Retail industry and performance on
EXECUTIVE SUMMARY Pivoting in the New Era of E-commerce
Retail advertising faced several challenges in 2022. Inflation and fears of an economic downturn led some business to pull back spending on online ads. As spending declined, cost-per-click (CPC) increased on certain platforms. But these challenges have created new opportunities. Savvy sellers are finding ways to improve ad targeting and maximize efficiency to remain competitive in a new landscape.
Automation and machine learning are some of the tools that can help sellers identify trends and capitalize on changing shopping behaviors. Maximizing the use of data to drive informed marketing strategies is the key to weathering uncertain market conditions. That’s why we are excited to bring you Quartile’s 2023 Benchmarks Report.
The 2023 Benchmarks Report will help sellers understand the changing online advertising industry and uncover new opportunities. We analyzed thousands of businesses ad accounts across Amazon, Instacart, Walmart, Facebook, and more to deliver the most comprehensive multichannel performance benchmarks to date to help your organization prepare for a successful 2023 and beyond.
Among our research, we found:
YoY Increase in Amazon PPC AOV
YoY Increase in Google Paid Search ROAS
YoY Reduction in Google Shopping CPC
YoY Increase in Facebook Conversion Rate
Quartile examined thousands of businesses with active ad campaigns on Amazon, Walmart, Instacart, Google Paid Search, Google Shopping, Google Performance Max, Facebook, Bing Shopping, and Bing Paid Search. This report analyzed data from thousands of campaigns across these ad platforms. Brands advertising on these platforms had active campaigns for the full years of 2021 and 2022, apart from Google Performance Max, Walmart, and Instacart. Quartile tracked Google Performance Max campaigns starting October 2021, Instacart campaigns starting December 2021, and Walmart campaigns starting May 2022. Quartile’s technology and team manages all campaigns featured in this report.
The analysis took place in January 2023, when the standard attribution window of each ad platform had closed. The report also details retailers’ monthly ad spend in each channel. Analysts grouped ad accounts by three monthly ad spend tiers and calculated the performance of those groupings. Monthly spend tiers include: <$5,000; $5,000-<$25,000; and $25,000+.
Finally, Quartile examined Amazon campaign performance based on sellers’ unique verticals. Some major segments include health and household; sport and outdoors; beauty and personal care; clothing, shoes, and jewelry; pet supplies; and automotive. Quartile is excited to relaunch and refresh the 2023 Benchmarks Report, adding six new adverting platforms. Now in its sixth installment, the 2023 Benchmarks Report continues to be the most comprehensive study on multichannel ad performance in the retail industry.
Despite inflation increasing CPCs across many of the channels tracked in this report, Amazon experienced a slight decline year over year. This, along with significant gains in AOV led to an increase of 26% in ROAS year over year. Consumers may have purchased more from Amazon in 2022 because they felt economic pressure to find the best deals.
Because of inflation and economic uncertainty, it is likely that advertisers will continue to prioritize low-funnel marketing channels like Amazon in the year ahead. Driving sales efficiently by targeting shoppers with high purchase intent will be critical for success in 2023.
Amazon DSP, which delivers display ads across Amazon’s websites and leading publishers’ sites, experienced an increase in CPCs from 2021 to 2022. Despite these challenges, ROAS increased on this channel year over year. That success may be due in part to lower clickthrough rates and consistent AOV year over year.
Increased ROAS on Amazon DSP could also be attributed to focused ad targeting. Particularly as CPCs increase, sellers must focus spend on high-value shoppers¬–those who have visited a seller’s website or added a product to their cart. These shoppers are more likely to convert, which may explain how sellers offset rising costs on the platform.
In 2022 Google Shopping underwent significant updates to accommodate changing shopping behaviors and emerging privacy regulations. Google’s increased focus on automation and machine learning tools is helping retailers navigate these shifts and target their most valuable shoppers on the platform.
Although Google Shopping saw declines in conversion rates, AOV increased 6% year over year, indicating that retailers are reaching shoppers with a higher intent to purchase. This targeted marketing strategy helped retailers maintain ROAS year over year while lowering their average CPC on the marketing channel.
