2023 Year in Review Benchmark Report
Retail industry and performance on
2023 was marked by new challenges and exciting opportunities for sellers across a variety of retail advertising platforms. New capabilities from generative AI to highly customized data analysis are helping sellers deliver more targeted and cost-effective advertising campaigns to their ideal shoppers. These gains are critical because macroeconomic trends like inflation and high consumer prices continue to create difficulties in the market.
Having the right data to navigate 2024 is critical, which is why Quartile has assembled its 2023 Year in Review Benchmark Report. Quartile released the first installation of this report in June 2023, analyzing retail advertising performance in the first half of the year. Completing that analysis, we are excited to bring you the full 2023 analysis, which breaks down performance across leading retail advertising channels including Amazon, Walmart, Google, Bing, Meta, and Instacart.
In 2023 we saw return on ad spend (ROAS) rebound across nearly all marketing channels we track, a reflection of rising average order values (AOV), and on certain channels, declining or flat cost per click (CPC). This may indicate increased consumer spending overall or an improved ability for sellers to target their ideal audiences. There are several factors driving these shifts, which is why we’ve added a new section to this year’s Benchmark Report—2023 Year in Review—which breaks down some of the key technologies, capabilities, and platforms shaping online retail in 2023. We anticipate that these trends will continue to shape online shopping in 2024 and beyond.
Standout YoY Metrics Include:
YoY Increase in Amazon DSP ROAS
YoY Increase in Google Conversion Rate
YoY Increase in Walmart AOV
YoY Reduction in Meta CPC
Quartile examined thousands of businesses with active ad campaigns on Amazon, Walmart, Instacart, Google, Meta, and Bing. This report analyzed data from thousands of campaigns across these ad platforms. Brands advertising on these platforms had active campaigns for all of 2022 and 2023, apart from Walmart. Quartile did not launch Walmart advertising with partners until May of 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 and compares those metrics year over year. 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+. This breakdown sheds light on how different levels of ad spend can benefit from the economies of scale or, alternatively, hyper-targeted marketing strategies.
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.
2023 Year in Review
Several key developments shaped shopping habits and retail advertising in 2023. The following are some of the most important trends that retail companies should monitor or incorporate into their strategies to in 2024.
Artificial Intelligence – Generative AI is reshaping how sellers develop creative for their online ads. At Amazon unBoxed in October 2023, the retail giant introduced an AI-enabled image generator tool, allowing sellers to place their products within generated images, cutting down on creative costs while boosting ROI. We anticipate generative AI tools will continue to automate and streamline retail advertising across a variety of platforms.
Amazon Marketing Cloud Maturity – Amazon Marketing Cloud (AMC) helps retail companies customize performance analytics and build bespoke audiences. The cloud-based clean room solution is gaining sophistication with the announcement of Template Analytics, which make it easier for sellers to execute queries and complete complex data analysis.
Walmart Growth – In November 2023, Walmart announced online sales growth that exceeded analyst expectations. Q3 online sales grew 24% in the U.S. and 15% globally. Contributing to that growth was the rise of marketplace sellers, which increased 20% in Q3. Increasingly, Walmart is an attractive advertising platform to capture an increasing share of shoppers.
Social Media Shopping – Analysts estimate that social commerce will account for 5.9% of all U.S. ecommerce sales in 2023. TikTok will be a driving force of these sales, after launching TikTok Shop in 2023. As one of the fastest rising shopping platforms, TikTok is estimated to gain 9.6 million online shoppers this year, which is more than Facebook, Instagram, and Pinterest combined.
Chinese Marketplaces – TikTok Shop is not the only Chinese marketplace that gained traction in 2023. Shein and Temu also expanded rapidly in the U.S., gaining over 23 million and 56 million monthly active users from October 2022 to September 2023. Both platforms are attracting shoppers looking for good deals amidst persistent inflation.
2023 Holiday Recap and Top Categories
Quartile analyzed shopping behaviors across Amazon retail categories during the holiday shopping season. Because of the wide variety of categories and subcategories on the platform, Amazon provides a helpful indicator of consumer preferences and industry-wide trends.
Overall, holiday sales remained relatively stable on Amazon from 2022 to 2023, but certain categories significantly overperformed year over year. Home and Kitchen remained the top shopped category during the holidays and managed to increase sales 9% year over year. Automotive retailers saw the most significant sales growth during the 2023 holiday period, increasing sales 92% year over year. Other notable successes include the Grocery and Gourmet Food category which increased holiday sales 21% year over year and Beauty & Personal Care which increased sales 11% year over year.
Some top performing categories unfortunately experienced year over year declines during the holidays. Health and Household categories, the second most purchased category overall, declined 23% year over year. Sports and Outdoor retailers, the third most purchased category during the holidays, also saw sales decline 15% year over year. At number five in terms of sales, Clothing, Shoes, and Jewelry retailers also experienced a 15% year over year sales decline.
