Ad prices continue to drop while clicks and impressions grow

Skai, an omnichannel platform for performance marketing, published its Q1 2023 Digital Marketing Quarterly Trends Report, an in-depth analysis of the digital marketing trends that defined the first quarter of this year, along with an interactive infographic detailing key analysis. While spending growth continued in several performance channels, overall it slowed in Q1 of 2023 compared to Q4 of 2022, reflecting advertiser caution given uncertainty around the global economy, even while engagement with key digital channels continued to press forward.

Advertisers focus on efficiency
In each channel, the volume of ads either clicked or seen rose, while unit pricing dropped. This behavior implies that while advertisers are still focused on their key digital channels, that doesn’t necessarily mean spending growth. Within channels and publishers, new and improved ad types and campaign strategies are giving marketers greater ability to dial in efficiency for their programs without adding to budgets.

Cautious spending affects growth
Spending growth across channels slowed in Q1 as advertisers continued to tread carefully amid economic uncertainty. Retail media spending grew 30% year-over-year (YoY), paid search outlays increased 4% and paid social budgets shrank by 3%. All of these metrics were down compared to results from Q4 2022. Quarter-over-quarter (QoQ) spending was broadly within post-seasonal expectations, with spending down 14%, 20% and 25% for retail media, paid search and paid social, respectively.

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Retail media expanded without sacrificing performance
Even with a 30% increase in spending year-over-year, advertisers are seeing improvement on performance metrics. Return on Ad Spend (ROAS) for the channel improved by 2% YoY, while Cost per Action (CPA) dropped 8%, indicating that despite rapid growth, retail media has not yet reached the point of diminishing returns for advertisers.

Other QoQ and YoY findings include:

“With the lack of a clear direction up or down from the economy, no one should be surprised that most advertisers are not making big budget moves in any direction,” said Chris Costello, Senior Director of Marketing Research at Skai. “In fact, what we’re seeing across channels is a microcosm of the overall economy, with some segments seeing strong results, particularly around shopping behavior in retail media and paid search, while other areas that are implicitly or explicitly more sensitive to costs and ad prices are contracting.”

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