DISPLAY & PAID SOCIALSEO & SOCIALCSECSEMERKLE DIGITAL MARKETING REPORT Q1 20182PAID SEARCHEXEC SUMMARY TABLE OF CONTENTS EXECUTIVE SUMMARY 03 PAID SEARCH 05 ORGANIC SEARCH & SOCIAL 18 DISPLAY & PAID SOCIAL 22 AMAZON & COMPARISON SHOPPING ENGINES 26 ABOUT MERKLE & METHODOLOGY 30Click on the icons at the top of each page to jump between sections quickly. DISPLAY & PAID SOCIALSEO & SOCIALCSECSEMERKLE DIGITAL MARKETING REPORT Q1 20183EXEC SUMMARYPAID SEARCH NEW & NOTABLE FOR Q1 2018 Still accounting for the largest share of digital advertising dollars for most brands, Google paid searchspend growth slowed in Q1 to 20%, as click growth decelerated for the third straight quarter. Averagecost-per-click (CPC) growth once again drove the lion’s share of Google spend growth with a 13% Y/Yincrease for the quarter. Google text ad CPC growth slowed compared to a quarter earlier, but remained at the second highestrate of any quarter since Q3 2016. Brand keyword CPC growth accelerated from 23% in Q4 to 28% inQ1, continuing a strong reversal of the CPC decline observed for these keywords following Googleupdates to its Ad Rank calculations in May 2017. Q1 Google Shopping spend grew 40% Y/Y, the highest rate observed since the rst half of 2016, as bothpricing and click growth accelerated. Newer Shopping ad variations such as Local Inventory Ads andShowcase Shopping Ads make up a small share of overall Shopping trafc, but are steadily growing forthe advertisers deploying them. Shopping ads now make up 82% of all non-brand Google paid searchclicks for retailers. While Google continues to dominate paid search trafc with 90% click share, Bing Ads and YahooGemini spend have actually increased faster Y/Y than Google in each of the last two quarters. BingProduct Ads continue to play a large role in that growth, with a 64% increase in spend and 110%increase in clicks Y/Y in Q1 2018. The growth of paid clicks on Bing and Yahoo appears to have hurt organic search trafc driven by thetwo engines, as both posted their largest year-over-year (Y/Y) organic visit declines in the history of thisreport. Yahoo also sufered from losing its position as the default search provider for Firefox. IncludingGoogle volume, total organic search visits were roughly at compared to a year ago. In paid social advertising, increased pricing and ad engagement continue to drive Facebook spend up,with 48% Y/Y spend growth for the median advertiser in Q1, despite a 5% decline in impressions. Thedecline in impressions is in line with Facebook’s expectations that ad load would not play as large a rolein driving ad spend growth beginning in the second half of 2017. Investment on Instagram continued to grow even faster than Facebook, but remains a smaller overallshare of paid social spend, with just 9% as much spend as Facebook for brands advertising on both.That gap will likely become smaller over the next several quarters as Instagram continues to roll outnew advancements. Amazon advertising continues to grow rapidly, with Sponsored Products and Headline Search Adsspend increasing 96% and 90% Y/Y in Q1, respectively. CPC increased signicantly for both formats,and was 128% higher for Headline Search Ads Y/Y, as brands are seeing competition for theseprominently placed ad units heat up. Sponsored Products accounted for 86% of all Amazon MarketingServices spend for the quarter, up slightly from 85% in Q4. EXECUTIVE SUMMARY DISPLAY & PAID SOCIALSEO & SOCIALCSECSEMERKLE DIGITAL MARKETING REPORT Q1 20184EXEC SUMMARYPAID SEARCH EXECUTIVE SUMMARY AMAZON & COMPARISON SHOPPING ENGINES (CSES)·Amazon Sponsored Products spend grew 96% and Headline Search Ads 90% Y/Y for the quarter.Pricing increased meaningfully for both formats, and Headline Search Ads CPC more than doubled Y/Y.·While Headline Search Ads have a much higher click-through rate (CTR) than Sponsored Products,Sponsored Products accounted for 86% of all Amazon Marketing Services spend in Q1, while HeadlineSearch Ads accounted for 10%. The remaining 4% of spend came from Product Display Ads. DISPLAY & PAID SOCIAL·Facebook spend excluding Instagram grew 48% Y/Y, as same-site impressions fell 5% Y/Y for themedian brand, while CPC and CPM increased 10% and 70%, respectively.·Q1 Instagram spend increased 62% Y/Y, as impressions more than doubled. Instagram remains smallerthan Facebook in terms of ad spend, with the median brand on both platforms investing 9% as muchspend on Instagram as on Facebook. ORGANIC SEARCH & SOCIAL·Total site visits driven by organic search were at Y/Y, as growth weakened across all device types.Phone organic search visits rose 8% Y/Y, while desktop and tablet visits fell 6%.·Both Yahoo and Bing posted the largest organic search visit declines in the history of this report, as paidsearch click growth ran near multi-year highs for the two search engines.·Social media sites drove 3.4% of all site visits in Q1 2018, driven by mobile devices, as phones and tabletsproduced over 75% of site visits from social media. PAID SEARCH·Google spend grew 20% Y/Y, driven primarily by a 13% increase in CPC. CPC growth began toaccelerate in mid-2017 around the time of Google’s May Ad Rank changes, which seemed to increasethe rst page and top-of-page minimum bid estimates required for advertisers to show on the rstpage or at the top of the rst page of search results.·Google text ad spend grew 4% in Q1, after 15% growth in Q4, while Google Shopping spend growthaccelerated from 32% in Q4 to 40% in Q1. Google Shopping now accounts for 60% of all Google paidsearch clicks for retailers.·Bing Ads spend growth continues to rebound on the back of strong Product Ads click growth. ProductAds now account for over half of all non-brand trafc from Bing Ads for retailers. ·Amazon’s Google Shopping impression share against Home Goods advertisers declined in theback half of Q1, indicating a likely shift in either bidding strategy or the product selection featured byAmazon in Shopping campaigns.·Phones and tablets accounted for 60% of all paid search clicks in Q1 2018 and 39% of spend. 55%of Google paid search clicks came from phones alone, while just 26% and 19% of clicks were fromphones for Yahoo Gemini and Bing Ads, respectively. 。。。。。。