DIGITAL ADVERTISING REPORT ADOBE DIGITAL INDEX Q3 2015

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1 DIGITAL ADVERTISING REPORT ADOBE DIGITAL INDEX Q3 2015

2 Table of contents Charts 03 Overview 04 Key insights 05 Paid search spend growth by region 06 Share of paid search spend in North America 07 Global paid search spend growth by sector 08 CTR growth by search engine and region 09 CPC and CTR growth by device type 10 Global paid search CPC comparison by device type 11 Global display CPM comparison by device type 12 Paid search CPC and CTR growth: smartphone 13 CPC growth by search engine and region 14 CTR and CPC growth by sector 15 Global display ad CPC and CTR growth 16 Facebook ad CPC s and CTR s 17 Facebook paid ad clicks and impressions growth 18 Facebook and Google comparison: CTR s 19 Streaming video apps: periscope 20 Social interaction rate by industry and content type 21 Social referred visit growth by industry 22 Share of smartphone visits referred from social 23 Social referred revenue growth by device type 24 Revenue per visit by referrer 25 Reddit CEO s firing drives sadness Appendix 26 Methodology 27 Glossary 28 Tables 2

3 Overview This report covers a broad range of information from the digital advertising industry with insights centered around search engine marketing. Topics include: Insights around Google s search and display business. Search engine spend, click-through-rates (CTR), and cost-per-click (CPC) across different regions, search engines, and devices. How search behaviors and metrics differ across devices. How social behaviors and metrics differ across devices. 3

4 Key insights Digital advertising is not immune to economic forces: As a global economic slowdown in Asia and Europe approaches, paid search spend growth is declining, up only 2% and 7% YoY, respectively; North America up 17% YoY Google vs. Bing and Facebook: Google looks to compete head-on with Facebook s new ad targeting tools and increase key metrics like CTRs; Google paid search CTRs up 16% YoY, Google display ad CTRs up 25% YoY Bing grows paid search spend faster than Google in Europe and Asia, North America was a tie; Bing global YoY spend growth up 17%, Google global YoY spend growth up 11% Last year s Facebook algorithm change is paying off: Impressions up 10% QoQ, CTR up 30% YoY, and CPC down 2% YoY Social media has become more compelling as RPV increases overall YoY Facebook yielded highest RPV for marketers via social, while Reddit realized largest YoY RPV increase (up over 100%) Smartphones are the major driver of social RPV growth (up 102% YoY) Periscope remains niche, as usage volatility is still driven by one-off events: User growth continues to trend up, but struggles to reach mainstream adoption 4

5 Paid search spend growth by region Paid search spend increased 10% globally with North America growing the fastest at 17% (likely due to favorable economic conditions in the U.S). Marketers are increasing their search spend fairly uniformly across all regions. Paid search spend on Google increased 11% YoY globally, and saw the strongest regional spend increase in North America (up by 19%). Bing realized a strong increase in paid search spend in North America and Europe which is up by 19%. Both domestically and in most international markets, marketers have maximized the efficiencies of Google and are now transitioning their new search spend to fully optimize paid search services from Bing. 5

6 Share of paid search spend in North America Google is still dominant platform for paid search in North America. Yahoo! gradually declines in terms of paid search share. 6

7 Global paid search spend growth by sector Retail registered the largest YoY increase in paid search spend; up 9% YoY. Auto industry paid search spend increased by 4% YoY. Finance sector paid search spend was hovering around 0% before reaching a dip of -1% change. Travel industry saw a -3% dip in the paid search spend YoY. 7

8 CTR growth by search engine & region Marketers in North America registered the highest average growth in paid search optimization with CTR s up 19%. Marketers continue to optimize paid search, with Google CTR s up 16% YoY; Bing up 7%. 8

9 CPC and CTR growth by device type Desktop showed the highest increase in paid search efficiency with CTR s up 11% YoY. The cost of a paid search campaign via tablet increased the most (up 4% YoY). 9

10 Global paid search CPC comparison by device type Smartphone CPC s are the cheapest relative to desktop and tablet CPC s. Marketers are paying more for tablet clicks, with tablet CPC s 3% higher than desktop CPC s. 10

