DIGITALBENCHMARK REPORT

Q4, 2017

With an 8% bump in clicks and 31% increase in click share, retail advertisers continue to find success with Shopping ads. We expect this upward trend to continue in 2018.

Opportunity: Customers want the best price. Leverage the newly released price report in Google Merchant Center to benchmark your auction level price competitiveness.

CPCs in the Education industry remain the most expensive, with an average of $3.80. This represents a modest 2% decline from last quarter. On the other hand, Travel and Technology enjoy the lowest average CPCs of $0.49 and $0.50, both of which saw quarterly decreases from the prior of 12% and 6% respectively.

Opportunity: Marketers facing high CPCs should be in hot pursuit of better CTR by feeding Google’s machine learning with fresh collateral. This will help you discover the winning combinations for your audience segments. Marketers in industries with cooling demand should adjust their bids to prevent over-bidding.

Q4 2016 Q1 2017 Q2 2017

Google Shopping

Key Findings

• Shopping ads continue to gain momentum

• Advertisers are still underutilizing Audiences

• Search clicks are down, but engagement’s up, so advertisers are happy

• As CPMs continue to rise, the social space is heating up

Q3 2017 Q4 2017

100% 85% 92% 93%124%

31% 28% 30% 32%40%

ClicksShare of Clicks

Q4 2016 Q1 2017 Q2 2017

Mobile Share

Q3 2017 Q4 2017

49% 50% 51%52% 53%

In Q4 2017, there was a 3% increase in creative-light ad groups. This is a surprising finding because—as we noted in our Q3 report—Google's improved creative rota-tion technology can reward advertisers who use three or more ads per ad group with increased clicks and impressions.

Opportunity: Consider adding more creative to your most important ad groups. You’ll benefit from Google’s machine learning technology underpinning the newly released “optimize” ad rotation setting.

Advertisers continue to find success with search advertising spend marching ever upward. An interesting trend developing is reduced gross clicks, yet higher overallcustomer engagement (measured by CTR). Advertisers are (happily) paying a premiumfor this improved engagement.

Opportunity: Tightly pairing your audiences strategy with engaging creative ensures that your advertising investment performs to its fullest. Evaluate your campaignaudience depth and create unique personalized creative to suit each audience.

Mobile share continues to steadily increase with observed sequential quarterly growth of 1% in Q4. Mobile CPCs increased 25% from last year. While mobile CPCs remain discounted relative to desktop CPCs, the gap is closing rapidly.

Opportunity: Mobile traffic remains a bargain. Seize the opportunity to court yourcustomer on their preferred medium by utilizing mobile bid adjustments. Be mindful that discounted CPCs on mobile will soon dissipate as more advertisers seize this opportunity.

Social Trends

CPMs increased 44% YoY, indicating that competition for consumer attention is heating up. Yet, CTRs have remained relatively flat, which may indicate creativepersonalization isn’t keeping pace with consumer expectations.

Opportunity: Competition tends to be at a seasonal low in Q1 and Q2. Advertisers bucking the trend may be positioned to realize better returns from suppressed CPMs.

Creative Depth by Ad Group

Audience utilization remains low, despite the advantage that combining audiences with keyword targeting provides.

Opportunity: Add audiences to all campaigns; begin with “Bid Only”to measure audience performancewithout restricting reach.

Audience Depth

CPC by Industry

Search Trends

In North America, we observed no market share change between Google and Bing from Q3 to Q4. Time will tell if Microsoft’s December soft-launch of a new AI-powered Bing will move the market share needle. In the meantime, our findings serve as a good reminder that not everyone searches on Google.

Opportunity: Bing still presents 10-15% in additional volume foradvertisers not invested there today. Round out your search ad campaigns by including Bing.

Publisher Share

1

35%

30%

25%

20%

15%

10%

5%

0%2 3 4

Number of Creatives / Ad Group

5 6+

160%

120%

80%

40%

0%

80%

60%

40%

20%

0%

Education

$0.00 $1.00 $1.50

Auto

Healthcare

B2B Services

Finance / Insurance

Industrial / Manufacturing

Travel / Leisure

Technology

Retail

Real Estate

$2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00

$0.80

$0.78

$0.76

$0.72

$0.74

$0.70

$0.68

$0.66

$0.64$0.62

Q42016

Q12017

Q22017

Q32017

Q42017

CPC (Actual)

Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

CPM

Google Audience KPI

Mobile Share of Spend

Market Share

Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

1.8%

2.3% 2.3%

2.1%2.2%

CTR

Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

$0.12

$0.07$0.09

$0.12$0.14

CPC

Google

3.0%

2.5%

2.0%

1.5%

1.0%

0.0%

Q42016

Q12017

Q22017

Q32017

Q42017

CTR (Actual)

Google

110

105

100

95

90

85

80

Q42016

Q12017

Q22017

Q32017

Q42017

Click Volume

Google

120

115

110

105

100

95

90

Q42016

Q12017

Q22017

Q32017

Q42017

Spend (Indexed)

Google

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24%

$2.94

$1.67$2.03 $2.17

$2.53

Each quarter, we aggregate advertising performance across our customer base, and share our results with digital marketing professionals tocompare against their own initiatives. In addition to global industry trends, we explore the most compelling areas of digital marketing, including the evolution of mobile, the best use of creative for more clicks and market share, and using the right search and social tools to attract the rightcustomers. For each benchmark, we identify a tactical opportunity you can use immediately to drive better performance in your campaigns.

Benchmarks are calculated using a "same store sales" approach with advertisers who were clients from 4Q2016 through 4Q2017.

DIGITALBENCHMARK REPORT

Q4, 2017

16%

84%