One of the most significant shifts in Google Paid Search in 2022 was the move to sunset Expanded Text Ads. Google replaced the ad format with Responsive Search Ads in June as the new default ad type. Responsive Search Ads leverage machine learning to create combinations of ad titles and descriptions that are more likely to engage shoppers on the SERP.
The shift toward greater automation seems to be paying off as retailers experienced significant gains in conversion rates, up 108% year over year on Google Paid Search. ROAS also increased on this channel 18% year over year. These gains make Google Paid Search one of the most efficient channels in the 2023 Benchmarks Report.
Quartile is excited to share benchmarks on the latest automated ad format from Google. Google Performance Max campaigns leverage machine learning to fully automate ad campaigns on Google and deliver ads across Google’s properties, including Google Discover. The automated ad campaigns help retailers increase conversion rates while lowering CPA.
Quartile integrated this advertising channel into its solution in 2022 and our initial metrics indicate high conversion rates, averaging 10%, and low CPC at $0.77 in 2022. Quartile analysts note that as these campaigns ingest more data, Google Performance Max will be able to identify more efficiencies and help retailers lower costs further in the future.
Bing Shopping continues to evolve as it adapts to changing shopping behaviors. In 2022 Bing Shopping expanded access to its Customer Match, Similar Audiences, and In-Market Audience features. These targeting tools help retailers engage shoppers who have visited their websites or uncover similar shoppers who are in-market for their products. These targeting tools will become increasingly important in 2023 as retailers work to lower costs and increase conversions through more granular targeting.
Uncovering ways to limit costs will be paramount for Bing Shopping in 2023 as average CPC and CPA increased on the platform year over year in 2022.
Like Bing Shopping, Bing Paid Search saw increases in both CPC and CPA from 2021 to 2022. While these trends may lead retailers to overlook the advertising platform, Microsoft is planning several enhancements to Bing Paid Search in the coming year, including increased automation and new ad types. Microsoft’s goal is to double its advertising business to $20 billion in 2023, which means retailers can expect significant innovation on the platform.
Because Bing Paid Search is less saturated, retailers may see competitive CPCs in the near term, compared to other search advertising platforms. Lower costs may also help retailers target and nurture new shopping audiences.
Facebook significantly revamped its advertising offerings considering new privacy regulations in 2022, like Apple’s App Tracking Transparency feature. In January 2022, the social platform removed certain ad targeting around sensitive topics and added enhanced ad controls for its users. While these changes may limit the reach retailers’ ads have on Facebook, they may help retailers engage consumers with higher purchase intent.
That seems to be the case with this year’s Facebook benchmarks. Conversion rates increased year over year on the social platform and ROAS remained steady year over year.
Because Facebook advertisers often encounter consumers earlier in their shopping journey, driving discovery, it will be critical for retailers to find effective ways to target the right customers at the right time on this platform to move shoppers closer to purchase in 2023.
Walmart is a new marketing channel that Quartile incorporated into its technology in 2022, which is why this report does not share year-over-year metrics. The 2022 benchmarks and month-over-month trends can help lay the foundation for a 2023 marketing strategy.
Compared to other channels analyzed in this report, Walmart has one of the lowest CPC and CPA and relatively high conversion rates, making it an ideal channel to test new campaigns. It is also an excellent platform to reach new shoppers who have a high purchase intent and are lower on the sales acquisition funnel.
Online grocery shopping remains an incredibly popular convenience for consumers, which is why advertising on Instacart is growing rapidly despite economic uncertainty. Instacart launched its advertising platform in 2019. Despite its recent entry to the market, its AOV and ROAS metrics are among the most robust in the 2023 Benchmarks Report.
One of the benefits of advertising on a new ad platform like Instacart is that it is less competitive than more saturated marketing channels. Innovative CPG retailers can take this time to learn and master the advertising platform which will become a critical part of their marketing strategy in the near future.
Your industry’s benchmarks are in
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Quartile’s analysts have audited thousands of ad accounts across over 5,300 brands and sellers. Our data-driven experts and certified professionals are meticulous, inquisitive, and determined to make your ads succeed.
No two conversations with our prospective partners are the same. We analyze your accounts in advance and give you transparent feedback and recommendations for how to update your advertising strategy and campaigns to best support your business objectives in 2023 and beyond. Paired with A.I. and machine learning technology, Quartile helps you take your advertising strategy to the next level.