A new report from eMarketer says that the US retail industry will spend $9.42 billion this year on paid digital media. By 2017, that number is expected to grow to $13.5 billion, representing a 10.5 percent compound annual growth rate.
As a consistent top spender in digital paid media, eMarketer reports the retail industry will keep its lead during the four-year forecast period, but lose a small portion of its share of total US digital advertising dollars, dropping from a 22.3 percent share this year to 22 percent share in 2017.
With the largest portion of retail digital ad dollars going to direct-response campaigns, eMarketer estimates that online and multichannel retailers, along with catalog retailers and restaurants, will spend 64.6 percent of paid digital budgets on direct response and 35.4 percent on brand-focused campaigns.
The report goes on to claim that even though direct-response ads result in more “immediate actions,” brand advertising is growing, with marketers moving away from standard banner units toward more rich and dynamic units, including video and social display:
Brand-focused campaigns appear to be more popular at certain times of the year and in different sectors of the industry. Retailers tend to do bigger brand buys, including more video, during seasonal pushes. This differs from their investments in search and other types of direct response, which run more continuously throughout the year.
The report emphasizes that search engine marketing is still a crucial component of the retail industry’s direct-response ad spend, with retailers – both multichannel and brick-and-mortar – counting on paid search and SEO to generate website traffic and in-store visits, as well as get the phones ringing. As eMarketer points out, “Having an effective SEM program is becoming even more important as retailers find themselves competing directly online with manufacturers of the products they sell.”
While search and display repeatedly win the largest portion of the retail industry’s digital ad spend, eMarketer reports that mobile and local marketing have experienced an increase within the industry as retailers reach out to consumers who count on their mobile devices at different stages within the sales cycle.