The Funnel

Last Month in PPC: Top Headlines in October

Here's a selection of the top PPC headlines that grabbed our attention last month.

1. Google adds email forwarding, automatic reply features to click-to-message ads

On Thursday, October 25, 2018 Google announced that it was enhancing its click-to-message ads with two new features set to improve the service.

The first involves email forwarding for click-to-message ads. Texts will now be sent directly to your email, eliminating the need for you to provide your phone number. Replies to email will be sent back as a text message to the user.

The second update involves automatic reply, which will send an automated reply to a customer as soon as they text you, such as “Thanks for texting! We will be in touch shortly.”

Google also said it was expanding message reporting to make it easier for you to measure the success of your click-to-message ads. The new feature will allow you to set the number of user-initiated exchanges typically needed to make a purchase as a conversion threshold.

In addition, Google wants to make it easier for businesses to track the offline activity of their customers. As Google themselves put it: “Most customer journeys still end in store, and 61% of shoppers would rather shop with brands that have a physical location than ones that are online only. Businesses need to measure the offline impact of digital advertising in order to take action on omnichannel behavior.”

To help measure the offline activity of customers, Google offers store visit measurement, where store visits are estimated using data from users that have location history turned on. Google is adding the information collected on store visits to data-driven attribution and smart bidding. In this way, the search giant hopes to make it easier for businesses to use machine learning to help them bette and which ad campaigns are most effective. Store visits will be rolled out in google analytics. The new features will allow businesses to better understand which marketing campaigns are driving customers to their website and later to their store.

JCPenney is already using store visits to measure the offline activity of its customers, according to the search giant. Store Visits in Google Analytics are allowing the retailer to analyze which digital marketing channels are most effective in driving in-store visits.

2. Google Lens finally integrated with Google Images search results

Starting from October 25th, 2018, Google Lens will officially be available as a feature on Google Image search results. As Google put it: “Starting today, when you see something in an image that you want to know more about, like a landmark in a travel photo or wallpaper in a stylish room, you can use Lens to explore within the Image.”

Lens is already available as a feature in Google Assistant and Google Photos. A Lens button will now appear in Google Images too, which when clicked, will show dots on images you can click on to learn more about the item.

Google says Lens will make it easier for you to buy products online. If you search for living rooms in Google Images and you see some wallpaper you like, you can now click the Lens button and then the wallpaper to learn more about where to buy just that kind.

The update is yet another example illustrating the spectacular growth of visual search in the past several months. By bringing Lens to Google Images, the search engine giant is hoping to compete with Pinterest and Bing who already have similar features.

3. Google parent Alphabet misses earnings, Google Ads blamed

Google reported Q3 earnings after the bell on Thursday, Oct. 25th, 2018. While the number of clicks on Google Ads soared over 60% for the quarter, prices fell a significant 28%.

“Google parent Alphabet Inc. is paying more to partners that distribute its search engine, while charging less for each ad that is run - a combination that’s putting a damper on growth,” Alistair Barr of Bloomberg wrote on Thursday.

Whereas analysts expected the company to post Q3 sales minus partner fees of $27.3 billion, the company pulled up only $27.2 billion.

“Google is shelling out billions of dollars a year to partners including Apple Inc. to distribute its search engine widely. Then it’s up to Google to generate as much money as possible when people search and click on relevant ads. More of these marketing spots are running on mobile and YouTube, which can’t charge as much as the company’s original desktop search business because they result in fewer eventual consumer purchases,” Alistair Barr wrote.

The search giant is facing a rising problem when it comes to search. YouTube and mobile ads offer lower returns on investments for advertisers, since customers are less likely to make a purchase when they click on mobile ads or YouTube ads.

With the rise of mobile search, people are more likely to click on your ad, but consumers still tend to make final purchases on desktop. Bloomberg data shows that while clicks on Google ads jumped 60% in Q3, prices dropped 28%, the biggest decline since 2015.

4. Amazon digital ad revenue soaring according to Q3 earnings report

Amazon reported Q3 earnings in late October, posting $2.5 billion in sales and cementing itself as the third-largest and fastest-growing digital advertiser. Pointedly, ad revenue was up 123% year-on-year.

The earnings marked two consecutive quarters of triple-digit growth in the advertising segment for Amazon, putting the online retail giant just behind Facebook and Google.

In a report in September looking at Amazon’s digital ad revenue, eMarketer forecast that Amazon’s U.S. ad revenue would more than double in 2018, reaching $4.61 billion.

While this growth is impressive, it is still a distant third to the Facebook-Google duopoly. Put together, Facebook and Google will have 58% market share in 2018, with Google at $42 billion (37.1%) and Facebook at $23 billion (20.6%).

According to eMarketer, Amazon will boost its market share of the sector to 7% by 2020.

Amazon’s digital ad segment is focused on improving the usability of its advertising platform for advertisers and providing better recommendations to customers. On September 5, the company announced it was planning to integrate and unify its advertising platform and that all ad buying and reporting would fall under a new 'Amazon Advertising' banner by the end of 2018.

5. New ‘digital taxes’ could force tech giants to cough up billions more in tax bills

A detailed analysis by the Wall Street Journal (WSJ) looks at the repercussions of new EU proposals which aim to tax tech giants based on revenue as opposed to profit. The legislation will affect companies such as Google, Amazon, Uber, Facebook and others, forcing them to shell out billions more in taxes to EU governments.

At issue are so called ‘digital taxes’ which target the digital services offered by global companies within certain countries from units based outside of the country, such as collecting data about citizens for targeted advertising campaigns.

As things currently stand, global tech giants like Facebook and Uber provide services such as advertising and taxi reservations in a digital way to local markets, while themselves being based in countries often several thousand miles away. While they earn significant profits on local markets, they pay almost nothing in local income tax, taking advantage of international tax loopholes.

As the WSJ writes: “U.S. tech companies often report little profit, and therefore pay little income tax, in the overseas countries where they sell their digital services. That is because customers in those countries are actually buying from a unit based elsewhere, often a low-tax country. The in-country unit is tasked with marketing and support, and the overseas unit that actually makes sales reimburses the local unit for expenses, leaving little taxable profit.”

The EU proposals aim to end this practice by taxing tech giants based on the revenue they earn through digital services, on top of the after-expense profit.

Other countries around the world are watching the EU closely and considering drafting their own legislation, including South Korea, India, Mexico and Chile.

There is, however, no guarantee the EU proposals will pass. Several EU states have voiced opposition to the bill, including Ireland, where a lot of US tech giants are headquartered.

Opponents to the bill argue it will negatively affect small tech firms and lead to double taxation.

A final word

We'll be posting updates like these in the months to come to help you keep up to date with the latest PPC trends. Stay tuned.