October 2017

US Retail Industry
StatPack 2017
Digital Ad Spending
Forecast and Trends

Presented by

© 2017 eMarketer Inc.

Overview

The StatPack includes updated eMarketer forecasts and third-party

data on the following eight areas:

 Digital Retail Ad Spending Outlook

 Digital Retail Ad Spending by Format
 Display vs. Search
 Digital Video
 Social Media
 Programmatic Ad Spending
 Mobile Ad Spending
 Methodology

© 2017 eMarketer Inc.

Let’s connect more shoppers to
the things they need and love.

In retail today, the advantage goes to those with access to large-scale data
assets. That’s why, according to a joint report conducted by Forbes Insights
and Criteo, nearly three-quarters of top brand and retailer executives saw
pooled data as a way to compete, connect, and win.

Check out The Commerce Data Opportunity: How Collaboration Levels the
Playing Field for more insights from 500+ global brand and retailer executives.

Get the report

71+29+M 72+28M
Brand and Retail Executives

71% 72%
would contribute said increased revenue is a top
to a data pool. benefit of data collaboration.
eMarketer’s definition of retail

This industry
includes mail
order/catalogs,
restaurants/fast
food, drug stores,
retail stores,
cosmetics stores
and merchants of
apparel, home
furnishings/textiles,
toys, pet
food/supplies,
appliances, jewelry
and general
merchandise.

Source: Cash register: Gan Khoon Lay; Price tag: Alexandre Aimbiré; Shopping cart: Praveen Patchu; Store:
© 2017 eMarketer Inc.
Pumpkin Juice. Via The Noun Project, licensed under CC by 3.0.
Digital Retail Ad Spending
Outlook

© 2017 eMarketer Inc.

Factors influencing digital ad spending in the
retail industry

 Mobile advertising growth has been fueled by improved consumer targeting

and personalization tactics. These advancements have resulted in advertisers
reallocating spend from desktop to mobile search.

 There are skeptics of digital advertising metrics and, increasingly, their efficiency.
With Procter & Gamble CMO Marc Pritchard calling for uniform
viewability/measurement standards for digital ads, and other
advertisers asking for assurance that ads appear around quality content,
increasing spend on print and TV has been discussed. While this move won’t
happen on any grand scale, the biggest advertisers will likely rein in programmatic
spending until they can get better accountability from agencies and platforms.

 However, the allure of digital video, including its broad audience and similar
branding opportunities, will pull some ad dollars away from traditional TV.

 Social ad spend will grow due to the increasing number of digital video ads,
along with branding campaigns carried out via influencers.

© 2017 eMarketer Inc.

Retail ad spending growth will be driven by
mobile, social and video formats

$28.29
$25.73
Spending on digital $23.10
ads in the retail $20.54
industry will grow $18.18
15.8% in 2017. $15.70
Growth will continue
by double-digit
percentages through
2020.
0
2016 2017 2018 2019 2020 2021

US Retail Industry Digital Ad Spending (billions)

Source: eMarketer, March 2017 © 2017 eMarketer Inc.

What executives are saying

“[Consumers think] about how the website reflects the store, because they’re often
looking at the website while they’re in the store or as they’re preparing for a store
visit.” —Cherise Ordlock, Divisional Vice President, Digital Commerce, Walgreens

“The next step is figuring out how to merge video content [on Facebook]—which is
so engaging—and the shoppable aspect.” —Jess Jacobs, Director, Marketing,
Wayfair

“If I can start to take browsing history, social media history and tie that to your
transaction history, I can start to do very specific segmentation. ... If you can master
the data, you can really target customers with what they want and optimize your
marketing.” —Michael Relich, COO, Crate and Barrel

“There has been device proliferation in natural consumer shopping behavior. To

serve customers well, we have to identify them no matter the device they’re
interacting with us on.” —David Doctorow, Head of Global Growth, eBay

© 2017 eMarketer Inc.

Retail will account for the largest share of digital
spend, driven by ecommerce competition

Retail 21.9%
Automotive 12.8%
Financial Services 12.2%
Telecom 10.9%
CPG & Consumer Products 8.8%
Travel 8.2%
Computing Products* 7.6%
Media 5.8%
Entertainment 4.9%
Other 4.3%
Healthcare & Pharma 2.8%

US Digital Ad Spending Share, by Industry, 2017 (% of total)

*includes consumer electronics

Source: eMarketer, April 2017 © 2017 eMarketer Inc.

