Search Advertising On Growth Track For 2017, Impact Of Amazon Still Unknown

The long-term impact of Amazon Sponsored Ads remained the big unknown during an analyst call between Raymond James and search companies Merkle and Kenshoo to provide guidance on search advertising and marketing during the third quarter of 2017.

Merkle sees short-term growth in Amazon-sponsored products. Investments from advertisers now come a faster pace. But the market for Amazon's sponsored ads remains smaller than Google shopping, and Merkle expects this trend to continue for the foreseeable future until more brands gain interest.

Interestingly, Kenshoo noted that many of the Amazon ad budgets come from merchandising such as product placement in physical stores -- so this is not coming from search budgets, according to the research note.

Both Merkle's and Kenshoo's analysis suggest that mobile will remain strong. Merkle estimates marketers spent 51% more on Google for mobile compared with the year-ago quarter, but fell from 64% from second-quarter 2017. Desktop should rise 25% year-over-year in third-quarter 2017 vs. 22% in the second quarter), and for tablets should fall 23% YoY. Merkle also notes that desktop continues to benefit from Google’s decision late last year to separate it from tablet bidding.

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Overall, Kenshoo expects about 10% YoY growth in search, similar to the rate of growth seen in the past four to five quarters. Merkle expects Google's paid search to increase about 24% YoY in third-quarter 2017 vs. about 23% in the second quarter, and looks for 19% growth in click rates and a 4% increase in the cost per click.

 

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