• by Laurie Sullivan  @lauriesullivan, July 28, 2020

Heading into earnings week, performance ad agency Merkle on Tuesday will release its Q2 2020 Digital Marketing Report. It seems its digital marketing forecast estimates the market fared much better than most anticipated.

Overall U.S. paid-search clicks saw 38% year-over-year growth in Q2 2020, compared with 7.2% in the first quarter.

Advertisers paid less for each click. The cost per click fell 21% in the second quarter of 2020 compared with 4.4% in the first quarter.

“For Google, we see strength in retail clients,” said Mark Ballard, vice president of research at Merkle. “When stores closed offline, most sales shifted online. The weakness in retail and other channels and verticals, too, is on the pricing of clicks. CPMs are down, but we’re also seeing reduced competition.”

Google U.S. paid-search ad spend rose by 8.6% YoY in Q2, and clicks rose by 39%.

Overall monthly U.S. paid-search spend for Google grew 6% in June 2020, compared with 11% in May and 9% in April. Spend had previously been up 4% in March. 

Globally, for Google, paid-search ad spend grew 11% YoY in the retail and consumer goods vertical, but fell 47.4% in travel. 

Ballard said agencies focused on supporting travel brands will see different results.

Google U.S. organic search visits overall saw 32.9% YoY growth in the second quarter, compared with a 13.3% decline in the first quarter.

Mobile also saw a 34.9% increase in the second quarter, compared with a 15.8% decline in the first quarter. “Things shifted to desktop for a while, but quickly shifted back to mobile, Ballard said. “It was more likely because people were working from home in early March, late April.”

Google U.S. organic search visits grew 42.5% YoY in the retail and consumer goods vertical, but fell 50.5% in travel. Searches for essential goods grew 69.5% YoY in Google search, versus non-essential goods which grew 41.2% and apparel which fell 1.5%.

“We didn’t really see people turn off their search ads, so I’m not sure there’s a huge effect for search,” he said. “The big story for the quarter is Amazon turning off their advertising in late March," Ballard said, and keeping it off for 12 weeks through mid-June.

Spending on Amazon ads declined in the second quarter compared with the first. Spending on Sponsored Products ads rose 22% YoY in Q2 2020, down from 67% growth in Q1. Click and sales growth for Amazon’s ads remained robust, but, as with other channels, ad pricing became significantly weaker.

Matthew Mierzejewski, SVP, search capability lead at Merkle, believes Amazon pulled its ads because it was seeing a substantial increase of traffic to the marketplace and decided to rely more on organic traffic. It was overwhelmed with traffic from paid and organic search and had to focus on fulfilling essential goods for a while.

Facebook ad impressions grew 25% YoY in Q2 2020, but CPM fell by 17%. Instagram ad impressions saw grew 46% YoY in Q2 2020 and ad spend rose 30%. Instagram’s share of total Facebook ad impressions came in at 35% in the second quarter for advertisers also running on both platforms.

Most brands paused Facebook ads on Blackout Tuesday in support of racial justice and the Black Lives Matter movement, but they reemerged in July.

Display spend fell 11% YoY in the second quarter, versus paid social, which rose 11%. 

Twitter’s average share of paid social ad spend was 10% in the second quarter for participating brands. Pinterest's share was 9% and Snapchat's share was 8%.