July 15, 2014, Charlottesville, VA - Leading full-service digital marketing agency, RKG, a Merkle company, released its Digital Marketing Report covering the second quarter of 2014 today. By analyzing data across its client base, which includes 50 of the IR Top 500 Retailers, RKG’s report provides insight into digital trends for search, SEO, product listing ads, display advertising, social media, comparison shopping engines and more.

After a slow start to the calendar year, U.S. paid search spending growth accelerated during the second quarter. Google saw a 24% increase in ad spend from Q2 of last year, as Product Listing Ads (PLAs) continue to produce huge growth, while Bing Ads search spending grew 19% from last year across Bing, Yahoo, and search partners.

Mobile traffic continues to produce strong growth, while desktop traffic continues to decline. Smartphone clicks grew by 47% year-over-year, compared to a 43% increase for tablets and a 2% decline for desktop.

Product Ads Continue to Exhibit Impressive Growth

Image-based product ads continue to see much higher growth than traditional text ads. Search advertiser spending on product ads in Q2 rose 72% over last year, while text ad spending grew just 6%. PLA share of total Google clicks remained steady from last quarter, at 26% of overall paid search clicks and 50% of non-brand clicks.

With Google’s upcoming transition to a new PLA campaign structure next month, RKG data found that conversion rates continue to be higher for PLAs, resulting in a 13% higher ROI than text ads, and suggesting continued growth opportunities for this ad format.

Google Search Partner Volume Declines, Though Opportunity May Exist to Expand PLA Presence

With Google set to disclose paid click and CPC growth by property for the first time this earnings season, RKG data from Q2 shows that the contribution of search partners is on the decline. Search partner ad spend decreased by 5% from Q2 of 2013, which is in line with trends released by Google over the past several years.

RKG data also shows that PLAs are not well-monetized on search partners, which may be one factor in the continued decline of search partner contribution. PLAs produced just 7% of total search partner clicks, compared to 26% of all clicks on Google.com. Although low, this figure is up from near zero last year, suggesting that Google may be working to increase PLA presence on search partner sites, potentially leading to further PLA growth.

For advertisers actively advertising on the Google Display Network (GDN) and running AdWords paid search ads, GDN accounted for 6% of total Google spending, the same rate as the previous quarter.

Cross-Device Reporting Gives Advertisers Better Insight Into Mobile Value

In anticipating the impact Google’s cross-device estimates may ultimately have on advertisers’ spending, RKG sees that cross-device tracking surfaces 7% more orders overall, but 14% more smartphone orders.

While smartphones produce 12% of traditionally tracked conversions, they contribute nearly 25% of cross-device orders. As improved tracking capabilities arise, advertisers will increasingly take these figures into account when setting smartphone ROI targets.

Other Notable Q2 Highlights

Paid Search •Google paid search spending grew 24% Y/Y in Q2, as paid clicks rose 13% and CPC rose 10%. •Bing Ads search spending grew 19% Y/Y, led by a 22% increase in paid clicks. Bing Ads CPCs fell 3%, due to a mix shift to mobile. •Advertiser spending on Google Product Listing Ads (PLAs) and Bing Product Ads rose 72% over last year. •Smartphones generated 19% of paid search clicks and 9% of search spend, while tables produced 18% of clicks and 19% of spend.

Organic Search & Social •Organic search produced 31% of all site visits in Q2 2014, which was down from 36% in the first half of 2013. As the major search engines work to better monetize their listings with larger and more appealing ads, organic search volume will continue to get squeezed in favor of paid.

Comparison Shopping Engines •Share of total CSE spend going to Amazon dropped from 17% in Q2 of last year to 9% in Q2 of 2014 as large advertisers were moved out of Amazon Product Ads by Amazon, ostensibly to encourage them towards the Amazon Marketplace. •Among advertisers running both Amazon Product Ads and Google PLAs, revenue volume from Amazon’s program was just 7% that of PLAs, down from 9% in Q1.

Display Advertising •For advertisers actively advertising on the Google Display Network (GDN) and running AdWords paid search ads, GDN accounted for 6% of total Google spending, the same rate as the previous quarter.

Click here to download the full report.

The full RKG Digital Marketing Report offers over 50 charts with additional insights and analysis on trends in paid search, SEO, social media, product listing ads, comparison shopping engines, display advertising and more.

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About RKG, a Merkle Company

Founded in 2003, RKG is a search and digital marketing agency that combines superior marketing talent with world-class digital media capabilities to create the industry’s most effective data-driven digital marketing solutions. RKG drives business to clients by maximizing a full range of opportunities including paid search, SEO, product listing ads, social media, display advertising and comparison shopping engine management services. In 2014, RKG became a part of Merkle, creating the largest independent search agency. RKG is headquartered in Charlottesville, VA with offices in Bend, OR and Boston, MA. For more information visit www.rimmkaufman.com or follow the company on Twitter @rimmkaufman.

About Merkle

Merkle, a technology enabled, data driven customer relationship marketing (CRM) firm, is the nation’s largest privately-held agency. For more than 25 years, Fortune 1000 companies and leading nonprofit organizations have partnered with Merkle to maximize the value of their customer portfolios. By combining a complete range of marketing, technical, analytical and creative disciplines, Merkle works with clients to design, execute and evaluate connected CRM programs. With more than 2,100 employees, the privately held corporation is headquartered in Columbia, MD with additional offices in Boston, Chicago, Denver, Hagerstown, Little Rock, London, Minneapolis, Montvale, Nanjing, New York, Philadelphia, Pittsburgh, San Francisco and Shanghai. For more information, contact Merkle at 1-877-9-Merkle, visit www.merkle.com or follow the company on Twitter @MerkleCRM.