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E-Commerce Boom Is Here to Stay, and Digital Advertisers Are Noticing

·3 min read
lightwavemedia / Shutterstock.com
lightwavemedia / Shutterstock.com

One sector that has benefited from the pandemic is e-commerce, a trend that will likely continue. The sustained popularity of online shopping pushed brands to continue investing heavily in online channels, triggering growth in spending across paid search, retail media and social, according to a new survey.

See: 30 Ways Shopping Will Never Be the Same After the Coronavirus
Find: The Biggest Changes to Our Consumer Habits as a Result of COVID-19

The first quarter of 2021 proved to be strong for retail media spending, with new players rolling out broader advertising capabilities for brands on their platforms, according to marketing intelligence company Kenshoo.

“It’s no secret that e-commerce boomed due to a wave of online shopping catalyzed by the pandemic,” Chris Costello, senior director of Marketing Research at Kenshoo, tells GOBankingRates. “Although this shift occurred because of an obligation to stay home rather than visit physical storefronts, it’s an acceleration of a trend that was already in progress, and we anticipate it can sustain in the months and years to come as both the longer-term and shorter-term changes to shopping behavior continue to stick, due to new habits forming, convenience and wider product variety.”

Costello says that the growth is not exclusive to items people had bought online even before the pandemic, such as fashion, home décor and apparel, but also notably in online grocery. “Instacart has seen a major uptick in usage, and services like Gopuff, backed by SoftBank, are continuing to grow,” he adds.

See: Under-the-Radar Online Grocery Stores — And How Much They Charge for the Convenience
Find: Walmart and Instacart Team Up to Fight Amazon and 17 More of the Biggest Business Moves of 2020

While still the dominant force, Amazon’s share of the larger retail media advertising pie declined from 98% a year ago to 89%. Together, Instacart and Walmart accounted for 11% of total spending in the first quarter, with Instacart at 5% and Walmart at 6%, the survey shows.

And advertisers are spending more than they spent before. Compared to the first quarter of last year, spending is up across the board in retail media, paid search and social media advertising, a phenomenon reflected in the quarterly earnings from many of these players, which once again beat out expectations by a pretty fair margin, Costello says.

According to the survey, the most notable newcomers are on the retail media side, where Walmart and Instacart are starting to catch more advertisers’ attention — and their budgets.

See: Adidas to Invest More than $1.2 Billion into Digital Transformation
Find: All the Ways Online Retailers Get You to Overspend

Another key finding is that consumers have shown much more responsiveness to keyword ads in paid search. “Some of this may be that we are searching with more purpose because we are staying at home more, but some of it also reflects greater adoption of advanced management and optimization tools that are constantly helping advertisers deliver more effective ads at scale,” Costello says.

In terms of the most surprising finding of the survey, Costello says that it was the magnitude of the growth and the fact that the finance category also stood out.

“Other categories saw more obvious pandemic-fueled growth, and while you can point to overall financial anxiety, or opportunities around stimulus checks, the growth in both paid search and social advertising in this industry was a bit of a surprise,” he says. The growth in the social spend for the finance category came primarily from the credit and lending subcategory, according to the survey.

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This article originally appeared on GOBankingRates.com: E-Commerce Boom Is Here to Stay, and Digital Advertisers Are Noticing