Year In Review with Marketplace Pulse
The Year Ahead for Ecommerce with Daniel Knijnik
Quartile broke out analysis for sellers—businesses that sell to customers through the Amazon marketplace—and vendors—manufacturers or distributors who sell directly to Amazon at a wholesale price. The performance metrics for these groups varies, so we hope this will provide a clearer picture of how different kinds of advertisers are performing on Amazon.
Notably, CPC for sellers declined -4% year over year, contributing to a 12% increase in ROAS. For vendors, CPCs increased 9%, but because both conversion rates and AOV tend to be higher for Amazon PPC vendors, ROAS also increased 11% year over year. New this year, Quartile analyzed total advertising cost of sales (TACoS)—a metric that indicates how much sales (organic and ad sales) a seller earns relative to ad spend—reflecting that paid advertising on Amazon improves both ad sales and organic sales. Sellers improved TACoS year over year by 26%.
Amazon DSP, which delivers display ads across Amazon’s websites and external media sites, was the top advertising channels when it came ROAS growth year over year, up 26% since 2022. That was helped by one of the most significant declines in CPC, down 17% year over year.
Another key driver of this channel’s success is its high average conversion rates, which contributed to its success during the holiday shopping season in November and December. High returns during the holiday were boosted by relatively small increases in cost per acquisition (CPA). In a crowded and highly competitive shopping season, Amazon DSP is particularly attractive to lock in high-converting holiday shoppers.
Combining results from Google Search, Google Shopping, and Google Performance metrics, Quartile saw relatively stable CPCs on Google throughout 2023, increasing just 1% year over year. This stability, paired with consistently high AOV helped sellers maximize returns on Google, averaging 9.20 a 22% increase over 2023.
Shoppers on Google are among the most engaged, averaging a clickthrough rate (CTR) of 1.46% and a conversion rate of 11.49%, both of which increased 11% and 29% year over year, respectively. This may be in part due to the maturity of the platform and the significant investment Google has made in its automation tools. Features like Performance Max Campaigns leverage machine learning to enhance campaign performance over time.
Client Case Study
DTLR is a premier urban lifestyle retailer that offers a diverse selection of footwear and apparel while fusing passion for fashion, entertainment, sports, and community empowerment.
Amid heightened competition during Cyber 5 2023, DTLR achieved remarkable results, increasing revenue volume by 44% while reducing CPCs by 17% YoY. This success was driven by enhanced campaign segmentation and strategic budget allocation. By improving campaign structure, DTLR realized a notable 37% improvement in ROAS performance by maximizing ad spend for top-performing Brands at a greater efficiency.
CTR increased by
CVR increased by
Walmart is the newest channel tracked in Quartile’s annual benchmark report. It continues to mature as an advertising channel with indications of growing competition. CPC increase 12% for Walmart advertisers, although the cost remains quite low compared to other channels, averaging $0.46 CPC. Conversion rates are quite high on Walmart, averaging 16.8%, but consumer spend on this channel is relatively low with AOV at $11.08.
That trend seems to be shifting as ad sales ticked up significantly on Walmart throughout 2023, increasing nearly 1.5X from the first half to the second half of 2023. As sellers increasingly invest in this channel, it will be interesting to see how much they can improve their efficiency and boost returns.
Like Google, Quartile has combined performance for Bing Search and Bing Shopping campaigns. Bing earned the second highest AOV of all platforms tracked in this report, averaging $138.98. Despite this, ROAS declined year over year, as CPC increased 18% on the platform.
While Bing attracts a lower volume of impressions and conversions, when compared to rival search platform Google, it’s still worth testing ads on this channel. Particularly in its peak sales months of January and March, Bing may be an attractive platform to advertise for sellers looking to expand their reach to new customers.
Meta, which includes Facebook and Instagram advertising platforms, experienced significant growth in 2023. ROAS increased 9% year over year, averaging 10.26. That is the highest average ROAS of any channel tracked in this report. Driving that success was a significant decline in CPC, down -24% year over year and a high average order value of $154.29.
The CPC decline may indicate that Meta is becoming a less competitive platform as new social commerce channels like TikTok emerge. That decreased competition could create new opportunities for sellers as Meta remains a lucrative channel where high-value shoppers are discovering their next purchases.
Instacart, like marketplace platform Walmart, had relatively low average ROAS in 2023 at 3.77, despite incredibly high conversion rates. Part of that low return may be due the channel’s high average CPC of $1.16. Although sellers were able to sell more on Instacart compared to Walmart in 2023, the advertising cost was significantly higher.
As Instacart matures as an advertising platform and introduces greater targeting and automation features, sellers may be able to drive down these costs and recognize greater returns in the year ahead.
Behind the Numbers
"As retail media rapidly expands, every channel is striving to seize a prominent position in the market. Now more than ever, brands and sellers require access to terabytes of data capable of capturing data points from customers, sometimes on an hourly basis rather than monthly. With data infrastructure becoming increasingly accessible, there's a growing need for sophisticated tools to ingest, process, and translate this data into actionable insights that can drive more effective strategies."
Solano Pertile Campos,
Director of Data Intelligence at Quartile
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