11 Global display CPM comparison by device type Smartphone CPM s are 6% higher relative to desktop CPM s. Marketers are paying more for tablet clicks as well, with tablet CPM s 5% higher than desktop CPCMs. 11

12 Paid search CPC and CTR growth: smartphone CPC rose 9% YoY. CTR fell 3% YoY. 12

13 CPC growth by search engine and region Marketers in North America realized the highest increase in CPC s up by 2% YoY. The competition for consumers during the Q4 holiday season heated up raising CPC s in North America by 7%. Google CPC s are getting more expensive up by 12% YoY while Bing CPC s remained relatively unchanged, up by 1% YoY. 13

14 CTR and CPC growth by sector Marketers in the Auto industry showed the highest increase in optimization, with CTR s up 32% YoY but also realized the largest increase in search CPC s (up 14%). 14

15 Global display ad CPC and CTR growth Display CTR s are up 14% YoY as marketers increase optimization in this advertising medium. A spread between display CTR s and display CPC s has widened by about 13%. 15

16 Facebook ad CPC s and CTR s CTR is up 35% YoY with evidence of much higher rates for individual brands. CPC saw a dip of -2% YoY. 16

17 Facebook paid ad clicks and impressions growth Facebook ad impressions has dropped by 13% YoY. Clicks are up by 7% QoQ. Signs indicate that Facebook s desire for higher quality impressions is paying off as impressions are slowly recovering from the last quarter. 17

18 Facebook and Google comparison: CTR s Facebook s radical approach produced very different metrics compared to Google s more incremental approach to display advertising. Facebook CTR increased 35%. Google display network CTR is up 25%. 18

19 Streaming video apps: periscope Periscope continues to grow, but struggles to reach mainstream adoption. One single event in India in September increased usage by almost 4x to peak at 348K streams showing adoption is still niche. The other major contributor that week was New York Fashion week. 19

20 Social interaction rate by industry and content type Interaction rates decreased YoY in major industries. Retail remains the industry with the highest interaction rates followed by Travel. Text posts increased in YoY interaction rates, up 1.2%. Image and video post interaction rates are down YoY. 20

21 Social referred visit growth by industry Auto saw the largest increase YoY (up 45%). Retail sites see a 17% increase YoY. Finance sites are up 22% YoY. 21

22 Share of smartphone visits referred from social Search accounts for 44.1% of referred smartphone traffic. Social accounts for only 3.2% of total referred smartphone traffic. 22

23 Social referred revenue growth by device type Smartphone referred revenue coming from social networks increased 102% YoY. Desktop and tablet referred revenue increased 12% and 9%, respectively. 23

24 Revenue per visit by referrer Facebook remains the strongest platform for referred RPV and saw a YoY increase from $1.16 to $1.24. Pinterest has increased referred RPV to $0.74.while Twitter has increased from $.43 to $.60. Reddit remains the smallest, but more than doubled its referred revenue per visit to $

25 Reddit CEO s firing drives sadness 58% of the social buzz was related to sadness and another 23% to surprise between July 3 rd and July 7 th. Reddit affiliated social Sadness is down 17% since July with the majority of recent sadness now related to outages of Amazon Web Services. 25

26 ADOBE DIGITAL INDEX Methodology Based on anonymous, aggregated consumer data from Q thru Q from North America, Asia Pacific and Europe. Data came from the following sources: Consumer activity on branded sites from Q3 14 Q billion digital ad impressions from search/social platforms (Google, Facebook, Yahoo, Baidu, Yandex) 23+ billion referred social visits from Facebook, Twitter, Pinterest, Tumblr, Reddit, YouTube, and LinkedIn Visit our website: adobe.ly/digitalindex Read our blog: adobe.ly/digitalindex Follow Ask a question or make a suggestion: 26

