Report Highlights

• Google paid search CPC increased for the first quarter of 2020 in Q4, rising 4% year over year after a 1% decline in Q3. The quick reversal in CPC growth in the back half of the year was remarkable after a 17% decline in Q2. Click growth slowed from 30% in Q3 to 23% in Q4, but spend growth held steady from quarter to quarter at 28%.
• One likely cause of increased CPC growth as well as slower click growth in Q4 was Amazon’s surging presence in both Google Shopping and text ads auctions against Tinuiti retailers. The ecommerce giant reached highs not seen since January 2020 in the middle of December, and appeared to become much more aggressive with ad campaigns immediately after pausing ads entirely on Thanksgiving Day.
• Retailers saw much higher paid search conversion rate than last year for much of Q4, but saw a quick drop in the middle of December as shipping concerns, dwindling top-seller inventory, and the effects of a prolonged holiday shopping season seemed to impact performance. A very similar trend was observed for Amazon advertisers, and in the case of both Google and Amazon ads conversion rate quickly rebounded and was up year over year for the final week and a half of the quarter.
• With COVID-19 cases continuing to surge, get location details clicks, the vast majority of which are attributed to ads on Google Maps, declined at least 20% year over year for each month of the quarter. As the pandemic continues to weigh on travel and brick-and-mortar shopping activity, it’s likely that traffic from this click type will continue to show declines in the first few months of 2021.
• Search-driven sales tracked via Amazon Attribution, a tool used to attribute sales that happen on Amazon to efforts across other channels, peaked in Q4 during the week of Amazon Prime Day. While sales surged again during the weeks of Thanksgiving and Cyber Monday, neither rose to the levels of Amazon’s premiere sales event.
• Discovery campaigns have grown quickly in adoption, and in Q4 2020 there were 73% more advertisers actively deploying the campaign type than in Q1 2020. Among the inventory that can be targeted with these campaigns are placements on the ‘Promotions’ and ‘Social’ tabs in Gmail, and advertisers will have to go through Discovery campaigns to access this inventory soon as the Gmail-only campaign type will be sunset as of July 1, 2021.
• The share of paid search clicks attributed to Remarketing Lists for Search Ads (RLSA) continued to slip on phones, dropping from 11% last Q4 to 7% in Q4 2020. Reliant on cookie tracking to place website visitors into targetable audiences, RLSA share might continue to slip as cookies are steadily restricted. RLSA share can also be impacted by changes in advertiser strategy, as well as shifts in the makeup of the universe of Google searchers, which can certainly happen during periods of mass shifts to ecommerce such as the one witnessed in 2020.
• Customer Match audiences, which rely on PII including email addresses, physical addresses, and phone numbers, continue to account for about 3% of paid search clicks. Advertisers should look to target these customers with smart ad copy and landing pages to optimize the customer experience as best as possible based on known customer traits heading out of the busy Q4 holiday shopping season.
• Phones continued to account for 69% of all paid search clicks in Q4 2020, the same figure observed in Q3. While phones have long accounted for the lion’s share of paid search traffic, growth in click share from the device type has slowed markedly as smartphone penetration growth has slowed in the US. Tablet devices now account for just 3% of paid search clicks, and these devices have seen a decline in popularity over the last couple of years.

Google paid search CPC increases year over year for first time in 2020.

Average cost per click for Google paid search advertisers rose 4% year over year in Q4, the first quarter of 2020 in which pricing increased, as ad auctions were highly competitive during the extended Q4 holiday shopping season that started as early as October for some retailers. The largest decline in CPC of 2020 occurred in Q2, for which Amazon was absent from ad auctions for much of the quarter, and Amazon is now back at full force in many product categories. Click growth slipped from 30% in Q3 to 23% n Q4, as spend growth held steady at 28%.

Shopping click growth slows but remains above 2019 levels.

