Ignition one - digital marketing report - Q3 2015

Digital Marketing Report
Follow us on Twitter: @IgnitionOne
Q3 2015

www.IgnitionOne.com | info@IgnitionOne.com | 888.744.6483 | ©2015 IgnitionOne, Inc. All Rights Reserved.
2
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Detailed Findings
U.S. Search: Spending Trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Deep Dive: Yahoo! Gemini . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
U.S. Search: Mobile Device Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
U.S. Search: Market Share Q3 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
U.S. Display: Programmatic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Mobile Display . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
About IgnitionOne . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Contents

3
Additional insights by vertical
Breakouts by auto, travel, finance, retail and education are provided within the report, with
finance as interesting outlier this quarter. It continues to see large drops in impressions, down
57% due to interest rates and demand, while also seeing strong growth of 130% in CTR.

Q3 demonstrated continuing, though decelerating, trends in digital advertising metrics. U.S. paid search was
up 12% in spend year over year (YoY) and programmatic display was up 7% in spend year over year (YoY).
Facebook continued to outpace the market in display spend growth, up 40% YoY while Google display spend
dropped 19%. Recent partnership changes for Yahoo! and Bing are expected to affect trends.
Executive Summary
Strong search spend growth continues
U.S. paid search spend grew 12% YoY in Q3, with click-through rate (CTR) and cost-per-
click (CPC) increases pointing to more expensive but efficient ads. Sophistication in mobile
advertising may be a driving factor in the spend increase.

Mobile search sees slower growth
Shifts in user behavior from tablets/desktop to mobile phones continued to lead to an increase in
mobile search spend of 56% YoY. Tablets, similar to desktops, were relatively flat. This is due to the
similar ways they’re now managed by users, as well as increased sophistication and interest in mobile
traffic. This resulted in 64% of mobile spend share devoted to phones and 36% share going to tablets.

Facebook outpaces Google as ad costs rise
Facebook continues to grow in spend, up 40% while Google display spend dropped 19%. The
cost of Facebook ads also continued to climb, with eCPMs up 33% compared to last year.


Yahoo Gemini brings change
The addition to the marketplace of Yahoo Gemini gives Yahoo the ability sell its own Mobile
and Native ads into its own search results while giving it more control. This has implications
to the data tracked in this report and tactics for marketers as it increases fragmentation and
bifurcation in the market.
Programmatic display indicates shift to remarketing
When looking at display tactics in Q3, we see a slight shift toward remarketing ads (targeting
ads to users who have visited a site before) when compared to last quarter, coming in at 53% of
spend. This is a brief stabilization and a 50:50 mix of remarketing versus prospecting (look-a-like,
contextual, custom targeting and reach).


4
© 2015 IgnitionOne
YoY Search Spend Growth by Quarter 2013-2015
0.021
0.105
0.26
0.22
0.12
0%
5%
10%
15%
20%
25%
30%
3Q14 4Q14 1Q15 2Q15 3Q15
YoYChangeinSpend
YoY Search Spend Growth by Quarter
2013-2015
Detailed Findings
U.S. Paid Search Spend Trends
While paid search spend has continued to decelerate when compared to the peak of Q1, YoY
growth in U.S. spend for Q3 2015 is up 12%. While this is a lower growth rate than the last two
quarters, this is actually an impressive growth number compared to Q3 of 2014.
When looking at just Google, the search giant is up 14%. Numbers that we have historically
tracked for Yahoo!/Bing will not reflect market trends at this time due to Yahoo and Bing’s
recent partnership changes and the addition of Yahoo Gemini. This addition is also a facet of
the slower growth in spend this quarter overall as a significant portion of traffic is out of reach
of most advertisers due to Gemini limitations. This may cause budgets to decrease because of
traffic loss or to increased inefficiency. More coverage of this later in the report.
In Q2 impressions continued to drop (-19%) YoY which can be attributed to three main reasons: the
continued move to mobile (fewer ads shown per query), advertisers continued move away from partner
networks and more expensive yet more effective ads (higher CTR and CPCs). Clicks are flat when
compared to last year, while CTR increased 25% and CPCs were up 10%. Again, this points to fewer but
more effective and expensive ads as marketers continue to move away from partner networks and gain
more sophistication in mobile advertising.


