Search advertising now accounts for 22 cents in every ad dollar, despite slowing overall growth and a flatlining share of all internet advertising, while voice and visual search are yet to materialise in a meaningful way. 

This is according to WARC’s Global Advertising Trends report, which finds that investment in search advertising will rise 9.6% this year, to $135.9bn. But this growth rate is the softest since 2015 and is a marked slowdown from the 16.9% growth in 2018, while search’s share of internet advertising has plateaued at 45.8%.

“Search has boomed over the last decade as practitioners have put a greater emphasis on performance-related advertising to lift ROI – few marketing strategies exclude a search element today,” notes James McDonald, Managing Editor, WARC Data, and author of the research. 

The report suggests that marketers regard search as the easiest channel to measure accurately and that it is a more cost-effective way of driving conversions when compared to online display formats.

“But the industry is beginning to question whether this focus has been beneficial in the long run, with a number of large, consumer-facing businesses considering a pivot back to more conventional brand building formats.”

The necessity of voice

A lack of growth has intensified the competition for other forms of search. The squeeze on Google’s main revenue stream means a growing focus on a smart speaker market currently dominated by Amazon, which also enjoys a first-mover advantage in several key markets, among them the US, UK, and Japan. For both firms, growth of the voice search market will be critical. Most marketers are aware of its potential in the coming years, but very few are using voice search today.

Conversely, where Google moved first, it now leads. In Australia, Google enjoys a comfortable lead over Amazon in terms of smart speaker penetration (86% penetration versus Amazon’s 15%), and the same is true in Singapore (76% versus 24%). This may not bode well for Facebook, which is developing an AI assistant for its Portal devices and is playing catch up to win market share in this area.

Mobile search is growing

Mobile search adspend is expected to rise 19.2% to $88.1bn this year – almost two-thirds (64.8%) of total search spend worldwide. The US alone accounts for 43.0% of this total (US$38.1bn in 2019), while a fifth (21.8%, or $19.3bn) is transacted in China. Japan ($6.1bn, a 6.9% share) and the UK ($5.3bn, 6.0%) then follow.

In this arena Google is even more dominant. Google accounts for 95.4% of all mobile searches worldwide, higher than its share of desktop search traffic (88.6%). Google’s share of mobile search traffic in the US (94.4%) and UK (97.9%) is close to its global rate but in China its share is near zero, with Baidu the incumbent on 79.9%.

Mobile’s share of ad investment is actually growing ahead of mobile search traffic which has plateaued since 2017, the possible result of a consumer shift to more in-app browsing (over 80% of mobile usage is in-app, according to comScore).

Where the platforms fit in

Instagram is used to discover, Google to research, and Amazon to buy: one in three (32%) online purchases in the UK begins on Amazon, rising to 52% for entertainment products, 50% for children’s products, 47% for household items and 40% for electronics. Comparatively, one in five (19%) online purchases begins with a search engine, such as Google.

Research by Mindshare shows that Instagram is used by 69% of consumers to discover products, ahead of Snap at 64% and Facebook at 61%. Google is used most to research, with 70% of consumers utilising the platform in this way (versus 51% for second-highest Pinterest). Crucially, however, Amazon is used most to buy; 78% of Amazon users report this, compared to 40% using Google for the same purpose.

Amazon made $35bn from e-commerce in Q3 2019, up by a fifth from the previous year and putting it on course to reach close to $150bn in sales for 2019 as a whole. 

Sourced from WARC