Digital Marketing

Quarterly Trends
Report
Q3 2021
Executive Summary

Top Line:

• Spending growth has moderated across channels, which was

inevitable given the state of the recovery from COVID-19
across ad channels
• In aggregate, spending and pricing across paid social
advertisers were stable despite the changes required by Apple
iOS privacy policies

Other Highlights:

• Paid social advertisers continue migrating towards more

branding- and traffic-related objectives, which also carry a
lower price
• The average CPC of a paid search
Line ad has risen 30% year-over-
year, with mobile keywords searches increasing in price by
41%
• Algorithmic bidding and optimization tools dominate paid
search, but are also making inroads in retail media

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Table of Contents

1 What You Need to Know

2 Core Trends

3 Consumer Goods & Retail

4 Market Intelligence

5 About this Report

3 © 2021 Kenshoo. All Rights Reserved.

1: What You Need To Know

Channel growth continues in Q3

+70%
+60%
+60% +55%
After the abnormally
+50% +45%
+41% high, pandemic-driven
+40% growth across all
+32% channels in Q2,
+30% +26% spending increases
continued in Q3 at
+20%
more moderate rates.
+10%

+0%
Retail Media Paid Search Paid Social
Q2 2021 YoY Growth Q3 2021 YoY Growth

Price vs spending increases

+50%
+45%
+45%
+40%
Year-over-year price +34%
+35%
% Change YoY

increases were a major +32%

+30%
component of spending +30% +26%
growth for paid search +25% +21%
and paid social, but less
+20%
so for retail media,
where click volume also +15%
contributed. +10%
+5%
+0%
Retail Retail Sear ch Sear ch Social Social
Media Media CPC Spend CPM Spend
CPC Spend

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1: What You Need To Know

Social CPMs begin leveling off

$9.00
Average Cost per Thousand Impressions

$8.00
$7.00
While social ad prices
$6.00
are up sharply year-
$5.00 over-year, there does
(CPM)

$4.00 not appear to be a

major inflection point
$3.00
that coincides with the
$2.00 release of Apple iOS
$1.00 14.5 in late April.

$0.00
1/ 1

1/ 1

1/ 1

1/ 1

1/ 1

1/ 1

1/ 1

1/ 1
21
02

2
20

20

20

20

20

20

20

20
1 /2
1/

2/

3/

4/

5/

6/

7/

8/

9/

Mobile search keywords close the price gap

$1.40

$1.20

Mobile keywords have $1.00

Average CPC

closed the pricing gap

$0.80
with desktop keywords
in many industry $0.60
categories and are now
more expensive than $0.40
desktop keywords were
$0.20
last year.
$0.00
Desktop Mobile Desktop Mobile
Keywords Keywords Shopping Shopping

Q3 2020 Q3 2021

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1: What You Need To Know

Facebook advertising objectives are changing

+70% +64%
YoY Change in Impressions

+60%
+50%
Impression share for
+40% +34% Facebook advertisers
+30% has shifted away from
+20% the Conversions
objective to Product
+10%
Catalog Sales and
+0% several branding-
-10% related objectives, all of
-20% which have lower CPMs.

-30% -21%
Conversions Product Brand
Catalog Sales Awareness,
Traffic & Reach

Retail media sees results from bid optimization

Retail Media :: Q3 2021

+50%
optimized and unoptimized

+41%
Retail media
+40%
campaigns using +33%
Difference between

algorithmic +30%
campaigns

optimization showed
better performance in +20%
aggregate last quarter +10%
than unoptimized
campaigns. +0%

-10%

-20% -15%
CPC CTR ROAS

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2: Core Trends

Retail Media Trends

1.80
Indexed Volume (Q3 2020=1.00)

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00
Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021
Impressions Clicks Spending

QoQ YoY
With a 45% spending increase over last
Impressions
year, Retail media growth continues to -9% +1%
outpace the other channels.
Clicks
As Amazon matures, new retailers add
-9% +19%
additional breadth and more inventory
for brands to reach active shoppers. Spending
-7% +45%

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2: Core Trends

Retail Media CPC and CTR Trends

$1.20
Both cost-per-click
$1.01 $1.04
$0.97 (CPC) and clickthrough
$1.00 $0.90 rate (CTR) increased by
$0.85
roughly 20% year-over-
$0.80 year for retail media
Average CPC

advertisers.

