• by Laurie Sullivan  @lauriesullivan, November 1, 2024

Increasing ad prices became the most important issue for advertising during the second quarter of 2024 -- but by the time the third quarter rolled around costs declined somewhat.

Ad-price growth continued to trend downward across all channels in Q3, continuing the pattern from earlier this year -- resulting in headwinds for spending growth in search and social, where ad volumes did not offset the price changes enough to maintain previous growth levels.

Retail media and search cost-per-click (CPC) grew more slowly in the third quarter, compared with the previous two this year. Paid social CPMs dropped year-over-year (YoY) after two quarters of increases, according to Skai’s quarterly trends report based on the spending at the agency by clients.

Retail media saw a significant spike in clicks, while search saw little change in click volume and social media experienced a surge in impressions enough to keep spending growth positive at the channel level.

But price vs. volume wasn’t the only story, Skai data shows. New advertising formats emerged behind walled-garden publishers, and the data shows they have outpaced overall growth of publishers or channels.

For example, Amazon DSP campaigns expanded its ad reach into the upper funnel, driving a 63% increase in spending for that segment compared to last year. Google pushed toward Performance Max, which contributed to 49% YoY growth. Meta’s Advantage Shopping Campaigns+ grew 67%. Just a reminder these numbers reflect Skai’s clients.

While overall adoption grew for Google Performance Max from 51% to 59% over the last quarter, spending share was unchanged from Q2 to Q3. One reason is that CPCs dropped sequentially, although prices are still higher than last year.

The increase in adoption likely reflects Q3 preparations for the Q4 shopping season, while spending may not begin to increase until shoppers start shopping in earnest in the fourth quarter.

Retail media spending showed healthy year-over-year (YOY) growth, while search and social were generally flat.

Skai social data is heavily lower-funnel, which can result in additional growth headwinds when those tactics are less prominent outside of the fourth quarter, particularly for Meta.

This quarter, Skai looked at what drove spending growth, weighting YoY growth based on the size of the segment.

For example, Amazon DSP spending grew 63% YoY, but it only comprised 13% of total spending. As a result, it contributed 7% to the 28% growth across all retail media.

Skai reported that in Q4 digital should make a major impact on spending and volume. 

While lower ad prices have been a headwind toward spending growth in some channels, the company has seen those lower prices unlock greater ad volume closer to the bottom of the purchase funnel in retail media.

Both search and social ads will move toward the bottom of the funnel in Q4, and will likely follow.