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Companies shift ad dollars by 18% due to increased e-commerce spending

Companies shift ad dollars by 18% due to increased e-commerce spending Blog Feature

Daniel Escardo

Sr. Front-end Developer, 15+ Years of Web Development on HubSpot and Various CMSs

October 6th, 2020 min read

Just like everyone on the planet Earth, I’ve been spending way more time at home these days as I endure the claustrophobic effects of the COVID-19 pandemic.

As such, when I’m not desperately searching for “joy” in a pile of my belongings that have been cast onto my bed, like Mari Kondo says I should do, or consuming every single binge-worthy series available on Netflix, I’m working — a lot.

For some people, the removal of that barrier between home and office has gotten so bad that they’ve stopped saying working from home and are now saying living at work.

I think it has a nice ring to it, although I’ve been a remote employee for a couple of years now and love living at work. Personally, I’ve engaged with a ton of ads upselling the obscene amount of shopping I’ve done to retrofit my home office and make it the perfect live-at-work-in-comfort-but-stand-more-often office as I put my restaurant budget to better use.

Yes, that’s a word.

That’s why it made complete sense when I saw, last Thursday, that the latest Global Advertising Trends report from WARC Data stated that brands will spend $58.5 billion, an increase of about 18%, on e-commerce advertising this year in response to the boom in online shopping.

What does this e-commerce spend growth mean?

This report comes amid a global decline in overall advertising expenditure of about 8.1%, or $49.6 billion, as COVID-19 continues to re-shape where customers spend their hard earned live-at-work earnings.

In other words, the impact is not being felt equally across the media landscape – the explosive growth in e-commerce has drawn brands to shoppable media. Whereas buyers used to make more in-person purchases, now the vast majority of purchases are being made remotely and online, due to the pandemic.

🔎 Related: View all coronavirus digital sales and marketing insights

(True story: The first time I saw WARC, I, of course, had to look it up and had a difficult time finding what it stands for until I saw it stands for World Advertising Research Center. It was either that or World Alliance Of Reformed Churches and, while they’re probably very informed and inspired about what’s going on in the advertising world, my money’s on the former.)

So, this is just another factor pushing advertisers into the digital space — this time by force — to look for customers. In the online space, however, the qualitative data surrounding their prospects is much much richer than, say, television, which relies mostly on general demographics and super reduced inventory of possible interests.

🔎 Related: 72 features every e-commerce website must have

The advent of search engine optimization (SEO) is predicated on the idea that targeting a customer actively searching for a product or service like yours is worth way more than planting the seed of your product or service during a TV commercial break, for example.

As you can see in the video below, ad spending has been completely re-shaped in recent years — and it is only going to continue morphing as customers move away from traditional ways of consuming both entertainment and physical goods.

WARC-Global advertising spend 1980-2020

How can your company capitalize on this trend?

As more and more of the world’s population has a taste of what it’s like to open their front door to a mound of prepared food, groceries, nonperishables, electronics… you name it, the purchasing of goods online is only going to continue to increase — a total of $183 billion this year alone, according to WARC.

That’s billion with a “b”, folks.

I’d say it’s the right time to have a good look at your current ad spending to see if there’s an opportunity to diversify and put a little bit of your own advertising dollars into e-commerce platforms like Amazon, Walmart, or Google.

🔎 Related: Shopify COVID-19 surge tells complex story of businesses adapting

If your company sells physical products, like the most amazing live-at-work-in-comfort-but-stand-more-often desk, you may already be supplementing your e-commerce efforts with some targeted ads naturally, but this time I mean it: there’s no time like the present.

That said, If your company is still relying solely on traditional mediums like radio, television, or direct mail for your advertising needs, you might be truly surprised at how much you’ll save by moving some of your budget. Furthermore, you’ll be delighted at the data that’s available to really track your ROI and make the most informed decision about where to spend your advertising dollars.

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