Shopping clicks grew an astounding 53% in Q2 and 44% in Q3, as the early months of the pandemic sent shoppers online and some large advertisers like Amazon had to pull back on advertising given the flood of demand. Auctions during the Q4 holiday shopping period included a resurgent Amazon, and click growth slowed to 36%, though that figure is still higher than the four quarters preceding Q2 2020. CPC growth recovered slightly from a 7% decline in Q3 to a 6% decline in Q4.

Google text ad CPC continued to climb year over year in Q4.

Average CPC for Google text ads rebounded faster than Shopping ads, growing 4% year over year in Q3 compared to a 7% decline for Shopping. That dynamic continued into Q4, with text ads CPC rising 12% compared to a 6% decline for Shopping. The jump in CPC growth drove an acceleration in spend growth from 25% in Q3 to 29% in Q4, even as click growth slipped from 21% to 15%. Q4 click growth was still stronger than any quarter between Q2 2019 and Q1 2020, and expansions to the definition of close variants are likely resulting in keywords being placed in more auctions than they otherwise would be.

Rebound in Google CPC growth was strongest on desktop in Q4.

CPC growth was stronger on all device types in Q4 compared to Q3, as the busy holiday shopping season brought competitive ad auctions, highlighted by Amazon’s surging ad impression share during the core period between Thanksgiving and just before Christmas. However, desktop CPC growth recovery was much stronger than that of mobile devices, going from a 1% decline in Q3 to a 10% increase in Q4, compared to phone CPC growth which went from a 1% decline to just 1% growth.

Amazon’s impression share in Google Shopping auctions topped 50% in the late-December push.

After reactivating campaigns in early June following a twelve week hiatus, Amazon’s impression share in Google Shopping auctions held roughly steady from late July to early November. The ecommerce giant turned ads off completely on Thanksgiving Day, possibly to reduce load on a thinner staff during the holiday, but was back in auctions the very next day. From there, it appeared to become much more aggressive over the next three weeks, topping a 50% impression share during the week of December 14, the first time since January 2020 it reached such heights, before reducing its ad presence in the final weeks of the year.

Amazon text ad impression share hits its highest level since January 2020.

Much like in Google Shopping, Amazon exited Google text ad auctions in early-March when it was bombarded with demand as Americans began to limit travel and in-store purchases and increasingly ordered goods online. Amazon’s text ad impression share also followed a similar pattern as in Shopping throughout the holiday season, holding steady for the first several weeks of Q4 before surging towards the end of the holiday season.

Conversion rate tumbles in the lead up to Christmas Day amid concerns about shipping delays.

For much of the quarter paid search conversion rate for retailers was more than 20% higher than last year across ad formats, likely spurred on by high ecommerce demand and holiday discounts that were pushed out much earlier than normal for many retailers to entice shoppers to convert earlier in the holiday shopping season. However, year-over-year conversion rate growth tumbled between December 11 and December 20, a very similar trend to one observed for Amazon advertisers over the same period. The late-season decline in this metric probably reflects shoppers’ concerns over getting products in time for Christmas, as well as the effects of a prolonged holiday shopping season. Dwindling inventory for top-selling products also affected performance for some advertisers.

Get location details clicks were down 33% Y/Y in November.

Get location details clicks, which predominantly come from ads featured on Google Maps, were down at least 20% year over year for each month of Q4. The greatest decline came in November with a 33% decline, as many shoppers that might have otherwise gone into stores for Black Friday stayed home during the pandemic. As COVID-19 continues to have a significant impact on movement and brick-and-mortar shopping, we will likely continue to see year-over-year declines in get location details clicks into Q1.

Paid search sales tracked through Amazon Attribution peaked the week of Prime Day.

Amazon orders and sales attributed to advertisers’ paid search efforts rose more than 5x from the first week of October to the second, as Amazon’s Prime Day event took place on October 13 and 14 this year instead of the typical July timing. As was the case with other channels such as social, Amazon Attribution sales tied to search efforts surged the week of Thanksgiving, but not nearly to the extent that was observed during the week of Prime Day.

Phones accounted for 69% of all Google paid search clicks in Q4 2020.

