Our Q1/23 Digital Commerce Spend Report brings you data-driven insights and analysis on spending patterns within digital commerce to help companies identify trends, optimise spending and inform strategic decisions. Download the report here.
Q1 brought some surprises when it comes to ad spend. Google takes the crown for preferred ad platform from Facebook, digital agencies are a driving force, and would it really be 2023 if ChatGPT didn’t make an appearance?
Ad spend continues to take a significant share of 63.5% of total budgets for ecommerce businesses this quarter, fueling growth. However month on month there’s a decline in spend. In comparison to 74% of their budget going on ads in December 2022, they only spent 58.3% by March. This is most likely due to seasonal differences, as looking at growth by quarter, the trendline is positive.
Digital agencies have become the driving force behind ad spend trends this quarter. They’re accelerating their ad spend by 44.17% on average, while SMB and mid-market have increased their average ad spend by 14.27% and 4.14%, respectively, compared to Q4 2022.
In our 2022 Ad Spend Review, we crowned Meta, which includes Facebook and Instagram, the online retailers’ advertising platform of choice. After months of dominance by Meta, Google has become the new leader in Q1, with over 50.9% of ad spend. But, another shake-up could be on the horizon. Card spend on Microsoft Advertising – new owners of AI sensation ChatGPT – have seen a surprising increase this quarter, becoming the third most popular platform and knocking TikTok down to number four.
As we mentioned, spend on Google is over 50%. But, the breakdown by segment gives some interesting results. Digital agencies spend 67% of their budgets on Google Ads. In comparison, SMB increased their average spend by 11%. Mid-market companies increased their average spend by 48%.
Card spend with Meta has decreased by 11% compared to the previous quarter. They’re no longer the platform of choice for SMB digital commerce. Despite increasing their average spend with Meta by 9.4% compared to the previous quarter, Google Ads had higher spend. Meanwhile, mid-market businesses reduced average card spend with Meta by 3.4%.
Directly correlating with their purchase of OpenAI, and as such, ChatGPT, spend on Microsoft Advertising skyrocketed from 0.4% of customer’s budgets in Q4 2022 to 2.1% in Q1 2023. SMB digital commerce leaned strongly into the upwards trend of Microsoft Advertising – spend here rose by a massive 62% this quarter. However, mid-market reduced their spend by 34%.
TikTok was knocked to the fourth favourite platform with 2% of spend overall. Both SMB digital commerce and mid-market businesses decreased their spend since last quarter by 51.4% and 55% respectively. These significant amounts indicating a big shift in strategy.
UK businesses still prefer allocating spend to Meta, with Google Ads and TikTok following. In comparison, Swedish companies prioritised Google Ads, with Meta in second place and TikTok in third. Throughout the rest of Europe, Google Ads and Meta were first and foremost.
The UK has a consistent strategy: invest a similar percentage of their ad budgets with the same platforms quarter-on-quarter. This quarter, Sweden and the rest of Europe switched up their strategy.
Spend with Google Ads in Sweden went from 46% in Q4 2022 to 66% in Q1 2023, and investment with Meta decreased from 45% to just 30%. Customers throughout the rest of Europe also increased spend with Google Ads, moving from 45% of total ad spend last quarter to 59% this quarter. Spend with Meta in this market also decreased quarter-on-quarter – going from 39% to 31% of total ad budgets.
Instead of dealing with different platforms and currencies, receipts and invoices, and arguing with banks over spend limits, you can make running ads easier with Juni. With automatic receipt generation, real-time spend insights, and Google Ads invoices auto-pulled into your account, keeping track of your payments is simple.
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Methodology
Insights in this report come from analysing thousands of aggregated and anonymised transactions on Juni cards. SMB digital commerce represents companies with 50+ employees. Mid-market digital commerce represents companies with 100+ employees. Digital agencies reference both digital marketing and advertising agencies as well as affiliate marketing companies. Numbers were compiled and analysed on a quarterly basis.
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