Dive Brief:

• Ecommerce channel ads — which appear inside an online marketplace and a category led primarily by Amazon — and social ads saw major spending boosts in Q2 compared to last year — 66% and 37%, respectively — according to Kenshoo's latest Quarterly Trends Report.
• Q2 saw mobile ad spending earn the majority (51%) of search spending for the first time. The volume has been hovering near half for several quarters. Kenshoo calls this a "milestone for paid search," in a press release about the study, adding that search spending is unlikely to ever go back to a desktop-first focus.
• The hypervisual Stories format on Instagram accounted for 18% of all Instagram ads, up from 9%, and spending for Stories grew a massive 186% compared to Q2 2018. Video ads in social media were up 53% YoY, and represented 43% of total social ad spend.

Dive Insight:

Kenshoo's new report describes second quarters as a time for gathering insights, since Q1 is the time to recover from the Q4 holiday season, and Q3 is the time to prepare for the next Q4. On that note, Kenshoo suggests that spending for ecommerce channel ads (ECAs) during the upcoming Q4 may be higher than most forecasts predict based on their during strength during Q2. Specifically, ECAs experienced a 66% increase over last year's Q2.

In another sign of shopping's importance to digital advertising, product ads accounted for nearly half — 46% — of total search ad spending, as search ads continue to be the steadiest ad channel. Kenshoo predicts that product ads across search and social may become its own cross-channel category. Overall, paid search ads — digital advertising's biggest channel — posted a 10% quarterly increase, a higher rate than the 7.7% predicted by eMarketer for all media ad spending this year.

The report also points to the declining relevance of clickthrough rate (CTR) as a major ad metric. The CTR in Kenshoo's data shows a fall over the last five quarters, from 2.6% to 1.9%. A key reason, Kenshoo points out, is the rise of other kinds of ads that don't rely on clicks, such as video and other visual formats like Stories in social ads, These ads tend to be focused on brand awareness rather than direct engagement through clicks.

Although ad spending is increasing across many fronts, cost-per-click is down 10% YoY in Q2. Kenshoo attributes this to the availability of more lower-priced mobile and product ads. Average CPC dropped from 48 cents in Q2 of last year to 43 cents this year, but brands are getting 41% more impressions YoY.

The average CPM was up 10% during Q2 for a total of $6.04, with most of the increase coming from Dynamic Ads for Products (DPA), a customizable format on Facebook.

Social ad impressions were up 24% YoY, with social ad spending growing in a direct upward line for the last five quarters. Social's increase in spending of 37% YoY is led by Facebook and Instagram, although Instagram's growth — following a spurt last year — is now at about the same rate as that of Facebook.

The report is based on 15 months of performance data from more than 3,000 advertisers and agency accounts, covering over 500 billion impressions, 13 billion clicks and $5.5 billion in ad spending.