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Retailers Increase Spending Via Digital Channels, Focusing on Mobile and Search Advertising

Retailers’ digital ad spend parallels that of the overall US digital ad market this year, growing 19.1%, according to our latest forecast. For this industry, mobile and search advertising dominate ad spend allocation.

We expect retailers will spend $28.33 billion on digital ads in 2019. More than two-thirds of this spend will go toward mobile advertising, with growth rates eclipsing 20% through the end of our forecasting period.

“Retailers are at the forefront of mobile advertising, as strategies have shifted from a desktop-only to a dual-device approach,” said Oscar Orozco, senior forecasting analyst at eMarketer. “There has been an increased emphasis on boosting checkout conversion rates, simplifying the purchasing funnel on mobile and targeting shoppers in-store with relevant ads and promotions.”

This dual-device approach is paying off as more digital sales are made on mobile devices. Mobile purchases will grow 28.9% this year, and account for 37% of overall retail sales growth. Retail sales made via desktop/laptop will grow 4.3% this year, and account for just 8% of total retail sales growth.

When it comes to ad format, retailers are prioritizing search as companies increase Google and Amazon spend and embrace tactics like voice advertising. Search ad spend will grow 22.5% to $13.12 billion this year. Retail spend will account for the largest share of search dollars at nearly one-quarter of the total US search market.

“Google and Amazon have become online storefronts for nearly every product and service consumers are looking to purchase," Orozco said. "This means that search advertising has increasingly become a vital strategy for retail marketers to focus their budgets on. With the growth of voice search, we should also expect to see a continued emphasis on search in the foreseeable future.”

For consumers, search has established itself as a go-to resource, and voice shows similar promise. According to an August 2018 survey from digital experience platform WP Engine published in January, 43% of US internet users ages 14 to 59 already use Google Search when looking up information, and 9% expect to do so in the future. Fourteen percent of respondents said they current use voice assistants like Amazon Alexa or Apple's Siri, and more than twice that number of respondents plan to do so in the next five years.