27 ADOBE DIGITAL INDEX Glossary Acronym definitions: Anonymous and aggregated Adobe Marketing Cloud data (Adobe Media Optimizer, Adobe Analytics, Adobe Social). CPC: Cost-per-click (cost divided by clicks). CTR: Click-through-rate (clicks divided by impressions). YoY: Year-over-Year (comparing Q3 15 to Q3 14). QoQ: Quarter-over-Quarter (comparing Q3 15 to Q3 15). Social Interaction Rates: The volume of comments, likes, shares and other interactions with a brand post. 27

28 ADOBE DIGITAL INDEX Tables Paid Search Spend Growth by Region Region Q Global 10% North America 17% Europe 7% Asia Pacific 2% Share of paid search spend in North America Google & Yahoo Paid Search Spend Growth by Region Region Google Yahoo Global 11% 17% North America 19% 19% Europe 9% 19% Asia Pacific 2% 10% Search Engine Q Q Q Q Q Q Google 68% 66% 67% 67% 68% 71% Yahoo! 23% 25% 25% 25% 24% 21% Other 9% 9% 8% 8% 8% 8% Global paid search spend in North America Industry Q Q Q Q Q Q Auto -5% 0% 16% 10% 9% 4% Finance 1% 0% 0% 1% 0% -1% Retail 0% 0% 28% 5% 8% 9% Travel 4% 0% -19% -1% -4% -3% CTR growth by search engine Search Engine Q Q Q Q Q Q Google 0% 0% 2% 8% 9% 16% Yahoo! 0% 0% 3% 2% 1% 7% Paid search CPC and CTR smartphone METRIC Q Q Q Q Q Q CPC -5% 0% 9% 5% 10% 3% CTR 6% 0% -10% -4% -6% 9% CTR growth by region Region Q Q Q Q Q Q North America 3% 0% 2% 9% 10% 19% Europe 1% 0% 2% 8% 7% 14% Asia Pacific -2% 0% 1% -1% -2% 6% CTR growth by device type Device Q Q Q Q Q Q Desktop -1% 0% 2% 7% 8% 11% Smartphone 8% 0% -13% -7% -8% 7% Tablet -1% 0% 1% 7% 5% 8% 28

29 ADOBE DIGITAL INDEX Tables CPC growth by region Region Q Q Q Q Q Q North America 0% 0% 7% 1% 6% 2% Europe 0% 0% 5% 0% 6% 1% Asia Pacific -4% 0% 4% 4% 5% -2% CPC growth by device type Device Q Q Q Q Q Q Desktop 0% 0% 5% 1% 5% 3% Smartphone -6% 0% 9% 6% 10% 2% Tablet -1% 0% 7% 3% 7% 4% CPC growth by search engine Search Engine Q Q Q Q Q Q Google -1% 0% 6% 2% 7% 1% Yahoo! 3% 0% 4% 2% 7% 12% CTR growth by sector Industry Q Q Q Q Q Q Auto 4% 0% 0% 11% 18% 32% Finance -1% 0% 4% 10% 4% 11% Retail 1% 0% 3% 3% 2% 10% Travel -5% 0% -1% 9% 13% 24% CPC growth by sector Industry Q Q Q Q Q Q Auto -3% 0% 11% 13% 18% 14% Finance -3% 0% 0% -5% -1% -7% Retail -3% 0% 6% -1% 5% -1% Travel 3% 0% 8% 9% 11% 0% Global ad display CPC and CTR growth METRIC Q Q Q Q Q Q CPC 1% 0% 4% -10% -8% -13% CTR -5% 0% 11% 14% 18% 24% 29

