Innovation and Investment Rule Retail Advertising

Brendan Gill  | 

It’s been said that competition breeds innovation and marketers in the retail industry certainly prove the point. Brands now have more options than ever for advertising across all platforms, both in terms of buying methods and creative ad formats. What are retailers doing on the ad front to get shoppers’ attention and guide them through increasingly fragmented buying journey? We take a look at ad spending trends in retail with a focus on research from eMarketer. Here’s what to expect in 2018 and beyond.

Retailers Dominate Digital
Thanks to the ever-more-fierce competition for online shoppers, retailers spend more on digital advertising than any other industry. This year, investment is up 18.7% over 2017 and will reach $23.5 billion, which represents 22% of overall digital ad spend. eMarketer cites two primary factors as responsible for the strong growth. First, the ever-increasing need to stand out on Amazon as the ecommerce giant continues to grow and draw more consumer dollars. Second, retailers are putting more into search advertising on Google in order to better surface products on the platform, which still reigns as the first option for shopping. And while paid search still remains critical for retailers, they are doing more with display than ever before. In fact, this year retailers will spend more on display than search for the first time (48% vs 47%) due largely to the fact that advertisers are introducing innovations into display ads — like buy buttons on social networks —that help with conversion.

Mobile Is an Increasingly Critical Component of Omnichannel Marketing
With more consumers using phones and tablets to research and purchase products—40% of US ecommerce sales will be mobile-based this year—mobile is a key platform for retailers courting shoppers. Spending on mobile ads will grow from more than $13 billion in 2017 to $16-plus billion in 2018. That’s a 23% increase and one that eMarketer attributes to the growing sophistication of mobile offerings and retailers’ confidence that the engagement these ad innovations deliver warrant ever bigger investments. For the rest of 2018, retailers will continue efforts to create more personalized and targeted mobile campaigns with the understanding that even when these initiatives don’t result in an immediate transaction, they can be valuable in pushing consumers to physical locations.

Social Is Growing as an Engagement Medium
More retail advertisers see value in social media ads to persuade shoppers. The growth of social “influencers,” who add sponsored brand content into their social media posts, is helping drive interest. For example, RhythmOne’s Influencer Marketing Benchmark report found that among 527 retail influencers, 22% of campaigns used an Instagram or Snapchat Story in 2017. And according to the digital media ad company, offering exclusive sales or giveaways via social influencers is a favorite tactic on those platforms, with 56% of retailers doing so last year.

Getting with the Program(matic)
Retailers aren’t just upping investments on programmatic campaigns (from $37 billion in 2017 to $47 billion this year), but also refining their practices to better target shoppers and lead them through a fragmented buying process. For example, brands are starting to move some or all of their programmatic buying functions in-house not just to get a better ROI on campaigns but also to give retailers more control over the first-party data that enables them to get in front of relevant audiences with more personalized messaging and offers. This emphasis, along with the growing trends of integrating search with social channels and making display more targeted reflect a growing focus on using innovative new practices to engage the right consumers at the right time on any and every platform.

TV Remains an Important Component of the Marketing Mix
As retailers work to reach consumers via every screen and device, they continue to make significant investments in TV and video. While digital remains the primary means retailers choose for engaging and converting audiences, TV and video remain important for building brand awareness. While eMarketer did not break down anticipated TV spend for 2018, digital video spend is expected to jump from $2.85 billion to $3.43 billion and 69% of those eMarketer surveyed expect to invest in programmatic video over the 12 months.

Retail is one of the biggest drivers of the US economy (accounting for 26% of GDP according to Deloitte) and thanks to the competitiveness of the sector, retail marketing is one of the forefronts for ad innovation. Wherever and however the ad dollars are invested, new ways to approach ecommerce and online shopping are sure to follow. Advertisers—whether focused on retail or not—should keep a close eye on how the industry is leveraging both traditional and new practices to attract and engage consumers in an increasingly noisy marketplace.

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