WARC’s global trend sheds focus on search advertising

22 Nov,2019

By A Correspondent


WARC has found that investment in search advertising will rise 9.6 per cent this year, to $135.9bn – equal to 22.0 per cent of all advertising spend worldwide. But this growth rate is the softest since 2015 and is a marked slowdown from the 16.9 per cent rise in 2018. Search’s share of internet advertising has now flatlined at 45.8 per cent – the lowest in more than a decade.


The squeeze on Google’s main source of revenue has forced it to confront Amazon head on in the smart speaker market, as it looks to facilitate voice search in future paths to purchase. But Amazon has a first-mover advantage in many markets, notably the US, UK and Japan. Control of voice search could be critical to either’s success in future; most marketers understand its potential in the coming years but few have plans to use voice search today.


Mobile is driving growth in the search market

Mobile search adspend is expected to rise 19.2per cent to $88.1bn this year – almost two-thirds (64.8per cent) of total search spend worldwide. The US alone accounts for 43.0per cent of this total (US$38.1bn in 2019), while a fifth (21.8per cent, or $19.3bn) is transacted in China. Japan ($6.1bn, a 6.9per cent share) and the UK ($5.3bn, 6.0per cent) follow.

Google accounts for 95.4per cent of all mobile searches worldwide, higher than its share of desktop search traffic (88.6per cent). Google’s share of mobile search traffic in the US (94.4per cent) and UK (97.9per cent) is close to its global rate but in China its share is near zero, with Baidu the incumbent on 79.9per cent.

Mobile’s share of search advertising investment is rising ahead of mobile’s share of search traffic, which has plateaued globally since 2017 as consumers spend more time in app (over 80per cent of mobile usage is in-app, according to comScore).

Research by Mindshare shows that Instagram is used by 69per cent of consumers to discover products, ahead of Snap at 64per cent and Facebook at 61per cent. Google is used most to research, with 70per cent of consumers utilising the platform in this way (versus 51per cent for second-highest Pinterest). Crucially, however, Amazon is used most to buy; 78per cent of Amazon users report this, compared to 40per cent using Google for the same purpose.

One in three (32per cent) online purchases in the UK begins on Amazon, rising to 52per cent for entertainment products, 50per cent for children’s products, 47per cent for household items and 40per cent for electronics. Comparatively, one in five (19per cent) online purchases begins with a search engine, such as Google.

Amazon made $35bn from e-commerce in Q3 2019, up by a fifth from the previous year and putting it on course to reach close to $150bn in sales for 2019 as a whole. Over one in ten (11per cent) product page views come from sponsored ads, according to data from Jumpshot.


Voice is becoming a new search battleground

Voice is an area of growth for search advertising, aided by the rising popularity of smart speakers – an area where competition between Google and Amazon is fierce. More than one in ten internet users in the US and UK now own a smart speaker. Amazon enjoys a healthy lead over Google in a number of key markets, including the US, where three-quarters of smart speaker owners use Alexa. In the UK, that share is 77per cent.

The ‘first-mover’ advantage is crucial here, however. Google was first to launch in Australia and enjoys a comfortable lead over Amazon (86per cent penetration versus Amazon’s 15per cent), and the same is true in Singapore (76per cent versus 24per cent). This may not bode well for Facebook, which is developing an AI assistant for its Portal devices and is playing catch up to win market share in this area.

For all the potential, voice search remains a niche pursuit for advertisers today: only one in ten US practitioners plans to include it within their marketing strategy for 2020. A quarter (25.2per cent) believe it will be an ‘extremely’ important marketing channel within the next three to five years, but half (48.9per cent) have no plans to utilise the tech in the short-term.

Said James McDonald, Managing Editor, WARC Data, and author of the research: “Search has boomed over the last decade as practitioners have put a greater emphasis on performance-related advertising to lift ROI – few marketing strategies exclude a search element today. WARC research shows that practitioners regard it as the easiest channel to measure accurately, and it is more cost effective in driving conversions when compared to online display formats such as video. But the industry is beginning to question whether this focus has been beneficial in the long run, with a number of large, consumer-facing businesses considering a pivot back to more conventional brand building formats. This could explain, in part, the slowdown in search investment this year, a cooling which will reignite Google’s drive to control the next frontier: voice-assisted search.”



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