Exclusive Skai Study Reveals Rising Digital Ad Spend Despite Increasing Costs

Advertisers paid more for clicks and impressions in Q2 2024, but Skai’s Quarterly Trends Report predicts price moderation in the latter half of the year

Skai, the leading omnichannel advertising platform specializing in walled garden media, published its Q2 2024 Digital Marketing Quarterly Trends Report. This in-depth analysis highlights the digital marketing trends that defined the second quarter of 2024, along with an interactive infographic detailing key analysis. Topline growth numbers in retail media, paid search, and paid social were all positive, maintaining similar levels to those reported by Skai last quarter.

Spending up over last year and last quarter
Overall investment levels continued to grow in the primary walled garden ecosystems of retail media, paid search, and paid social, underscoring their value to marketers. On a same-account basis, spending increased year-over-year (YoY) in all channels, as well as quarter-over-quarter (QoQ). A majority of Skai accounts in each channel increased spending by at least 5% over Q2 of last year.

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Prices grow as volumes slow
Retail media and paid search CPC have increased YoY for four consecutive quarters, and paid social CPM has increased YoY for the last two. Conversely, click and impression growth has slowed as prices have risen. This trend could be due to either advertisers buying fewer impressions and clicks because of higher prices, or structural changes in ad load shrinking ad inventory. In either case, history suggests that YoY increases may be slowing and could eventually lead to a period of higher volumes and lower prices.

Retail media performance maintains strength amidst price and spending increases
Despite rising prices and spending in retail media, performance metrics have kept pace. Conversion rate grew 12% YoY, matching the CPC increase, and total conversion volume grew 18%, just one point shy of the spending increase. This suggests that greater purchase intent, which requires fewer clicks to convert, could be a factor driving the price inflation without sacrificing Return on Ad Spend (ROAS).

Commerce media drives quarterly growth in search and social
Sequential growth for product ad and campaign types in both the paid search and paid social channels outpaced overall channel growth. New and engaging formats like Performance Max (search) and Advantage Shopping Campaigns+ (social) continue to gain traction. As of Q2, Performance Max has been adopted by half of Skai search accounts, while ASC+ was used by one-third.

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Other QoQ and YoY findings include:

“We’ve heard reports of advertisers concerned about higher prices, and they’re clearly experiencing some pain as CPC and CPM are up across the board,” said Chris Costello, Senior Director of Marketing Research at Skai. “Our long-term data analysis suggests these price increases are cyclical. With year-over-year increases slowing from Q1 to Q2, we may be nearing the end of this cycle. Marketers adapt their strategy in times of high prices with tools like dayparting, audience targeting, and budget caps until the trend reverses. Other factors,such as changes in ad load that artificially moves inventory, or macroeconomic conditions, may also influence these cycles.”