Earlier this year, we released The State of Digital Advertising Report 2019—the result of our annual survey of over 450 digital marketing professionals in the U.S. and U.K. across several key industries. While these marketers face many common challenges regardless of industry, we noticed that responses often varied slightly from vertical to vertical.
Retail is one vertical experiencing unique setbacks and opportunities in an evolving digital ad landscape. According to eMarketer, the U.S. retail industry will increase its digital ad spending by 19.1% to $28.33 billion in 2019. As the holiday shopping season approaches, what are some of the top priorities for retail marketers this year and beyond?
Let’s take a look at retail by the numbers, according to The State of Digital Advertising Report 2019.
Search Leads for Retail
Search is by far the most popular channel for retail marketers. eMarketer recently named search as retail’s fastest-growing ad format, so it’s not surprising that 90% of retail marketer survey respondents said they allocate digital ad budget to paid search. And, 86% said they expect budget to increase in this category this year.
So what are retail marketers paying most attention to when it comes to search? 77% said they expect to increase their use of audience targeting this year, and 91% said they’re using or plan to use responsive search ads—the AI-driven format first introduced by Google last year and now being tested by Microsoft.
31% of retail marketers also perceive voice search or smart hubs (i.e., Amazon Echo, Google Home) as a trend or challenge they’re keeping their eye on.
eCommerce Ad Spend on the Rise
44% of retail marketer respondents allocate digital ad budget to eCommerce, driven mostly by Amazon spend. Of those respondents that spend on eCommerce, 82% said they started using Amazon in the last year and 71% except budget to increase this year. However, all the talk about Amazon taking budget from Facebook and Google may not be true, at least for retail marketers—100% of respondents in this vertical expect that increase to come from incremental budget.
31% of respondents who started using Amazon in the last year said the main reason was to capture people starting their purchase journey. After all, several studies have shown that more and more product searches now start on Amazon. The most popular format on the channel for retailers is Sponsored Brands, which can help drive more clicks and better post-click customer interactions.
Social Advertising – Untapped Opportunity?
Just 41% of retail marketer respondents allocate budget to paid social, but 81% plan to increase budget in the category this year. While 44% of respondents say video is the most effective social ad format, the rise of eCommerce-related formats across Instagram, Facebook, and others are adding to this increase in spend.
In fact, 81% of respondents also anticipate an increase in use of Shoppable images or Shopping ads/images on social. 63% say paid social spend on Instagram will increase this year, with 80% expecting that money to come from incremental budget.
Despite Facebook’s privacy challenges in the past year, just 13% of respondents said they reduced spend on the platform as a result.
Performance Matters
Whether they’re allocating budget to search, eCommerce, social, or all of the above, one priority remains consistent for retail marketers: the ability to prove performance. 36% of respondents said the top priority for their business marketing function this year will be establishing effective metrics, the starting point for measuring results and ROI.
This is the first blog post of a series that will explore key priorities, challenges, and opportunities faced by marketers this year across verticals like retail, travel, healthcare, and more. To see the complete report and compare against your organization’s goals, view The State of Digital Advertising Report 2019.
