Report: Ad Spend Increases Across Channels

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Recent research from omnichannel platform Skai (formerly Kenshoo) revealed that advertising spending increased across channels overall in the second quarter, compared to last quarter and last year.

Research from Skai’s Q2 2022 Digital Marketing Quarterly Trends Infographic, an in-depth analysis of the digital marketing trends that defined the last quarter, indicated that commerce ads across retail media and social channels showed robust growth, while paid search spending focused more on services than goods. Some key takeaways from the Q2 research included:

  1. Overall spending growth continues: Retail media growth accelerated 42% year-over-year (YOY) in Q2 as advertisers continued to increase spending both on Amazon and the growing number of other retail media networks. Paid social media spending growth grew 15%, as 2022 has proved a more stable spending environment than the same period in 2021. Paid search spending increased 11% YOY.
  2. Shopping a big factor across channels: Retail media growth was driven by more brands trying to reach a larger group of shoppers while they are in-market. Paid social spending growth in the quarter also benefited from investment on commerce-focused ad types and advertisers. Only in paid search did investment follow the trend away from goods and toward services.
  3. Social advertisers are adjusting to IDFA (Identifier for Advertisers – the random device identifier assigned by Apple to a user's device): 2021 saw "sequential spending declines" from April to May to June as the release of iOS 14.5 introduced changes to privacy controls and availability of data for both targeting and measurement. "With a myriad of solutions and workarounds in place for these disruptions this year, monthly spending in paid social media has been much more stable in 2022, paving the way for an acceleration of growth," according to a Skai news release on the research.
  4. Responsive Search Ads dominate search spend: The migration of paid search from the Expanded Text Ad (ETA) format to the Responsive Search Ad (RSA) format has put RSA in the dominant position, comprising 38% of total Q2 spend compared to 23% in Q2 of 2021. ETA spend has dropped from 40% to 27% of spend over that same period, with shopping ads making up most of the balance.

"This quarter has been defined by how advertisers are reaching shoppers, and that's through a mindful mix of walled garden channels," said Chris Costello, senior director of marketing research at Skai, in the release. "Commerce advertisers and brands have increased investment in social media to stimulate demand, then continued to grow their advertising presence at the very bottom of the funnel with retail media spending, where purchase intent is strongest.”

“Meanwhile, we see more direct evidence of how social media advertising has adapted and rebounded versus the second quarter last year, when the introduction of IDFA led to decreasing social budgets,” he added. “This year, solutions to the loss of targeting and measurement signals have helped stabilize those spending levels, which has yielded stronger growth for social media spending than many expected."

Other key findings include:

  • Commerce spending in social media was a major driver of overall investment, whether based on accounts or ad types, even outgrowing retail media both QOQ and YOY.
  • Ads for CPG products are proliferating on newer retail media networks like Instacart and Kroger.
  • More sophisticated ad formats and bidding strategies continue to drive growth as they replace legacy options. 

Skai's analysis was drawn from a population of $9 billion in advertising spend over five quarters, comprising more than 3,000 advertiser and agency accounts across 40 vertical industries and 150-some countries running on the Skai platform including on Google, Microsoft, Verizon Media, Amazon, Walmart, Instacart, Criteo, Apple Search Ads, Pinterest, Snapchat and Meta.