Additionally, Instagram Stories ads accounted for 22% of Instagram spend and 28% of impressions in Q1.

Spending on YouTube ads grew 19% YoY in Q1, down from 43% growth in Q4 2019. YouTube ad impressions fell 2% for the quarter while average CPM rose 21%. As with other channels, YouTube trending looked very different at the end of the quarter with many advertisers pulling back on spend or pausing campaigns entirely.

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