Market Overview

Merkle Releases Its Q2 2018 Digital Marketing Report

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Report reveals key insights for overall ad performance and organic
search and traffic levels for major platforms like Google, Facebook, and
Amazon

Merkle (www.merkleinc.com), a
leading technology-enabled, data-driven performance marketing agency,
has released its Q2
2018 Digital Marketing Report
(DMR). This comprehensive report
analyzes trends across paid search, social media, display, and organic
search and provides insights into the performance of major industry
players like Google, Facebook, Amazon, Bing, Yahoo, and Instagram. To
provide additional detail on the research findings, Merkle is hosting a complimentary
webinar
on Monday, July 23rd at 2pm ET.

Google

Top takeaways from the report point to Google search ads continuing to
generate positive performance for advertisers, despite overall
investment growth decelerating for the third straight quarter. One
driver of this improved performance is the increasing role that audience
targeting played in Q2, with 37% of Google search ad clicks impacted by
Google's specific audience targeting products, including: remarketing
lists for search ads (RLSA), Customer Match, and similar audiences. This
rate was up from 21% of clicks a year earlier.

"The increasing use of data and marketers turning to people-based
marketing tactics with their search marketing campaigns are making a
positive impact on overall performance of Google search ads," commented
Mark Ballard, vice president, research, Merkle. "We predict this trend
will continue as marketers increasingly adopt more sophisticated
audience targeting strategies for search."

Other areas of growth for Google include Google Shopping ads, which were
up 31% Y/Y in Q2 2018, more than five times the rate of growth for
Google text ads. Google organic search visit growth improved nearly
three points between Q1 and Q2 2018, coming in at 2.4% Y/Y growth in Q2.
YouTube ad spend grew 189% from Q2 2017.

Google also maintained dominance in total site visits produced by
organic search. For desktop, Google rose 2% Y/Y with 93% share in Q2
2018. On mobile, Google also rose 2%, accounting for 96% of organic
search visits in Q2 2018.

Bing and Yahoo search ad spending growth also decelerated sharply in Q2
2018, despite accelerating click growth, as CPC growth dropped from 17%
Y/Y in Q1 to a 10% decline in Q2. Bing organic search visits fell 12% in
Q2 2018, but that marked a big improvement from the previous quarter,
which came despite accelerating Bing ad click growth.

Facebook

The top takeaways for Facebook from the DMR included significant Y/Y ad
spend growth for Instagram over Facebook. Facebook grew 40% Y/Y, while
impressions fell 17%. At the same time, Instagram grew 177% Y/Y with
impressions more than tripling.

"Our data shows that marketers are continuing to spend more with
Facebook and Instagram, despite all of the negative attention the
platforms have received leading into Q2 2018," added Ballard. "With
users still engaged on the platforms, we expect that Facebook and its
properties will continue to see major investments from brands."

Facebook also maintained its lead for social media-driven site visits,
yet growth has slowed to 8% Y/Y for Q2 2018, down from 19% in Q1 2018.
Site visits from Instagram are rising sharply with 236% Y/Y growth.
However, YouTube showed the biggest gains in driving traffic, with 300%
Y/Y growth. Other significant social platforms like Twitter and
Pinterest delivered larger visit growth than Facebook, but still trailed
Instagram and YouTube growth by a large margin.

Amazon

The DMR shows that Amazon search ads continue to grow rapidly, with
Sponsored Products spend up 165% and Headline Search Ads spend up 162%
Y/Y for the quarter. Sponsored Products continue to account for the vast
majority of Amazon search investment, with 88% spend share in Q2, and
they also drive the highest sales per click for advertisers among
Amazon's search formats.

"Our Q2 report shows the strength of digital media's ‘big three'
platforms: Google, Facebook, and Amazon. Despite major legislation like
GDPR and incidents like Cambridge Analytica, marketers are willing to
adapt to grow their investments in these platforms, and use them in
increasingly sophisticated ways to improve ROI," said Dalton Dorné, head
of marketing, Merkle Americas.

About Merkle

Merkle is a leading data-driven, technology-enabled, global performance
marketing agency that specializes in the delivery of unique,
personalized customer experiences across platforms and devices. For more
than 30 years, Fortune 1000 companies and leading nonprofit
organizations have partnered with Merkle to maximize the value of their
customer portfolios. The agency's heritage in data, technology, and
analytics forms the foundation for its unmatched skills in understanding
consumer insights that drive people-based marketing strategies. Its
combined strengths in performance media, customer experience, customer
relationship management, loyalty, and enterprise marketing technology
drive improved marketing results and competitive advantage. With more
than 5,500 employees, Merkle is headquartered in Columbia, Maryland,
with 24 additional offices in the US and 26 offices in EMEA and APAC. In
2016, the agency joined the Dentsu Aegis Network. For more information,
contact Merkle at 1-877-9-Merkle or visit www.merkleinc.com.

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