As Online Shopping Grows, So Does Ecommerce Ad Spend

The pandemic has accelerated growth in ecommerce as more people are shopping from home, and that tremendous growth has boosted ad spend in the channel as well. Digital research and forecasting agency eMarketer, part of Insider Intelligence, expects marketers to spend $17.37 billion on advertising on ecommerce sites and apps this year, up 38.8 percent from 2019. By the end of 2020, ecommerce channel advertising will represent 12.2 percent of U.S. digital ad spending.

“Ecommerce channel ads are gaining popularity as brands realize the value of targeting prospects exhibiting purchase intent within the large ecommerce marketplaces,” says Andrew Lipsman, eMarketer principal analyst at Insider Intelligence. “The trend has only accelerated during the pandemic as ecommerce accounts for a higher percentage of most brands’ and retailers’ sales. 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.”

Ecommerce channel advertising, sometimes known as retail media advertising, is digital advertising that appears on websites or apps that are primarily engaged in retail ecommerce.

“This type of advertising has benefited massively from the pandemic-accelerated shift of retail sales to ecommerce, but other disruptive forces in the digital media world are also driving more dollars to Amazon, Walmart and their competitors in the space,” says eMarketer principal analyst at Insider Intelligence Nicole Perrin. “As advertisers look to a future where it’s harder to identify and track users, ecommerce properties have the advantages of shopping and intent data on the targeting side, plus closed-loop attribution for measurement and optimization.”

Amazon is by far the largest platform, reports eMarketer. This year, the company will net $13.18 billion in ecommerce channel ad revenues, up 39.1 percent from 2019. This represents 75.7 percent of overall ecommerce channel ad spending and 90.6 percent of Amazon’s net U.S. digital ad revenues. Amazon is expected to continue to dominate the ecommerce advertising space, reaching nearly 77 percent of the market by 2022.

eMarketer also expects Walmart to grow its share of the market. In its first-ever forecast of Walmart’s net digital ad revenues, it predicts that Walmart’s ecommerce channel ad revenues will reach $849.4 million this year, thanks to the highest year-over-year growth among any company eMarketer breaks out, at 73.4 percent. Walmart will represent 4.9 percent of total U.S. ecommerce channel ad spending. By 2022, its share will reach nearly seven percent.

The forecaster also expect two other market leaders to maintain their share over the next few years as the overall market grows rapidly: eBay’s ecommerce channel ad revenues will reach $328.3 million this year, up 30.3 percent year over year, and Etsy’s ecommerce channel ad spending is on track to bring in $133.2 million, up 69.8 percent year over year.

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