Retailers investing heavily in mobile ads

Online advertising spending is set to increase 15% by 2020 with retailers expected to spend over $15.09bn on digital media ads. Two-thirds of digital ad budgets have switched to mobile, increasing spend by 52% in the past year, as online sales are projected to climb over $500bn in the next 4 years. However, 78% of online shoppers find the process of mobile purchasing frustrating, leading to potential improvements in the payment process before results of successful mobile ads can be seen.

by Sarah Mahoney @mahoney_sarah, May 12, 2016

Already the heaviest spenders in digital and mobile ads, retailers are going to dominate online spending through 2020, according to the latest forecast from eMarketer.

This year, the New York-based market research company says retail marketers will shell out $15.09 billion in paid digital media ads, which represents a 15% jump from last year.

And in the omnichannel sprint to keep up with online shoppers, it forecasts that retailers will crank up mobile ad spending 52% this year. About two-thirds of retailers’ digital ad budgets — $10.09 billion — this year have shifted to mobile, up from 52% of its budget last year. That amounts to 23.2% of all mobile ad spending in the United States.

The shift comes at a time when retailers are still stumbling as they try to follow customers through the online landscape.

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There’s no question consumers are increasingly apt to shop online: Forrester recently forecast that online retail sales in the U.S. are likely to zoom to $500 billion by 2020, compared to $373 billion in 2016. And it also estimates that about $1.5 trillion of total U.S. sales are in some way Web-influenced.

(Increasingly, though, retailers who have been excelling in omnichannel efforts, including Nordstrom and Michael Kors, have admitted that strong e-commerce sales have been cutting into profits.)

But while mobile ads may be soaring, mcommerce efforts still haven’t found their groove, with 78% of shoppers who have tried to use their phones to buy something saying they’ve found the experience frustrating.

EMarketer, while estimating that retailers are likely to be the top-spending industry for the next four years, with about one-fifth of all spending, also sees big gains in:

* Automotive, which continues in the No. 2 spot with $8.71 billion this year, set to reach $14.14 billion by 2020. Mobile spending is expected to hit $5.25 billion, about 60% of total digital ad spend.

* Telecom spending is expected to hit $7.55 billion this year, and $11.10 billion by 2020. But eMarketer predicts the category’s share of the digital spending — about 11.2% this year — will slip a bit to 10.6% by 2020. (About two-thirds of its spending goes to mobile.)

* Digital spending for consumer packaged goods is likely to reach $5.97 billion on digital advertising in 2016, an 18.2% gain from 2015, accounting for 8.7% of total digital ad spending across industries, with 60.2% of spending going to mobile.

* Media and entertainment is expected to come in at $7.34 billion this year, climbing to $11.52 billion by 2020, as consumers increase their appetite for online news and entertainment.

* Pharmaceuticals and healthcare, the smallest of the top 10 verticals eMarketer measures, with $1.93 billion in digital spending, up from 15.4% in 2015. That’s about 2.8% of all digital spending, and projected to reach 3% by 2020.