Grocery Advertising is Exploding in Paid Search – Walmart Leads but Will Amazon-Whole Foods Change the Market?

It’s been one week since Amazon announced its purchase of Whole Foods, and much of the speculation on how the move will affect the U.S. grocery industry has been centered on online grocery ordering and home delivery.

To explore this topic in paid search advertising, AdGooroo examined U.S. Google desktop text ad activity on 124 non-branded grocery store and grocery delivery keywords from June 2016 through May 2017, including terms such as ‘grocery store’, ‘groceries delivery’, ‘grocery delivery service’, ‘online grocery shopping’ and ‘supermarket’.

Top Spenders

During the 12-month period we found 1,741 advertisers spent $4.5 million sponsoring the non-branded grocery keyword group—a 245% increase in spend over the same period ending in May 2016, suggesting the online grocery category itself has grown significantly over the last year.

Further, AdGooroo data shows that the top 10 paid search spenders on the keyword group have dramatically increased their investment over the last 12 months compared to the same period ending in May 2016, as depicted in the following chart:

Top Paid Search Grocery Spenders
Walmart, the nation’s largest grocery retailer, led all paid search advertisers with an estimated $858,000 in ad spend on the non-branded grocery keywords during the 12-month period—up from just $51,000 spent from June 2015-May 2016. Walmart appears to be ramping up its online grocery effort in other areas as well, announcing delivery partnerships with Uber and Lift and expanding its curbside grocery pickup service in recent months., which Walmart acquired in September last year, spent an additional $82,000 on the keyword group during the period, up from just $3,000 in the 12 months preceding June 2016.

Aldi ranked second with $441,000 spent on the keyword group, up from $40,000 spent during the preceding 12-month period. Notably, Aldi averaged just $9,000 per month in spend on the keyword group from June 2016 through February 2017, but increased its average monthly spend to $119,000 from March through May this year, suggesting the Germany-based grocer began bolstering its online presence in preparation for its recently announced plans to expand its U.S. stores from 1,600 to 2,500 by 2022.

Safeway ($365,000), Kroger ($283,000) and Fry’s ($232,000) rounded out the top five.

Top Advertisers by Clicks

To assess performance leadership in the category AdGooroo also examined advertisers’ percentage share of total clicks on the 124 grocery keywords from June 2016 through May 2017.

Top Paid Search Grocery Advertisers
Walmart again led all advertisers, capturing a 19.1% share of total clicks on the 124 non-branded grocery keywords over the 12-month period, followed by Aldi (11.6% click share), Kroger (7.6% click share), Safeway (6.7% click share) and Fry’s (4.2% click share).

Although the same top five retailers for ad spend also ranked in the top five for click share, Kroger and Safeway swapped places, showing that Kroger had a more efficient campaign than Safeway, since it spent less and received a larger share of clicks on the non-branded grocery keywords.

Amazon & Whole Foods

As for the retailers that prompted this study, Amazon ranked 9th in ad spend on the non-branded grocery keyword group, spending $134,000 from June 2016 through May 2017, while ranking 9th in clicks with a 2.8% click share. Whole Foods ranked 18th in ad spend with $51,000 spent on the keyword group over the last 12 months—a decrease from the $57,000 the company spent on the same keywords from June 2015-May 2016—and 19th in clicks with a 1.2% click share.

It will be interesting to see if and how these numbers and the grocery market change as the Amazon purchase of Whole Foods materializes in the coming months. AdGooroo will certainly be keeping our eye on it.

Note: The results of this study are limited to U.S. Google desktop text ad activity on the 124 non-branded grocery store and grocery delivery keywords. Advertisers may be sponsoring additional keywords that, if measured, would alter the findings of the study.

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