Retail industry continues to lead in online ad spending

from Retail Customer Experience.com, April 27th, 2011

Retailers spend more on Internet advertising than any other industry, according to new eMarketer estimates that break down total U.S. online ad spending by verticals.

Retailers are expected to spend $5.73 billion on online advertising this year, up from $5.16 billion in 2010, accounting for more than one in every five online ad dollars.

While the retail industry will see double-digit growth of 11 percent in 2011, other verticals will increase spending more quickly. Consumer packaged goods (CPG) spending will increase 29 percent to $2.66 billion this year, automotive spending will rise 14 percent to $3.24 and healthcare and pharmaceuticals will boost online spending by 13 percent to $1.17 billion.

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The growth of online video ads—especially among brand marketers who have traditionally focused heavily on TV advertising—is a primary contributor to the growing market share of CPG and automotive companies. In 2009, CPG spending made up 6 percent of the overall $22.66 billion spent on Internet ads that year, but by 2015 that proportion will rise to 13 percent. Automotive advertisers' share of overall online spending is expected to grow from 11 percent in 2009 to 13 percent by 2015 as the industry continues to recover from the recession.

"Many industries that have traditionally focused on TV and print now see online video as an ideal and more cost-effective way to extend and complement their existing campaigns," said Victoria Petrock, senior research analyst at eMarketer.

Healthcare and pharmaceutical spending will continue to move online, but spending will likely be affected by the loss of patent protection for several blockbuster drugs and forthcoming guidelines from the U.S. Food & Drug Administration, which many in the industry hope will provide clearer direction for how pharmaceutical products can be marketed online.

As a result of this growth, more mature online advertising verticals—including telecom, financial services and travel—are expected to lose share through 2015.

"Online spending in these industries will grow," Petrock said. "But they will constitute less of the online spending pie because many are already heavily invested online."