Retailers' digital ad outlays will continue to
grow at a healthy rate this year

Entertainment 18.2%
Automotive 17.6%
CPG & Consumer Products 17.1%
Financial Services 16.1%
Healthcare & Pharma 15.9%
Average 15.9%
Computing Products* 15.8%
Retail 15.8%
Other 15.1%
Telecom 14.8%
Travel 14.4%
Media 13.8%

US Digital Ad Spending Growth, by Industry, 2017 (% change)

*includes consumer electronics

Source: eMarketer, April 2017 © 2017 eMarketer Inc.

According to Kantar, TV will remain a major
outlet for retail ads

TV $7.31

Radio $2.23

Newspapers $1.59

Magazines $1.01

Out-of-Home $0.59

US Retail Traditional Ad Spending, 2016 (billions)

Source: Kantar, April 2017 © 2017 eMarketer Inc.

Digital ad spend was down among some top
retailers last year

• In the past year, Wal-Mart

has revised its strategy to
offer more shopping options,
including in-store pickup for
online grocery orders and
“Scan & Go,” which enables
customers to add items to
their cart via mobile. Last
year, Wal-Mart’s digital spend
declined at a slightly slower
rate than Target’s.

• During the 2016 holiday

season, MediaRadar
identified Target as one of
two major retailers increasing
print spend.

Source: Kantar, April 2017 © 2017 eMarketer Inc.

Digital Retail Ad Spending,
by Format

© 2017 eMarketer Inc.

Search’s targeting effectiveness will keep it
the dominant digital ad format for retail

• Mobile and video

advertising—targeted
mostly at millennials—
have spurred display ad
spending growth. This
has helped to close
display’s gap with
search.

• However, increasing
ecommerce competition
is driving keyword
bidding prices higher
(notably on mobile
devices), inflating search
ad costs.

Source: eMarketer, April 2017 © 2017 eMarketer Inc.

Digital video will account for 31.0% of
retailers' display ad spend in 2017

 Static display image ads have declined in value in recent years. While
these branding ads produce page hits, lack of measurability has
made it difficult to determine their effect on sales.

 Meanwhile, video ad measurability has improved, showing

higher engagement among consumers and offering greater
opportunities for branding.

 Sports apparel retailer adidas said in March 2017 that it was reducing
TV ad spend to focus on branding via digital channels.

© 2017 eMarketer Inc.

Retail digital video ad spending will increase
24.4% in 2017

• Video will account for 14.2%

of the retail industry’s digital
ad expenditures this year.

• According to an April 2017

Interactive Advertising
Bureau (IAB) study, 55%
of US retailers spend
directly with premium
video sites (the leading
video ad buying option).

Source: eMarketer, April 2017 © 2017 eMarketer Inc.

Driven by ads targeted at millennials, retail
will maintain a lead in share of video spend

Retail 19.5%
Automotive 14.5%
CPG & Consumer Products 10.6%
Telecom 10.5%
Financial Services 9.9%
Travel 7.7%
Entertainment 7.1%
Media 6.8%
Computing Products* 6.6%
Other 4.2%
Healthcare & Pharma 2.8%

US Digital Video Ad Spending Share, by Industry, 2017 (% of total)

*includes consumer electronics

Source: eMarketer, April 2017 © 2017 eMarketer Inc.

Retail video ad spending will grow at a fast
rate—at the expense of TV

Travel 49.5%
Healthcare & Pharma 45.7%
Automotive 30.7%
Financial Services 26.0%
Retail 24.4%
Average 23.7%
CPG & Consumer Products 22.3%
Telecom 19.0%
Computing Products* 18.8%
Media 14.0%
Entertainment 11.9%
Other 6.7%

US Digital Video Ad Spending Growth, by Industry, 2017 (% change)

*includes consumer electronics

Source: eMarketer, April 2017 © 2017 eMarketer Inc.

Social commerce and branding opportunities
on Facebook will drive social ad spending

• Retail has been one of the more

effective industries at influencer
marketing. Retailers have used
giveaways and sweepstakes to drive
engagement with such campaigns.

• According to Kantar, which looked at

thousands of social posts from nine
of the largest US retailers during the
2016 holiday season, Instagram was
the least frequently used platform—
but had the highest engagement.

• A February 2017 RIS News and

Gartner survey found 45% of US
retail executives said leveraging
social media was a major strategy
for the next 18 months.

© 2017 eMarketer Inc.

 Overall programmatic ad spend will be
driven by retailer spending on social media

• The targeting $45.94

capabilities of social
$39.46
platforms like Facebook
have made them $32.56
leading outlets for
retailers’ programmatic $25.48
dollars.
$17.50

• Social platforms have

also been a common
option for video
advertising. According
to the April 2017 IAB 2015 2016 2017 2018 2019

study, 53% of US US Programmatic Display Ad Spending Forecast (billions)

retailers buy video ads

programmatically.

