U.S. Ecommerce Growth Leads To Ecommerce Channel Ad Spending Growth

The accelerated growth of ecommerce in 2020 is having a major impact across the advertising industry. The surge in online shopping has led to significant revenue gains for ecommerce brands and retailers, brick-and-mortar stores adapting to new buying habits and advertisers increasing their digital spending. Additionally, eMarketer recently reported that many advertisers are increasing their ad buys on ecommerce websites and apps. “The trend [ecommerce channel advertising] has only accelerated during the pandemic as ecommerce accounts for a higher percentage of most brands’ and retailers’ sales,” said Andrew Lipsman, eMarketer principal analyst at Insider Intelligence.

Amazon Continues To Dominate The Ecommerce Universe, Including Revenue From Advertising

The ecommerce boom during 2020 has greatly benefitted Amazon, and ecommerce channel advertising is another area where the online retailer is far and ahead of the competition. eMarketer reports, “This year, [Amazon] will net $13.18 billion in ecommerce channel ad revenues, up 39.1% from 2019. This represents 75.7% of overall ecommerce channel ad spending and 90.6% of Amazon’s net U.S. digital ad revenues. Amazon will continue to dominate the ecommerce advertising space, reaching nearly 77% of the market by 2022.”

Other major ecommerce players are also seeing growth in revenue from ecommerce channel ads, including Walmart with more than 73% year-over-year (YOY) growth to advertising revenue of $849.4 million, and eBay, up more than 30% YOY for a total of $328.3 million in ecommerce channel ad revenue this year. “While Amazon has already proven itself as an ad platform, the next wave of ecommerce power players is now making more aggressive moves in the space,” said Lipsman.

Ecommerce Channel Ads Offers A Number Of Benefits For Advertisers

eMarketer’s first ever “forecast of ecommerce channel ad spending” anticipates that advertisers will spend $17.37 billion advertising on ecommerce sites and apps this year, up 38.8% from 2019, with ecommerce channel advertising representing 12.2% of U.S. digital ad spend in 2020. The eMarketer ecommerce channel advertising forecast highlights reasons why advertisers are flocking to ecommerce channels, including the ability to target shoppers exhibiting purchase intent and “closed-loop attribution for measurement and optimization,” available because of purchasing data. These analytics are particularly attractive to advertisers in an increasingly cookie-less world.

Reaching Consumers Where They Are Shopping May Be Essential For Brands That Want To Get Noticed

Changing consumer behaviors have shifted the ad spending priorities for brands to focus on more digital advertising, including advertising on ecommerce sites. Reaching consumers across all the channels on which they are researching and shopping – especially as 2020 closes out with a holiday retail season likely to be dominated by ecommerce – is going to be critically important for brands looking to make headway in a crowded marketplace.

Download 2020 Holiday Season: Consumer Mindsets & The Growth Of Ecommerce, a new ebook from DMS. A compilation of previously published articles, this ebook was published to help digital advertisers optimize their campaigns to align with evolving consumer expectations, behaviors and demands. 

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