Click share by device type remained nearly identical from Q3 to Q4, with phones continuing to account for 69% of all clicks. While phone share of US paid search traffic has risen significantly over the years, the pace of growth for smartphone penetration has slowed. Tablet devices have steadily become less important to search campaigns over the years as tablet purchases have slowed dramatically, and the device type now accounts for just 3% of all paid search clicks.

Text ad CPC 12% year over year Q4 growth was driven by 18% growth on desktop.

CPC growth was much stronger for text ads than Shopping ads in Q4, and it seems that major advertisers like Amazon ramping up during the final quarter may have had more of an impact in text ad auctions than Shopping. For both Shopping and text ads, desktop CPC growth outpaced other device types, though CPC growth recovered across all device types and ad formats for the quarter.

Phone CPC remains far below that of desktop for many advertisers.

Phone CPC relative to desktop remained roughly stable year over year for the median advertiser studied, moving modestly from 43% lower to 45% lower. While there are often slight shifts from one quarter to the next, this comparison has remained remarkably stable over the last couple of years for Tinuiti advertisers. As advertisers have control over how much is spent for ad clicks from phones relative to desktop, the lower CPC is largely reflective of the lower expected value of phone traffic compared to desktop for many advertisers.

RLSA and Customer Match lists outperform non-audience members across devices.

Searchers included in Remarketing Lists for Search Ads and Customer Match audiences drove sales per click between 59% and 117% higher than searchers that were not included in any audience type across device types in Q4 2020. Optimizing campaign components like ad copy, landing pages and bids can help advertisers drive even more value out of these customers than they otherwise would, and the high direct response measures of these audiences are often at least partially reflective of marketing efforts outside of search that have produced these customers.

RLSA share of paid search clicks falls down to 7% on phones in Q4 2020.

The share of Google paid search clicks attributed to Remarketing Lists for Search Ads (RLSA) declined across all device types over the last year, but the dip was greatest on phones, for which share decreased from 11% to 7% year over year In Q4. RLSA share can be affected by changes to restrictions on placing cookies for website visitors, as well as changes in consumer behavior and advertiser strategy. For example, if a greater share of relevant searchers were new/unknown to an advertiser in Q4 relative to Q3, RLSA share might slip without any adjustment in strategy by the advertiser or shifts in the ability of Google to include website visitors in RLSA audiences.

Customer Match share of paid search clicks holds steady in Q4.

The share of paid search clicks attributed to Customer Match audiences held steady from Q3 to Q4 at around 3% of traffic across device types. Based on lists of customer emails, phone numbers, and/or physical addresses, Customer Match isn’t reliant on placing cookies on searchers’ browsers as is the case with RLSA, but is limited by the share of users in a list that Google is able to identify for targeting. Customers for which an advertiser has Gmail addresses to use in Customer Match tend to be the most likely to get identified by Google compared to other email domains.

Similar Audiences click share is up year over year across device types.

Google creates Similar Audiences based on searchers that exhibit similar query behavior as members of RLSA and Customer Match audiences. While these users are usually not as valuable in terms of direct response as those individuals that have either provided a brand with PII or visited the company’s website, they can be hugely valuable in helping to segment those searchers that might be most similar to known customers in allowing advertisers to better optimize components like ad copy and landing pages. In Q4 2020, 13% of all desktop paid search clicks and 17% of phone and tablet clicks were attributed to these audiences.

The number of advertisers deploying Google Discovery campaigns is up more than 70%.

Google discovery campaign adoption soared over the course of 2020, and in Q4 2020 there were 73% more active Discovery advertisers than in the first quarter of the year. Google Discovery campaigns target inventory ranging from the Discover feed to placements on Gmail and YouTube, and advertisers can choose between setting a target cost per acquisition or maximizing the number of conversions driven under a set budget. Gmail Ads campaigns will be sunset on July 1, 2021, and advertisers wishing to target inventory in Gmail ‘Social’ or ‘Promotions’ tabs will need to go through Discovery campaigns moving forward