Search ad spending surged in Q4 2024, with retail media leading: report

The holiday season saw a significant increase in digital ad spending across retail media, paid search, and paid social channels according to the Q4 2024 Digital Marketing Quarterly Trends Report by omnichannel advertising platform for commerce media, Skai.

Despite concerns over a shorter shopping season and ongoing economic pressures, advertisers doubled down on digital campaigns, driving a 20% quarter-over-quarter (QoQ) increase in ad spend across all channels. Retail media emerged as the biggest winner, with remarkable year-over-year (YoY) growth.

By the numbers:

• Paid search. While spending increased 20% QoQ, YoY spending dipped by 2%, with a decline in standard shopping campaign clicks suggesting a shift toward Performance Max. Text ads clicks remained flat YoY, with CPCs decreasing by 2%, highlighting a shift in campaign strategies.
• Retail media. Ad spend surged 23% YoY, driven by a 28% increase in impressions and a 20% boost in clicks. Stable costs-per-click (CPC) at 3% further enhanced value for marketers.
• Paid social. TikTok led the way with a 28% YoY increase in ad spending, helping paid social maintain overall growth. Meta’s deprecation of the Conversions campaign objective led to an impression deficit.

Why we care. These numbers reveals digital advertising’s resilience during Q4 2024, with 20% quarter-over-quarter growth despite economic headwinds. The standout performance of retail media, growing 23% year-over-year with stable costs, confirms it as an increasingly vital channel.

Meanwhile, significant shifts in paid search and social media, including TikTok’s strong growth and changes in shopping campaign dynamics, highlight important strategic considerations for future campaign planning and budget allocation in 2025.

Between the lines. Despite predictions that year-round deals and a shortened holiday shopping window would dampen Q4 spending, marketers successfully adapted by:

• Launching early Amazon-led promotional campaigns before the Cyber 5 period.
• Maintaining stable ad costs across channels, with retail media CPCs only increasing by 3%.
• Leveraging TikTok’s strong engagement with younger audiences during the critical shopping season.

Big picture. While retail media flourished, traditional digital channels faced some headwinds:

• Paid search saw declining clicks for standard shopping campaigns, suggesting a shift toward Performance Max.
• Paid social struggled with impression growth following Meta’s deprecation of the Conversions campaign objective.

What they’re saying. “The holiday season will always drive spending across digital marketing. In retail media, the performance and ubiquity of those ads allowed for healthy growth throughout the season,” said Nich Weinheimer, EVP of Strategy at Skai.

Bottom line. Q4 2024’s digital marketing performance demonstrates the continued evolution of holiday shopping patterns, with retail media emerging as an increasingly crucial channel for marketers.