5
Compared to the previous quarter, U.S. paid search metrics are down as is expected with seasonality.
Spend is down 21% quarter-over-quarter (QoQ). CPCs and clicks are also down (6% and 16%
respectively) and impressions decreased -23% QoQ. CTR rebounded QoQ and was up 10%.
-15%
5%
8%
23%
3%
27%
Q1 14
-24%
7%
10%
41%
3%
45%
Q2 14
-27%
6%
2%
46%
-4%
40%
Q3 14
-15%
9%
11%
28%
1%
29%
Q4 14
-20%
4%
26%
30%
21%
56%
Q1 15
-13%
6%
22%
22%
15%
40%
Q2 15
-19%
1%
12%
25%
10%
38%
Q3 15
© 2015 IgnitionOne
US Search Metrics YoY
YoY
Impressions
Clicks
Spend
CTR
CPC
eCPM

6
Deep Dive: Yahoo! Gemini and what it means
What is it - History?
In 2009 Yahoo and Microsoft announced an agreement to combine inventory, properties and networks
for search while utilizing Microsoft back-end technology to power both Yahoo and Bing portals. In the
last 5 years Yahoo-Bing, in aggregate, had become the second largest source for search traffic (behind
Google). Up until recently, desktop Yahoo traffic had to go through Bing Ads, while mobile and native
traffic was relegated to Yahoo advertising marketplace, Gemini.
In April of 2015 Microsoft and Yahoo announced an amended partnership allowing for greater flexibility
on the Yahoo side to serve desktop and mobile search traffic on Yahoo exclusive properties inventory
and networks.
Yahoo began migrating portions of traffic at end of Q2. While the amended agreement allows for Yahoo
to move up to 49% of desktop traffic, our data has shown most of the movement has been in mobile to
date – we expect to see additional traffic shifts, including desktop, in Q4 2015.
In summation, the shift from Yahoo-Bing to Yahoo Gemini gives Yahoo the ability sell its own ads into its
own search results and gives Yahoo more control.
How is it being used- Issues?
The Gemini platform is having some early challenges. Currently, usability of the platform for reporting,
trafficking, asset creation and asset optimization is limited as compared to other engines. While they
continue to improve their functionality and third-party tools develop more support through their API
we will likely continue to see Gemini underfunded by marketers.
Theoretical Implications - Impact?
What does the shift of Yahoo-Bing traffic to Gemini mean for marketers and their Search accounts?
Marketers that have little to no desire to participate in Gemini until all the problems are solved will be
impacted in one of two ways, holding everything else constant:
(1) Aggregate performance/efficiency will decline as more traffic moves to Gemini
or
(2) Aggregate budgets will decline as more traffic moves to Gemini.

7
The theory here is relatively simple. Pre-Yahoo Gemini, both Yahoo and Bing mobile traffic was reachable
by marketers through Bing ads, providing full access to traffic from both Bing and Yahoo. Post-Gemini, a
marketer’s traffic is limited to what is left in Bing – and the amount of traffic left in Bing will get smaller and
smaller as Gemini finishes the mobile transitions and begins to transition desktop ads. We assume that a
portion of the traffic that shifts to Gemini is more efficient then the aggregate efficiency of remaining traffic –
that portion likely being Yahoo brand-focused ads. As that efficient Yahoo brand traffic is lost the marketer is
left with two options (assuming Gemini is not on the table).
• Option 1 would be to shift the funds that in the past had gone to Yahoo brand to other less efficient assets
on Google and Bing (assuming good Google and Bing brand assets are already maxed out.) However,
the marketer has to expect lower efficiency from those funds moving forward and this will in turn drop
aggregate efficiency for the entire asset portfolio.
• Option 2 is to pull away the funds that used to go to Yahoo brand traffic – this will result in lower budgets/
spend level as well as lower nominal amounts of actions and revenue.
The choice between Option 1 and 2 will probably be dictated by account goals – accounts that are
concentrated on efficiency goals will go with Option 2 while accounts that are concentrated on driving nominal
actions or revenue will go with Option 1.
We expect for advertisers to slowly adopt Gemini, especially for their brand and core terms. This adoption rate
will increase as the amount of shifted traffic from Yahoo/Bing to Yahoo Gemini increases. Desktop traffic is
expected to start moving over in Q4 which will accelerate this process.

