Search Gets Buried In Hints Of Commerce Ad Budget Increases

What do marketers get when combining performance marketing, commerce content, and affiliate marketing? A new study by German-based Mrge, a global platform for commerce advertising, defines the combination as “commerce advertising” in the report, titled the State of Commerce Advertising.

The study was conducted between Dec. 6 and Dec. 19, 2023. The findings identify sentiment among publishers, advertisers and networks and show that AI and machine learning at 58.9% is the top industry trend in commerce advertising.

This concise but insightful study -- conducted with the help of 73 industry professionals across advertisers, publishers, agencies, networks, and technology providers -- also shows that influencer advertising appeared as No. 2 with 47.9%. Measuring attribution at 27.4% took No. 3. Google updates, and cross-device tracking landed close to the bottom, with each pulling in 9.6%.



From the comments in the study, it appears that companies will adjust their affiliate marketing strategy based on the introduction of ChatGPT and Google Bard.

About 74% of respondents say they are optimistic or very optimistic about 2024, while only 8.2% say they are pessimistic. This result is significantly more positive than in the previous year, but at the end of 2022, the general sentiment was more reserved, with only 57.5% saying they felt optimistic about 2023, and 12.7% expressing pessimism or strong pessimism.

Investments in partnerships will become more important this year, according to Felix Witte, general manager and senior vice president of publishing and advertising at Mrge. 

"One way is to increase commission rates," he said. "Let's say some partners have been identified as driving a strong incremental revenue. Giving them 5%, 8%, or 10% commission rate helps them reinvest revenue back into the channel. It's something we see chosen a lot because it tends to work very successfully." 

When asked to name the biggest opportunity for revenue growth in 2024, 49.3% of participants in the survey cited increasing investment in partnerships.

Some 31.5% cited diversifying their partner base, while 31.5% cited market and geographic expansion, 26% said increase investment in influencers, 19% cited new billing models, 12.3% cited generative artificial intelligence, and cited 5.5% said external marketing.

Some firms also intend to increase investment in video-based commerce campaigns this year. Among study participants, 38.9% said they plan to increase those investments moderately, while 25% said they will keep investments about the same, 19.4% they have no intention o investing in video commerce campaigns, 9.7% said significant investments are planned, and 6.9% plan to reduce investments.

About 43.8% of companies said cashback sites and extensions generated the most sales in the past quarter, while 38.4% cited coupon pages, and 31.5% cited buy now pay later. Other programs cited include loyalty programs and editorial content such as blogs, and social media, but search and product listings landed down at the bottom of the list with 5.5%.

The favorite billing model by far was cost per order at 57.5%, followed by cost per click at 32.9%, and cost per lead at 6.8%.

Quite the change from 2023. Price increases and economic stagnation had a negative impact on consumer spending in last year, but how these conditions reflected in the industry differed depending on several factors.

Some 64.3% of the survey participants said they were very satisfied or satisfied with the performance in the final quarter of 2023, a time of year when companies typically generated the most revenue. While 28.8% remained neutral, 5.5% were dissatisfied, and 1.4% said they were very dissatisfied. 53.4% said they were very satisfied or satisfied with the results for the year.

For 82.2% of respondents, commerce advertising accounted for more than 10% of total sales, compared with 72.1% in the same period last year. The share has increased by more than 10 percentage points.

Some 74% of respondents generated at least 15% of their sales via commerce advertising vs. 58.1% in the same period last year.

For 52.1%, the share was more than 25%, compared with 48.8% in the same period of the previous year. The findings reaffirm the power of partnerships to drive revenue and solve challenges quicker.

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