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US retail to remain biggest spenders on digital ads
19
May '16
The US retail industry will invest $15.09 billion in paid online and mobile media advertising in 2016. This figure will grow to $23.04 billion by 2020, for a compound annual growth rate (CAGR) of 11.9 per cent between 2015 and 2020. While spending growth is slowing, retail will remain the largest ad spender among US industry sectors tracked by eMarketer through at least 2020, according to a new eMarketer report, “The US Retail Industry 2016: Digital Ad Spending Forecasts and Trends".

eMarketer's definition of retail encompasses brick-and-mortar, mail order/catalogue, and online merchants of apparel, home furnishings and textiles, toys, pet food and supplies, appliances, jewelry, accessories, cosmetics, drugs and food, as well as restaurants. Retail ad spending will hover at just above one-fifth of all US digital ad spending for the entire forecast period.

Digital marketing—including paid advertising and unpaid digital tactics—is becoming an increasingly important part of retailers' promotional mix. When Duke University's Fuqua School of Business queried US retail marketers in February 2016 about the expected changes they planned to make in marketing spending in the next 12 months, digital marketing was the biggest beneficiary. Respondents expected their digital marketing outlays to increase 20.3 per cent, while their traditional ad budgets were forecast to fall 12.1 per cent.

One likely reason for the increased investment is that retailers are seeing bigger returns from digital marketing. A January 2016 survey of US retail marketers by digital coupon marketplace RetailMeNot found that more than three-quarters of respondents agreed that their digital marketing spend has a higher return on investment (ROI) than traditional offline marketing. The report also found that at least three-quarters of retailers surveyed are set to increase their digital marketing outlays across all channels in the coming year, with mobile and social marketing budgets named the most often.

Digitally native retailers are dominating spend on digital channels. According to Kantar Media, Amazon is consistently one of the leading digital ad spenders in the US, ranking No. 1 in the full year of 2014 and in Q1 and Q3 of 2015. In Q3 2015 alone, Amazon spent $96.8 million in online channels—a figure that includes desktop display and paid search, but not video and mobile.

It's no surprise that ecommerce sites are among the heaviest spenders in digital media, since scores of online retailers use digital media to drive traffic to their sites. According to data from the US Department of Commerce, ecommerce accounted for more than half of total growth in the retail industry in 2015. With competition growing fierce, it is likely that money will continue to flow in this direction. In fact, Internet Retailer's “2016 Digital Marketing Series” found that Amazon's digital marketing and ad spending from January to October 2015 increased 24.6 per cent compared with the same period a year earlier. Other web merchants that recorded significant growth during that timeframe included Etsy and Wayfair. (SH)

Fibre2Fashion News Desk – India

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