Increases in consumer travel and in-person shopping influence digital media spend allocations

Merkle , a leading technology-enabled, data-driven customer experience management (CXM) company, has released its Q4 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. Q4 2021 was shaped by trends in advertising and consumer behavior across retail, travel, and digital media, which are defining marketing strategies in Q1 2022 and beyond.

The Q4 2021 DMR indicates that marketers’ success in the year ahead will hinge on an ability to adapt quickly to consumers’ evolving preferences as they contend with dueling influences from the pandemic and a desire for normalcy. For example, while concerns around shipping challenges in 2020 and potential supply chain issues in 2021 spurred an earlier holiday shopping season, consumers have also continued to gain confidence in returning to pre-pandemic behaviors, such as in-store shopping and travel. Another interesting trend points to the growth of advertising on emerging platforms like TikTok and connected TV (CTV).

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TikTok and Connected TV Gain Ground

Within paid social and display, smaller and emerging segments within digital are securing an increasing share of spend. TikTok captured 4% of advertisers’ spend, compared to 2% in Q3, and will likely continue to grow as it evolves its capabilities for brands to reach its estimated 79.6 million US users in 2022. CTV saw a two-point increase over Q3, capturing 22% of display and paid social spend share for advertisers investing at least $1K on the device. On Amazon, advertisers increasingly see Sponsored Display as an off-the-shelf option to build brand awareness. This ad format grew its spend and impression share to 6% and 8%, respectively.

Holiday Shopping Season Leaps Forward, With More Activity Offline

Across channels, retailers saw a longer holiday shopping season. Consumers shopped earlier in the quarter, and staffing and inventory issues caused some advertisers to set shipping deadlines and reduce ad presence earlier than usual. Local Inventory Ads made up 35% of Google Shopping clicks for the quarter, compared to just 18% in Q4 2020, indicating greater Y/Y in-store activity among retailers. Retailers across SEM and SEO saw their greatest Y/Y traffic declines in December, at -11% and -19%, respectively. On Amazon, Sponsored Products and Sponsored Brands only saw Y/Y click declines in December.

Travel Continues to Show Strong Y/Y Performance

In paid search, clicks for travel increased 25% Y/Y as spending increased 40% Y/Y, and CPC rose by 12% Y/Y. SEO saw similar strength, with visits up 41% Y/Y, peaking in November at 55%. According to TSA data, passenger numbers in the ten days surrounding Thanksgiving reached 89% of pre-pandemic levels. This growth brought both SEM click traffic and SEO visits for travel above Q4 2019 levels.

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Y/Y Paid Search and Social Advertising Costs Cool Down

In Q2 and Q3, CPC and CPM across channels were up significantly Y/Y on strong competition. To advertisers’ relief, this trend discontinued in Q4 with paid search CPC up just 13% Y/Y versus 41% in Q3. Paid social saw a similar trend – Facebook CPM was up just 8% Y/Y compared to 46% in Q3, while Instagram CPM was down 9% Y/Y in Q4. Less discounted CPC in Q4 2020, compared to Q2 and Q3 2020, contributed to a less dramatic Y/Y increase across the board this quarter.

DMR’s 10 Year Anniversary

Marking the 41st edition and 10-year run of the report, this quarter’s DMR features a special section looking back on a decade of data to understand how the digital landscape has changed. Highlights include:

• Google Shopping’s share of SEM clicks grew 47 points since Q4 2012.
• Instagram achieved over 1100% cumulative growth in just five years.
• Phone traffic surpassed 50% click share in SEM in Q4 2017.
• Amazon Sponsored Products and Sponsored Brands were both up 200%+ since 2017.