The last 12 months have seen a boom in product ads – so much so that they have fuelled a 10% increase in paid search spend year-on-year for Q2 according to a new report and central to this, is paid search spending.

According to data from Kenshoo, the overall 10% increase in paid search spend masks the bigger picture; a 30% year-on-year increase in product ad spend specifically.

This emerging category left traditional text ads in the shade, commanding a much larger chunk of budgets overall. The growth in this area suggests that eCommerce retailers are fast evolving their paid search strategy and fully embracing product-centric ads.

Interestingly, a separate report from Merkle released around the same time says that Google Shopping spend grew by 38% in Q2. Overall search spend was up 10% year-on-year.

Paid social ad spend thriving

The Kenshoo data shows that ad spend is strong across a range of channels and isn’t just focused on paid search. Spending in social media for example is also accelerating, with paid social ad spend growing 37% in Q2 as advertisers continue to embrace photo and video ads.

The amount of paid social spend for this quarter almost equalled that of Q4 2018 –notable when you consider that ad spend is often higher in the run up to the holiday season. As we’re already seeing near enough that same level of spend mid-year, could we be about to see an even bigger leap in paid social budgets for the upcoming Christmas period?

If we do see further increase, it’s likely Pinterest and Instagram will command a large chunk of that pie.

Instagram’s Stories format has gained ground this quarter too with paid placements doubling from 9% to 18%. Pinterest too is taking a share of ad budgets, with Kenshoo saying one in ten large Facebook advertisers now also run Pinterest advertising campaigns.

Again, much of the emphasis in the paid social space is on products ads. In its report, Kenshoo notes, “Product ads accounted for 46% of total Q2 search spending and 37% of social spending for Kenshoo ecommerce advertisers.”

Despite the increase in spend, click volumes and click through rates (CTR) have declined, down from a CTR of 2.6% in April – June last year to 1.9% for the same period this year. Kenshoo says this decline in paid social ad engagement can be attributed to video and overall branding efforts.

On the back of all this growth, Kenshoo suggests that product ads could be emerging as a category in their own right with their own budgets and strategies spate to paid search in general.

If you’d like to explore the opportunities that product ads present for your brand, get in touch with the Adrac team today.

Author Rebecca

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