$0.60

$0.40

$0.20

$0.00
Q3 2020Q4 2020Q1 2021Q2 2021Q3 2021

0.40%

0.35%
Clickthrough Rate (CTR)

QoQ YoY 0.30%

CPC 0.25%
+2% +21% 0.20%
CTR
0.15%
0% +20%
0.10%

0.05%

0.00%
Q3 Q4 Q1 Q2 Q3
2020 2020 2021 2021 2021

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2: Core Trends

Retail Media Ad Type Snapshot

Retail Media :: Q3 2021

Bubble Size Represents Share of Spend
25%

20%

Sponsored Product
Conversion Rate

15% Sponsored Brand Video

Sponsored Brand

10%

Sponsored Display

5%

0%
$0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40
Average CPC

Sponsored Product ads comprised the majority of ad spend in Q3, with a slightly
lower CPC and a slightly higher Conversion Rate than the other primary retail
media ad types.

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2: Core Trends

Paid Search Trends

1.60
Indexed Volume (Q3 2020=1.00)

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00
Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021
Impressions Clicks Spending

QoQ YoY
Spending on paid search ads increased Impressions
32% over last year and 3% over last
-14% +0%
quarter.
Clicks
Higher prices for keyword ads
compensated for a drop in search -11% +1%
shopping campaign volume. Spending
+3% +32%

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2: Core Trends

Key Search Spending Drivers

AD TYPE: Responsive Search

BID METHOD: Target CPA

VERTICAL: Tech & Services

DEVICE: Mobile

TOTAL SEARCH

CAMPAIGN TYPE: Shopping

AD TYPE: Keyword Text Ad

BID METHOD: CPC/Enhanced CPC

-20% +0% +20% +40% +60% +80% +100% +120% +140%

Q3 YoY Spending Change

Growth in Responsive Search Ads comes largely at the expense of Keyword Text Ads.
The rise of Target CPA as a bidding method may reflect increasing sophistication from
non-commerce advertisers who are starting to evolve beyond traditional CPC bidding.

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2: Core Trends

Search CPC by Quarter by Type

$1.20
Average Cost-per-click (CPC)

$1.00

$0.80

$0.60

$0.40

$0.20

$0.00
Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021
Keyword Shopping TOTAL SEARCH

Keyword CPC has grown by more than

25% YTD, although the three months
of the third quarter have been more QoQ YoY
stable. Mobile keywords, in particular, Keyword
have driven this increase.
+16% +33%
Shopping campaign CPC is highly
seasonal and is expected to spike again Shopping
in Q4. -3% +7%
Total Search
+15% +30%

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2: Core Trends

Search CTR by Type

6.00%

5.00%
Clickthrough Rate (CTR)

4.00%

3.00%

2.00%

1.00%

0.00%
Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021
Keyword Shopping TOTAL SEARCH

The “elevated throughput” of search

keyword ads that characterized the QoQ YoY
second half of 2020 has mostly
receded, which points to the pandemic Keyword
as perhaps the main driver of that -11% -5%
higher clickthrough rate.
Shopping
The variance of keyword clickthrough
rate does not have much effect on
+6% +2%
overall CTR due to the dominant share Total Search
of impressions from shopping ads.
+4% +1%

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2: Core Trends

Paid Social Trends

1.60
Indexed Volume (Q3 2020=1.00)

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00
Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021
Impressions Clicks Spending

QoQ YoY
Social spending grew 26% over Q3 of Impressions
last year and was mostly flat compared
to last quarter.
-6% -6%
Clicks
Slight decreases in YoY impressions
and clicks emphasize the impact of -4% -2%
higher ad prices.
Spending
-3% +26%

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2: Core Trends

Paid Social CPM and CTR Trends

$9.00
The CPM story in Paid
$8.00 $7.56 $7.48 $7.70
Social depends heavily
$6.80 on where that story
$7.00
begins.
$5.75
$6.00
Average CPM

Prices are up since Q1,

$5.00 way up since a year ago,
and relatively flat since
$4.00 last quarter.
$3.00

$2.00

$1.00

$0.00
Q3 2020Q4 2020Q1 2021Q2 2021Q3 2021

1.4%

1.2%
Clickthrough Rate (CTR)

QoQ YoY 1.0%

CPM 0.8%
+3% +34%
0.6%
CTR
+3% +4% 0.4%

0.2%

0.0%
Q3 2020Q4 2020Q1 2021Q2 2021Q3 2021

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2: Core Trends

No Unified Response to iOS 14.5

14%

12%
With the rollout of iOS
% of Skai Accounts

10% 14.5 in late April, the

impact on spending in
8% Q3 was split almost
straight down the
6% middle, with 48% up
and 52% down,
4%
emphasizing that
2% Facebook advertisers
are not a homogenous
0% group.
+10%
+20%
+30%
+40%
+50%
+60%
+70%
+80%
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%

QoQ Change in Facebook Spend (rounded to nearest 10%)

