Fourth quarter earnings reporting season is just beginning, with most tech companies having yet to report. Intel kicked off the segment on Thursday with earnings that were better than expected. Digital ad giant Facebook is scheduled to report on Feb. 27, while Google is set to post its fourth quarter results on Feb. 1.
Both companies are direct beneficiaries of the significant increase in digital ad spend during the quarter.
Strong growth in Google’s search ad spend
Google’s core business is search advertising, and marketing cloud firm IgnitionOne reports that the fourth quarter brought the Internet company an 18% year over year increase in paid search in the U.S. The quarter continued a trend that’s been going on for the last several years. That’s an acceleration from the previous quarter’s 14% growth rate and is typical of seasonality.
IgnitionOne reports that search spend peaked in the first quarter of 2015, although it still has shown a steady increase. The firm adds that the data is sourced only from Google because the recent changes in partnerships for Bing and Yahoo have made it difficult to see their trends.
Impressions returned to growth
The firm reports that during the fourth quarter, online ad impressions rebounded, climbing 7% compared to 2014 after a 21% decline in the third quarter. Also clicks rose, and cost per click recorded its smallest growth rate in all of 2015.
The trends were attributed to a combination of factors. Seasonality, increased activity in the Google Partnership Network and the search giant’s changes to its shopping ads probably all impacted the. IgnitionOne’s researchers believe the addition of the carousel feature drove a significant increase in shopping ads during the quarter, noting that this feature now dominates most search results on mobile devices as it allows for the inclusion of more ads on the screen, which results in a greater number of impressions.
U.S. paid searches climbed as well, which is typical with seasonality during the holiday shopping quarter. Spend climbed 22% sequentially, while cost per click and clicks climbed as well. However, the rise in cost per click has significantly decelerated. Impressions climbed 48% compared to the third quarter, and the click-through rate declined for the first time in several quarters, according to IgnitionOne’s data.
Tablet search trend on the rise
The firm reports that only phones saw the number of impressions increase, while both tablets and desktops both saw 18% declines. Further, mobile searchers saw a 70% increase in clicks.
Looking at data from the retail industry, ad spend on tablets and cost per click over Thanksgiving weekend climbed the most compared to spend on other devices. Also these metrics saw the biggest growth on mobile devices in 2014, which IgnitionOne researchers suggest has to do with Google’s change in early November with how the layouts and templates look on tablets so that they resemble mobile search engine results pages rather than desktop results.
Mobile also saw a significant year over year drop in spend and cost per click, although it also saw the biggest year over year increase in impressions compared to tablet’s increase of 12% and desktop’s 9.5% increase.
Tablets’ share of mobile search spend climbed to 44% compared to 2014, although it still lags spend on phones. In the third quarter, tablet spend was 36% of mobile spend, while phone spend was 64% of the total.
Google beats Facebook in display growth
IgnitionOne found that Google came out ahead of Facebook in growth of programmatic display growth between Thanksgiving and the end of the year, rising 37% compared to 2014 compared to 22% for Facebook.
The firm suggests that this may be because of a change in display tactics. Analysts suggest that this is because of the increased focus on contextual prospecting, something that Google offers but Facebook does not. Also Facebook ads declined in price with a 6% year over year decline in effective cost per thousand impressions, which they said is consistent with predictions for the third quarter. They also said it’s mostly because users are seeing fewer but bigger ads, and the fourth quarter brought the end of the first full year of the trend.
The firm attributes Facebook’s 30% increase in impressions year over year partially to the apples-to-apples year over year comparison that is now possible.