30 ADOBE DIGITAL INDEX Tables Facebook ad CPC s and CTR s Device Q Q Q Q Q Q CPC 5% 0% 16% -3% 6% -2% CTR -29% 0% 12% 19% 20% 30% Facebook paid ad clicks and impressions growth METRIC Q Q Q Q Q Q CLICKS 0% 0% -2% 7% 3% 7% IMPRESSIONS 64% 0% -16% -21% -21% -13% Facebook and Google comparison: CTR s METRIC Q Q Q Q Q Q Facebook -31% 0% 15% 25% 26% 35% Google -1% 0% 12% 14% 21% 25% Social referred interaction rate by industry Industry Q Q Q Q Q Q Auto 6% 0% 25% 24% 32% 45% Finance -10% 0% 8% 17% 29% 22% M&E -7% 0% 16% 55% 50% 32% Retail -9% 0% 41% 25% 24% 17% Travel -9% 0% 7% 40% 40% 33% Social interaction rates by industry Q Q Retail 4.8% 3.4% Media 2.5% 2.2% Financial 2.4% 2.2% Travel 3.6% 3.0% Share of visits referred from social Q Q Social Networks 1.9% 3.2% Search 41.1% 44.1% Social interaction rates by content type Q Q Video 2.0% 1.7% Image 4.5% 3.5% Link 1.2% 1.6% Text 0.7% 1.2% 30

31 ADOBE DIGITAL INDEX Tables Social referred revenue growth by device type Q Q Q Q Q Q Desktop -11% 0% 36% 15% 7% 9% Smartphone -17% 0% 77% 76% 100% 102% Tablet -7% 0% 33% 15% 14% 12% Revenue per visit by referrer SN Q Q Facebook $ 1.16 $ 1.24 Twitter $ 0.43 $ 0.60 Pinterest $ 0.66 $ 0.74 Reditt $ 0.27 $ 0.57 Reddit social sentiment July 3rd- July 7th July 10th - July 13th July13th-September 30th Joy 10% 10% 14% Admiration 7% 10% 15% Surprise 23% 15% 23% Sadness 58% 62% 45% Anticipation 1% 2% 3% 31

32 ADOBE DIGITAL INDEX Tables Social report periscope 1-Mar-15 2-Mar-15 3-Mar-15 4-Mar-15 5-Mar-15 6-Mar-15 7-Mar-15 8-Mar-15 9-Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar , ,056 5,381 1, ,663 2,556 1,077 1, Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar-15 1-Apr-15 2-Apr-15 3-Apr-15 4-Apr-15 5-Apr-15 6-Apr-15 7-Apr-15 8-Apr-15 9-Apr Apr Apr ,209 90, ,090 44,994 41,407 42,238 41,263 39,140 36,647 36,175 25,666 29,633 31,966 41,318 39,440 41,652 41, Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr-15 1-May-15 2-May-15 34,917 37,092 39,774 42,558 39,586 46,804 41,007 34,816 33,459 34,555 42,558 38,172 48,408 50,432 35,823 33,937 41,373 47,793 69,107 79,912 85,242 3-May-15 4-May-15 5-May-15 6-May-15 7-May-15 8-May-15 9-May May May May May May May May May May May May May May May-15 61,978 63,384 68,013 76, ,844 75,371 57, May May May May May May May May-15 1-Jun-15 2-Jun-15 3-Jun-15 4-Jun-15 5-Jun-15 6-Jun-15 7-Jun-15 8-Jun-15 9-Jun Jun Jun Jun Jun ,996 82,001 91, , ,076 97,171 83,643 92, , , , , Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun-15 1-Jul-15 2-Jul-15 3-Jul-15 4-Jul-15 92,473 89,353 97,879 98, , , ,603 99,582 92, , , , , , , , , , , , ,329 5-Jul-15 6-Jul-15 7-Jul-15 8-Jul-15 9-Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul , , , , , , , , , , , , , , , , , , , , ,489 32

33 ADOBE DIGITAL INDEX Tables Social report periscope (continue) 26-Jul Jul Jul Jul Jul Jul-15 1-Aug-15 2-Aug-15 3-Aug-15 4-Aug-15 5-Aug-15 6-Aug-15 7-Aug-15 8-Aug-15 9-Aug Aug Aug Aug Aug Aug Aug , , , , , , , , , , , , , , , , , , , , , Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug-15 1-Sep-15 2-Sep-15 3-Sep-15 4-Sep-15 5-Sep , , , , , , , , , , , , , , , , , , , , ,022 6-Sep-15 7-Sep-15 8-Sep-15 9-Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep , , , , , , , , , , , , , , , , , , , , , Sep Sep Sep Sep , , , ,567 33

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