Source: eMarketer, March 2017 © 2017 eMarketer Inc.

Programmatic spend will continue to climb,
despite some pullback by advertisers

 Programmatic digital display ad spending is growing as spend on

social platforms, especially mobile-social, continues to
climb. Across all industries, eMarketer expects programmatic ad
expenditures will continue to grow though 2019.

 At the same time, the biggest brands are becoming more concerned
about the content their ads appear next to. The IAB study found 47%
of US retailers listed “quality of content” as one of the biggest
obstacles to spending more on original digital video advertising. Such
concerns are prompting advertisers to rein in spending
on programmatic ad buys, as platforms and agencies work to do
a better job placing ads.

 As brands become more cautious about ad placement, they are

taking greater control of buying, using private, one-to-one
setups to buy high-quality inventory.

© 2017 eMarketer Inc.

Mobile Retail Ad Spending

© 2017 eMarketer Inc.

Mobile ad spending among retailers is
expected to increase 19.4% this year

Source: eMarketer, April 2017 © 2017 eMarketer Inc.

Mobile advertising is a focus for retailers,
most notably for search ads

 During December 2016 to

January 2017, Amazon tested
product listing ads (PLAs) on
Google for the first time.
According to performance
marketing agency Merkle,
Amazon had nearly twice the
Desktop Mobile impression share for mobile PLAs
30.0% 70.0% than for desktop.

 Mobile display is nearly as

important as search. In
accounting firm BDO USA’s
October 2016 survey of US retail
marketers, 29% listed social
0% 100%
media ads as their top mobile
tactic for the 2016 holiday
Desktop vs. Mobile Share of US Retail Industry Digital Ad season—second only to targeted
Spending, 2017 (% of total)
ads (32%).

Source: eMarketer, April 2017 © 2017 eMarketer Inc.

Let’s connect more
shoppers to the things
they need and love.

The Criteo Commerce Marketing

Ecosystem is the place where retailers,
brands, and publishers win together.

criteo.com/Collaborate
Behind the Numbers: Methodology

eMarketer’s US digital spending estimates are based on an

analysis of quantitative and qualitative data from
research firms, government agencies, media firms and public
companies. Data is weighted based on methodology and
soundness. Each eMarketer forecast fits within the larger matrix
of all its forecasts, with the same assumptions and general
framework used to project figures in a wide variety of areas.
Regular re-evaluation of available data means the forecasts
reflect the latest business developments, technology
trends and economic changes.

© 2017 eMarketer Inc.

Behind the Numbers: What We Measure

eMarketer’s digital ad spending figures include advertising

that appears on desktop and laptop computers, as
well as on mobile phones and tablets, and all the ad
formats on those platforms: banner ads (static display), classified
ads, email (embedded ads only), mobile messaging (SMS, MMS
and peer-to-peer [P2P] messaging), rich media, search ads
(including contextual test links, paid inclusion, paid listings and
search engine optimization [SEO]), sponsorships, lead generation
(referrals and video [including in-banner, in-stream and in-text]).

© 2017 eMarketer Inc.

Additional resources

Sources
MediaRadar
BDO USA
Merkle
Gartner
RIS News
Interactive Advertising Bureau (IAB)
Video Advertising Bureau
Kantar

© 2017 eMarketer Inc.

This StatPack is part of an eight-series package
available to eMarketer PRO customers

About eMarketer’s Industry Ad Spending Series

eMarketer breaks down industry ad spending for ten industries annually. Each year,
the package not only forecasts digital ad spending, but also examines the market
forces that will determine how brands allocate budgets to digital channels.

Reports in This Series:

Digital Ad Spending Benchmarks by Industry: The Complete eMarketer Series for 2017
US Auto Industry StatPack 2017: Digital Ad Spending Forecast and Trends
US Financial Services Industry StatPack 2017: Digital Ad Spending Forecast and Trends
US Healthcare and Pharma Industry StatPack 2017: Digital Ad Spending Forecast and Trends
US Media and Entertainment Industries StatPack 2017: Digital Ad Spending Forecast and Trends
US Telecom and Computing Products and Consumer Electronics Industries StatPack 2017: Digital Ad
Spending Forecast and Trends
US Travel Industry StatPack 2017: Digital Ad Spending Forecast and Trends

Schedule a personalized demonstration or request a quote today.

Go to eMarketer.com, call 212-763-6010, or email sales@emarketer.com.

© 2017 eMarketer Inc.