8
US Search: Mobile Device Trends
Overall growth for paid search continues to be led by strong mobile phone advertising trends,
though this has been decelerating when compared to past quarters, which had been in the
triple-digits. Tablets, however, are flat in spend growth this quarter, and are seeing similar
trends to desktop. This can be attributed to similar consumer behavior regarding the use of
tablets and desktops, as well as industry focus on the increasing sophistication of mobile traffic.
Digging into specifics, paid search spend on phones is up 56% YoY, while tablets are relatively
unchanged at 2% growth. Impressions decreased across the board YoY with phones down 21%
and tablets down 28%. CTR accelerated on last quarter’s trend and increased 67% for phones
and 20% for tablets. CPCs continue to grow and were up 18% for both phones and tablets.

Impressions Clicks Spend CTR CPC
50%
0%
75%
25%
25%
-25%
32%
-13%
56%
67%
2%
20% 18% 18%
-21%
-28%
Phone Tablet
Q2 2015 YoY US Paid Search Metrics by Device
© 2015 IgnitionOne

9
Tablet, 36%
Phones,
64%
Q3 2015 US MOBILE SEARCH SPEND
SHARE BY DEVICE
© 2015 IgnitionOne
Q2 2015 US Mobile Search
Spend Share by Device
The share in mobile device spend continued to shift more heavily towards phones, with tablets
accounting for 36% of spend and phones at 64%. This again points to a shift in user search traffic from
desktop/tablet to mobile phones as well as greater demand and improved performance that resulted in
the increase in mobile search spend.

10
US Search: Paid Search by Industry Highlights
Looking at U.S. paid search metrics by industry vertical, we see some interesting outliers this quarter. Education
and Finance continue to see large drops in impressions (down 38% and 57% respectively) and strong growth in
CTR (up 76% and 130% respectively).
The drop in education can be attributed to the loss of Gemini traffic, improved mobile optimizations and demand
declines after Q2 enrollments. Finance trends are largely driven by interest rate fluctuations which have a large
impact on demand levels which in turn have a large impact on impressions.
Automotive takes the crown in spend growth, up 32% YoY, followed by Travel which was up 23% and Education
coming in at a close third with 22% growth. Automotive industry in general has had one of its best years in a while
due to improvements in the labor market and low gas prices which has been driving up auto sales and ad spend.
YoY Q3 2015 US Paid Search Metrics Growth by Vertical

11
U.S. Display: Programmatic
Based on data from a diverse set of advertisers in Q3 2015, programmatic display spend growth
decelerated, up just 7% YoY when compared to last year, pulled down by finance advertisers,
due to market trends similar to search. This growth was 33% in Q2 2014. Impressions dropped
slightly, down 5% compared to Q3 14.
Compared to a strong Q2 2015, programmatic display metrics are flat QoQ. Impressions are up
4% and spend is up 3%. This is consistent with seasonal trends.
When looking at display tactics in Q3 we a slight shift towards remarketing ads (targeting ads to users
who have visited a site before) when compared to last quarter, coming in at 53% of spend. Look-a-like
(ads shown to non-visitors who exhibit behavior similar to existing customers) and contextual (ads
shown to users who are on pages with relevant content for the advertiser) had 11% and 9% respectively.
Reach (showing ads to as many people as possible with minimal targeting) was 15% of spend.
While we have been steadily moving to doing more and more prospecting, we see some brief
stabilization and a 50:50 mix of remarketing versus prospecting (look-a-like, contextual, custom
targeting and reach). We expect to see significant growth in coming quarters, which will see
remarketing volumes grow, but will see prospecting volumes grow significantly more.
-0.05
0.07
0.13
-0.06
-0.04
-0.02
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
Impressions Spend ECPM
Q3 2015 YoY Change in
ProgrammaticDisplay Metrics
Programmatic Display Metrics
© 2015 IgnitionOne


