Visits to brand sites generated by organic search fell 15 percent year over year and phones accounted for 52 percent of organic search visits in Q1, according to Merkle’s Q1 2020 Digital Marketing Report. The report explores how search ad spend levels trended by industry amid the pandemic, the state of organic search and paid social and why Amazon ad spend may rebound sooner than later.

Google search ad spend grew 11 percent year over year in Q1 2020, down from 16 percent growth in Q4 2019—the lowest growth Merkle has seen in the last eight years—while clicks rose nine percent and cost per click (CPC) increased two percent. Microsoft search ad spend grew to 18 percent year over year in Q1 2020 while clicks fell 11 percent year over year. Microsoft CPCs grew significantly due to a drop in traffic from phones in the past year.

After generating 29 percent of Google Shopping ad clicks among participating brands in Q4 2019, Google Local Inventory Ad (LIAs) generated just 23 percent of Shopping clicks in Q1 2020, the lowest rate physical advertisers have seen for the format since Q3 2018. LIA click share dropped to zero by the end of Q1.

The pandemic has negatively impacted travel search budgets as Google search ad spend by travel advertisers fell 21 percent year over year in Q1, down from a 17 percent growth in Q4 2019; whereas retail Google search spend grew 13 percent in Q1.

Overall, desktop click share in Q1 fell one point to 32 percent while phone click share rose from 61 percent in Q4 2019 to 64 percent in Q1 2020. Phones produced 44 percent of total search ad spend in Q1, up from 38 percent in 2019.

Google and Microsoft saw opposing trends for device click share. Phones generated 67 percent of Google search ad clicks for Q1 while they generated 23 percent for Microsoft. Desktop share of Google clicks was 29 percent in Q1 while the same for Microsoft was 71 percent.

Excluding Instagram, Facebook ad spend grew 19 percent year over year in Q1, up from 15 percent in Q4 2019. Ad spend on Instagram grew 39 percent year over year in Q1, up from 38 percent growth in Q4 2019. Instagram accounted for 27 percent of total spend and 34 percent of impressions across both platforms for brands running ads. In addition, Instagram stories ads accounted for 22 percent of Instagram spend and 28 percent of impressions.

As a larger share of commerce has moved online amid the pandemic, ad conversion rates have improved and retailers’ ad spend has held up better for Google search. Organic search visits produced by Google decreased 13 percent year over year in Q1 and 16 percent year over year on mobile devices; Bing and Yahoo saw greater declines, with organic visits down 26 percent on Bing and 27 percent on Yahoo. 

As the pandemic unfolded, Merkle also saw organic search grow 53 percent year over year for essential retailers while organic clicks fell 31 percent for apparel and specialty merchandisers.

Amazon Sponsored Products spend grew 67 percent year over year in Q1, with clicks growing 87 percent and CPCs falling 10 percent. Sales from Amazon Sponsored Products ads increased 70 percent year over year in Q1, allowing advertisers to hold return on investment (ROI) roughly flat compared to 2019. Sponsored Brands spend ballooned to 118 percent year over year, with clicks growing 43 percent year over year and CPC seeing 52 percent growth year over year.

Merkle predicts Amazon ad spend investment will rebound as the giant stops limiting the fulfillment of non-essential products and as sales and inventory for brands start to pick back up.