Merkle, a leading technology-enabled, data-driven customer experience management (CXM) company, released its Q1 2021 Digital Marketing Report (DMR), a quarterly research report that analyzes and highlights trends within paid and organic search, Amazon ads, paid social, and display ad spend. The report provides insights into Q1 2021 digital marketing trends that were heavily influenced by an accelerated COVID-19 vaccine distribution, along with two stimulus checks to Americans, both of which contributed to signs of growth in activity across Google, Amazon, Facebook, Instagram, and more.
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As we work towards normalcy, American consumers showed signs of optimism. Fueled by brands looking to capitalize on increasing consumer demand, ad spend across most categories increased and was anchored by a particularly strong January that saw 33% Y/Y increases in spend growth. Retail click growth also strengthened in Q1 as retailers faced fewer shipping and inventory challenges compared to those experienced during the holiday season. Travel continued to show improvements with click traffic down less than 10% Y/Y and ad spend up 5% over Q1 2020.
Google paid search growth accelerated in Q1, with spend increasing 20% Y/Y. This quarter marked the highest increase since the start of the pandemic, driven by 21% Y/Y click growth at stable CPCs (-1% Y/Y). Google search spending by travel advertisers increased by 5% Y/Y while Y/Y click declines improved from 14% in Q4 2020 to 10% in Q1 2021. Retail and consumer goods continued to experience Y/Y growth across clicks, spend, and CPC from increased e-commerce demand.
According to Google estimates, daily store visits in Q1 2021 were 8% lower than average daily store visits in January 2020. Shoppers showed more willingness to venture back into stores as the COVID-19 vaccine rollout accelerated across the US. Store visit averages in Q4 2020, while higher than Q1 2021, were more indicative of holiday shopping demand than general consumer behavior.
Phones and tablets combined to generate 59% of Google organic search visits to brand sites in Q1 2021, down three points from Q4 2020. Within mobile, phones saw modest Y/Y growth in visit share, offset by Y/Y declines in tablet. Organic Google mobile share remained below Google paid mobile share.
On its own platform, growth of Amazon’s Sponsored Brand ads remained strong Y/Y, with clicks up 38% and spend up 26%. Impressions for the format grew 133% Y/Y after Amazon opened up new placements for Sponsored Brands throughout 2020. Sales growth did not keep up with click growth, though, and Sponsored Brands’ relative sales-per-click compared to Sponsored Products fell to 75%.
Sponsored Products also experienced Y/Y click growth, though at a more modest level of 11%. A 10% Y/Y drop in CPCs led to virtually flat Y/Y spend. Sales growth continued to be strong, however, at 36%, and Sponsored Products still captured the majority of spend share across Sponsored Products, Sponsored Brands, and Sponsored Display.
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Impression growth on Facebook was minimal compared to the sharp increase in investment, up 19% and 21% in Q1 the past two years — signaling an uptick in competition and rising CPMs. Instagram continued to be an opportunity for growth across brands at a more efficient CPM, as ad spend increased 58% Y/Y and 30% Q/Q and CPMs reduced by 5%.
Outside of Facebook-owned properties, Pinterest continued to receive solid investment from advertisers at a 8% share, slightly lower Q/Q. Investment in Snapchat declined considerably Q/Q in terms of advertiser share, while LinkedIn edged out Twitter for the #3 social platform outside of Facebook for advertiser investment. Emerging digital channels like video and audio encompass a notable share across advertisers who invested across multiple digital channels with display and social, averaging 33% of media spend in Q1.
“As we entered a new year, consumers continued to embrace e-commerce as they saw a short-term influx in their disposable income due to two separate stimulus checks and an accelerated COVID-19 vaccine distribution,” said Marion Gendron, senior manager, performance media at Merkle. “We also saw consumers continue to warm up toward the idea of traveling, but hesitancy remained to fully re-engage with the world. However, this hesitancy did not impede on growth for several channels — showcasing a promising trend for the rest of the year.”
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