The total US digital ad revenue reached $139.8 Billion in 2020, representing a 12.2 percent growth from the previous year. And while the vast majority of the growth of digital advertising last year can be attributed to the pandemic, one curious factor stands out. It was the second half of 2020 that saw the highest growth, with 58 percent alone being spent between June and December—a period in which many analysts were predicting stay at home constraints would be lessened.
It’s not unreasonable to expect that much of that revenue may have been the result of holiday spending. But it’s a considerably higher percentage than previous years. In fact, ads on properties whose primary channel was eCommerce accounted for 12.3 percent of all US digital ad spending.
But who gains from this surge? Retailers or advertisers?
The Top Three: Too Big to Fail?
It shouldn’t surprise anyone that Amazon Advertising was one of the largest digital ad channels during 2020, seeing a 47 percent increase in revenue and actually growing faster than Amazon itself.
Yet their hold is relatively minor, accounting for only 10.3 percent of the US digital ad market. In comparison, Google retains the lion’s share of the market at 28.9 percent, followed closely by Facebook at 25.2 percent. But despite widespread consumer wariness of all three, their hold on digital advertising remains firm. Amazon’s growth rate isn’t necessarily a fluke. The pandemic has sparked considerable changes in consumer shopping habits and the subsequent need for alternate marketing channels to address them—not the least of which being digital marketing.
Paid Search: The Next Wave?
It may not be unreasonable to expect that the higher growth rate in digital ad spending in the second half of 2020 was a reaction to the uncertainty of the first half, particularly in the face of widespread budget cuts. And while there may have been ten years’ growth in eCommerce during the first three months of 2020, digital advertisers still needed to rely on channels which have been proven historically effective.
Social media may have seen a substantial $41.5 Billion in revenue during 2020, but it still lags behind search at $59 Billion—an increase of 7.9 percent from the previous year. Mobile search’s $39.7 Billion revenue in particular saw an even higher increase of 8.8 percent. Traffic on mobile may be considerable, accounting for an estimated 68.1 percent of all website visits in 2020, with a vast majority of searches being for consumer packaged goods and necessities. But the difference between desktop and mobile ad placement is drastic. A recent survey indicates that 30 percent of ads appearing on the first page of desktop search results don’t even appear in the top 10 results on mobile.
It’s been predicted that advertiser spending on paid searches will result in a $99.22 Billion revenue by the end of 2024, with approximately two-thirds coming from mobile. That includes voice search, as well.
Retailers need to prepare themselves ahead of time. The average amount of time spent on a mobile site is only 158 seconds, indicating slow loading sites to be one of the leading causes of poor search results. To make matters worse, cart abandonment rate statistics were almost 70 percent in 2020.
Paid searches are here to stay. And retailers need to be prepared for what customers are looking for. The strength of your product alone may not be enough. Understanding your customer’s needs is only a small step. But knowing how to optimize those needs is a giant leap for your business.
Color More Lines maximizes your visibility on Amazon Advertising and beyond. We provide white glove, global account management of your eCommerce platforms so mission-driven companies can focus on new product development, branding and growth strategies. Find out more at Color More Lines.