Why social ad spend growth is outstripping search

The improved ability to target audiences across devices on platforms such as Facebook means social media ad spend is growing at a vastly accelerated rate compared to search advertising, with mobile ad spend now generating over a third (36 per cent) of all digital sales, according to data.

The insights were revealed in Kenshoo’s latest Digital Marketing Snapshot study, which showed that spend on social advertising grew 114 per cent during the second quarter, compared to 12 months earlier, while the amount of ad dollars spent on search advertising increased by a comparatively small 10 per cent during the period.

Kenshoo arrived at the conclusions by analysing 550 billion ad impressions on leading digital media properties such as search engines Google and Baidu, as well as on social platforms such as Facebook and Twitter, which it claims equated to $5.5bn worth of spend.

Mobile ad spend accounted for 63 per cent of all paid-for social ad formats, accounting for a 167 per cent year on year rise, according to the study. This is compared to search advertising where mobile accounts for 38 per cent of all spend, and the amount spent on desktop ad units decreased by 2 per cent year on year (see below). Further results can be seen here.

Commenting on the results, Rob Coyne, Kenshoo’s managing directorEMEA, said: “Existing social advertisers are ramping up spend and getting better results in terms of click volumes despite fewer available impressions, while new social advertisers are also entering the market.

“Mobile has been the key driver of growth in both search and social, with 36 per cent of revenue from advertiser sales now coming from mobile phones, up from 16 per cent last year.”

The Atlas effect?

With advertisers apparently willing to spend more on social (and mobile ad opportunities an increasingly large part of that) it is worth noting that the surveyed period (Q2 2014, compared to Q2 2015) incorporates the relaunch date of Facebook’s Atlas platform in September last year.

This relaunch of the ad stack was the result of 12 months of engineering by Facebook ­– with the social network effectively rebuilding it from the ground up after taking it over from Microsoft - introducing cross-device targeting (made possible via Facebook’s bank of both desktop and mobile, i.e. app, log-in data).

Plus, it also claimed that Atlas could help advertisers make connections between offline sales, and how its digital advertising strategy was effecting that. Theoretically, this should mean that advertisers are willing to pay more for Facebook advertising inventory, especially its mobile offerings.

Industry observers claimed that the cross-device targeting services offered by the social media juggernaut would position it as a serious rival to Google, with its DoubleClick ad stack, when it comes to competing for ad spend.

Defections from Google to Facebook

Since then, Facebook scored a series of high-profile coups in terms of staff in the UK, with the social networking giant managing to woo both Damian Burns, Atlas, global head of sales, and Andy Mihalop, who is set to head-up its UK sales operations from Google, after the pair had held similar positions promoting DoubleClick.

Commenting on the transition, Burns said: “The move away from cookie-centric marketing technology is gathering pace, with the most forward-thinking marketers transitioning to Atlas.

"Unlike other ad server technologies - which have historically been viewed by advertisers as marketing cost - the unique measurement capabilities of Atlas are being viewed as marketing investment and a competitive advantage.”

Google fights back

Google has since reacted to the introduction cro ofss-device targeting on Atlas with the introduction of cross-device metrics to all DoubleClick’s advertiser products last month. This means that marketers can measure conversions that start as a click on one device and end with a conversion on another. This tracking capability is offered to advertisers for their campaigns across all the web, not just with the ads they buy from Google, according to Neal Mohan, a VP at Google.

Kenshoo’s numbers do not reflect the introduction of this service, given how recent the launch has been, but Google has since been quick to point how cross-device tracking capabilities means it is now a “formidable” alternative to Google’s offering.

Speaking with The Drum last week, Google Doubleclick’s head of platform sales, independent agencies, Darragh Daunt, said: “You may have seen about two weeks ago we released cross device measurement which is a deterministic model of cross device measurement, i.e. it is based on log-in data, 100 per cent deterministic so it is accurate [similar to Facebook’s log-in data].”

He further went on to say that the search giant is now able to offer a larger “graph size” of data compared to Facebook given that its mobile OS Android has an 80 per cent market share.

Google is still in the process of rolling out this capability, but its introduction is likely to affect the contrasting growth rates of social and search advertising.

The search giant made its earnings call last week where it credited mobile with an increase in figures, but it further disclosed an 11 per cent decrease in its CPC (which many attribute to the comparatively small amount advertisers are willing to pay for mobile ad slots).

Facebook is poised to make its latest quarterly financial disclosure next week, where its ability to monetise its mobile inventory is likely to be a key area of focus for financial analysts.

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Ronan Shields

I'm the digital editor at The Drum, and cover adtech and martech. Prefer news and analysis, over opinion pieces. Current fascination(s) are blockchain and media futures trading; also curious about transhumanism on a personal basis. NYC-based, but really London Irish.

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