Google’s ad spending is rising, despite changes due to AI

Search ads, shopping ads, and PMax adoption remain stable, with cost-per-click (CPC) metrics showing growth, according to a new report from Tinuiti.

Overall Performance

Google search ad spending increased by 11% year over year in Q3 2024, reflecting resilience despite slower price growth and the introduction of AI-driven features, as noted in Tinuiti’s latest “Digital Ads Benchmark Report.”

• Search advertising expenditures on Google rose 11% year over year in Q3 2024, slowing down from 14% growth in Q2.
• Click volume remained steady at approximately 3% year over year.
• Cost-per-click (CPC) growth moderated to 8% year over year, down from 12% in Q2.

Shopping Ad Dynamics

• Spending on shopping ads maintained robust growth of 16% year over year in Q3, matching the performance seen in Q2.
• Click volume increased to 6% year over year, rising from 4% in Q2.
• The growth of shopping ad cost-per-click (CPC) moderated to 9% year over year, continuing a downward trend.

Meta Advertising Overview

• Meta’s advertising spending grew by 9% year over year in Q3 2024, despite a decline in CPM.
• On Facebook, CPM decreased by 12% on a year-over-year basis, but impression growth rebounded.
• Meanwhile, Instagram continues to outpace Facebook in year-over-year spending growth.

Competitive Landscape

• Amazon leads the shopping ad market with a 58% share in Q3, down from 63% in Q2.
• There was a notable drop in Amazon’s share to 45% in mid-September, followed by a rapid recovery.
• Walmart holds a distant second place with a 22% share.
• Temu’s presence has significantly declined compared to 2023.

PMax Implementation Rate

• The implementation rate of PMax among shopping advertisers reached 92% in Q3, which is 1% higher than in Q2.
• Non-shopping inventory accounted for 29% of PMax spending in September, compared to 21% in June.
• YouTube made up only 1% of impressions within PMax.
• Mobile apps maintained a steady share of 10% of impressions.

Campaign Performance Metrics

• The conversion rate for PMax was 2% lower than that of standard shopping campaigns in Q3.
• Sales per click for PMax shifted from +3% to -3% compared to standard campaigns.
• Return on ad spend (ROAS) remained stable quarter-over-quarter.
• Spending on traditional text ads increased by 7% year-over-year, down from 13% in Q2.

Impact of Google AI Overviews

• For non-branded mobile keywords, the click-through rate (CTR) declined by 14% from April to July.
• However, CTR rebounded in August and September across various segments.
• Non-branded mobile CTR remains 4% below the April level but is 6% above early 2023 figures.
• The CTR for shopping ads on mobile devices rose by 14% from April to September.

Why This Matters

The data indicates that despite the initial impact of Google AI Overviews on advertising performance, advertisers are adapting and discovering ways to maintain growth, particularly through shopping ads and Performance Max campaigns.

Key Takeaways

• Shopping ads demonstrate resilience amid broader market changes.
• PMax adoption remains high, despite slight performance deterioration.
• Major retailers continue to hold dominant positions in shopping ads.
• The impact of Google AI Overviews appears to be stabilizing.
• Mobile remains a critical battleground for enhancing ad performance.

At UAMASTER, our specialists are prepared to optimize your advertising strategies to leverage these trends effectively. We will help you adapt strategies based on innovative technologies, particularly on the Performance Max platform, to achieve better results in Google Shopping. Our tailored advertising solutions will increase your company’s profits by focusing on your target audience. Contact us to discuss opportunities and strategies to meet your business goals.

Tinuiti’s Q3 2024 Digital Ads Benchmark Report.

This article available in Ukrainian.