Brands are set to spend $59 billion on e-commerce advertising in 2020, indicated WARC Data. This represents an annual rise of 18.3% at a time when the global advertising industry is expected to decline by 8.1%. Ad investments across e-commerce sites, omnichannel retailers and social commerce are growing 30 times faster than the wider online ad market, as brands intensify lower-funnel tactics in response to COVID-19. This growth has coincided with a sharp fall in spending across major media.
“Our research shows that the ad industry will take a $49.6 billion hit from COVID-19 this year, but the impact is not being felt equally across the media landscape, as the explosive growth in e-commerce has drawn brands to shoppable media,” stated James McDonald, head of data content, WARC.
Some of WARC’s research findings indicate that Amazon’s ad business is growing 4.5 times faster than Facebook’s and 63 times faster than Alphabet’s. And COVID-19 will result in an additional $183 billion being spent online by consumers in 2020. Taken together, e-commerce sales are set to rise by 30.4% – $677 billion – to $2.9 trillion this year, with consumer-packaged-goods the primary benefactors. FMCG ad money is also shifting online in response to buying patterns.
As brands are set to spend $59 billion on e-commerce advertising in 2020, WARC Data also elaborated that with digital advertising spend plateauing in the wake of COVID-19, e-commerce platforms – which have seen penetration balloon – are in a strong position to capture reallocated budgets by using sales data to demonstrate ad performance and return on investment during a volatile economic climate.
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