Traditionally, retailers have leaned by a small margin toward direct-response advertising, rather than branding. Thus, we expect retail will slightly exceed the US digital ad spending average in search, but not display, this year. The industry will, nonetheless, be extremely balanced in allocating its digital ad dollars, splitting them almost evenly between formats, and within formats as well.
The retail industry will spend 4.8% more on search ads in 2020. At $13.42 billion, that’s a healthy 24.7% of total US search ad spending.
Though retailers will increase ad spend in these formats, these increases signify dramatic decelerations when compared with 2019 figures. The coronavirus and the ensuing recession have constrained ad spending growth for nearly every industry, and retail is no exception. Display and search spending in the retail category, however, should rebound nicely next year. We forecast that the industry will see 27.8% growth for display and 24.6% growth for search in 2021.
As a vertical, retail will probably always have a wide range of brands and products that will find value in both search and display advertising. Retail and ad industry insiders regularly offer a vast—and, at times, contradictory—array of opinions about how retailers prefer to allocate their digital ad budgets, which speaks to the great diversity within retail. In containing these multitudes, no other vertical we cover but retail will spread its digital ad dollars quite so evenly.