12
LAL
11%
Contextual
9%
Custom
Targeting
12%
Reach
15%
Remarketing
53%
US Programmatic Display
Tactic Breakdown - Q3 2015
When looking at verticals, retail and auto are up YoY in spend, with auto again leading YoY growth in
spend at 84%. Auto also saw the biggest impressions and eCPM growth at 25% and 47% respectively.
Retail grew 19% in spend, while travel dropped 8% and finance took a major hit, dropping 49% in spend.
Finance, for reasons covered, also dropped in impressions (-43%) and eCPM (-10%).
US Programmatic Display Tactic Breakdown -Q3 2015
© 2015 IgnitionOne

13
-2%
19% 22%25%
84%
47%
-9% -8%
1%
-43% -49%
-10%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Programmatic Display Metrics by Vertical
Retail Auto Travel Finance
Facebook continued to outpace Google in display growth when looking at the total IgnitionOne
network, with Facebook FBX growing 40% in spend while Google dropped 19% in spend. Facebook’s
share held steady at 16% of spend (up from 10% a year ago). Google’s share dropped to 27%, down
from 35% last year. The cost of Facebook ads also continued to climb, with eCPMs up 33% compared to
last year.
Prior to October 2014, Facebook showed 6 small ads on the right side of the page, however since that
time, they are now showing 2 large ads on the right side of the page.
As fewer ads (but larger) are being shown to users impressions are reduced significantly. Starting next
quarter this trend of increasing eCPM is expected to decelerate.
In addition, this past February, Facebook claimed that it will only sell ads that are viewable to users. The
definition of viewable in this case is the ad will only be sold if the user scrolls down to the ad space in
which the ad can be seen resulting in reducing reported impressions.
Q3 2015 YoY Change in Programmatic Display Metrics by Vertical
© 2015 IgnitionOne

14
-32%
-19%
10%9%
40%
33%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Programmatic Display Metrics -
Google and Facebook
Google Facebook
Q3 2015 YoY Change in Programmatic Display Metrics -
Google and Facebook
© 2015 IgnitionOne

15
iOS
51%
Android
49%
Q3 2015 Mobile Display
Share of Spend by OS
Mobile Display
When looking at a total client-basis, IgnitionOne tablet share of spend increased to 15%, up
from 9% last quarter. During the same time period, Android took the majority spend, increasing
its share from 50% in Q1 to 55% in Q2.

Q3 2015 Mobile Display Share of Spend by Device Type
Q3 2015 Mobile Display Share of Spend by OS
© 2015 IgnitionOne
Tablet
20%
Smartphone
80%
Q3 2015 Mobile Display Share of Spend
by Device Type
© 2015 IgnitionOne

16
Methodology
This is the longest continuously running quarterly report on digital marketing trends. Since this report’s
inception, IgnitionOne has tracked more than 120 billion impressions and more than 4.3 billion clicks
on Google and Yahoo!/Bing search networks, Google AdEx, and other display networks from January 1,
2006 through September 15, 2015. All trend metrics are reported using a same-client basis which may
vary between reports.
Additional reports can be found here: http://www.ignitionone.com/thought-leadership/
About IgnitionOne
IgnitionOne is a global leader in cloud-based digital marketing technology. The company’s Digital
Marketing Suite (DMS), with a powerful customer data management platform (DMP) at its core,
simplifies life for marketers by providing an integrated suite of solutions that significantly improve
digital marketing performance across all devices. The DMS encompasses algorithmic media
management across channels such as search, programmatic display, email and social; advanced data
management; user scoring, lead optimization and website personalization. With a global footprint of
over 450 employees in 17 offices across 10 countries, IgnitionOne is one of the largest independent
marketing technology companies in the world.
IgnitionOne currently scores over 300 million users monthly in 75 countries and powers more than $30
billion in revenue each year for leading brands, including General Motors, CenturyLink, Bridgestone, La
Quinta and Fiat, as well as advertising agencies such as 360i, GroupM and iProspect.
For more information, please visit http://www.ignitionone.com, follow the company on Twitter
@IgnitionOne or read our blog at http://www.digitalmarketingsuite.com.

Ignition one - digital marketing report - Q3 2015

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