+25%

+20%
% of Skai Accounts

Compared to Q2, ad +15%

prices held mostly
steady in Q3, with more +10%
than half of Skai
accounts holding
between 10% and +5%
+10%.
0%
10%
20%
30%
40%
50%
60%
70%
80%
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%

QoQ Change in Facebook CPM (rounded to nearest 10%)

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3: Consumer Goods & Retail

Consumer Goods & Retail Trends

Spend by channel
2.00 QoQ YoY
Indexed Spending (Q3 2020=1.00)

1.80
1.60
Retail Media
1.40 -5% +45%
1.20
1.00
Search
0.80 -6% +17%
0.60
0.40 Social
0.20 +16% +52%
0.00
Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021
Retail Media Search Social

Shopping Ad share of total Consumer

If we look only at Consumer Goods & Retail spend
Goods & Retail accounts, Paid
50%
social spending continued to
45%
lead growth heading into the
40%
all-important fourth quarter
35%
with a year-over-year increase of
30%
50%.
25%
The share of Consumer Goods & 20%
Retail spending from shopping 15%
ads has dropped for paid 10%
search, while it has inched up 5%
for paid social. 0%
Q3 Q4 Q1 Q2 Q3
2020 2020 2021 2021 2021
Search Social

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4: Market Intelligence

Intro to Market Intelligence Data

Skai now collects millions of data points across customer discussions, reviews, key
opinion leaders and R&D.

The end goal is a comprehensive, data-driven engine to help brands go to market

with more confidence, from product development to strategy and planning, to
marketing, measurement, and back again.

Ultimately, this will help unlock more the “why” behind the “what” of recent trends.

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4: Market Intelligence

Beauty & Personal Care Across Channels

+70%

+60%
% Spending Growth YoY

+50%

+40%

+30%

+20%

+10%

+0%
Retail Media Paid Search Paid Social
Beauty & Personal Care Overall Channel

Across all paid media channels, the Beauty & Personal Care category outperformed
the overall channel in terms of same-advertiser spending growth.

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4: Market Intelligence

Market Intelligence for Beauty & Personal Care

Learn about key consumer trends in

this category, like how:

● Consumers use skincare products

to combat stress

● High coverage products are rising

in popularity

● Bright, cheerful colors are

trending

All based on a universe of data

covering consumer discussions and
posts, product listings and reviews, key
opinion leaders and research &
development.

Download the report at https://skai.io/reports-and-whitepapers/unmasked/

20 © 2021 Kenshoo. All Rights Reserved.

5: About This Report

About the Data

Analysis is based on advertiser campaign data managed through the
Skai platform on Google, Microsoft Advertising, Yahoo!, Yahoo Japan,
Baidu, Yandex, Facebook, Instagram, Pinterest, Snapchat, Apple,
Amazon, Walmart, Instacart and Criteo.

Sample is drawn from a total population of over 1 trillion impressions,

12 billion clicks and $7 billion in spending across multiple countries
and industry categories.

Advertisers must have 15 consecutive months above a minimum

spending threshold in the channel to be included in the analysis.
Additional outliers will be removed as necessary. Some analysis may
use different filters, and are labeled accordingly.

Ad spending and CPC are translated to common currency before

aggregation, and do NOT use Ex-FX or “Constant Currency”
adjustments.

Additional Resources
Quarterly Trends Hub

skai.io/digital-marketing-trends

View the current infographic,

long-form report and highlights,
along with previous quarters, all
in one place.

Other insights are posted

regularly to

● skai.io/blog
● skai.io/case-studies
● @skaicommerce

21 © 2021 Kenshoo. All Rights Reserved.

5: About This Report

About Skai

Skai is a commerce intelligence platform that powers brand insights,

decisions and execution for faster, more predictable go-to-market
outcomes. Skai’s platform includes a suite of data-driven products for
market intelligence, omnichannel media activation, testing and
measurement, enabling product, insights and marketing teams to
accurately plan strategies and benefit from connected omnichannel
launches. Skai merges the former Kenshoo and Signals Analytics
capabilities and for more than a decade, has been trusted by an
impressive roster of global brands including Procter & Gamble, PepsiCo,
Estée Lauder, Nestle, Johnson & Johnson, Mars and others. With its
expanded product suite, Skai is unifying data and helping companies
better understand their consumers in real-time. It has seven
international locations and is backed by Sequoia Capital, Arts Alliance,
Tenaya Capital, Bain Capital Ventures, Pitango and Qumra Capital. For
more information visit https://skai.io.

22 © 2021 Kenshoo. All Rights Reserved.

 skai
22 4th Street
7th Floor
Thank you San Francisco, CA
94103

+1 877 536 7462

www.skai.io

© 2021 Kenshoo. All Rights Reserved.