Brands will spend $58.5 billion on e-commerce advertising this year in response to the surge in online shopping, according to WARC Data’s latest Global Advertising Trends report.
Global Advertising Trends: The pivot to e-commerce reveals that advertising investments on e-commerce platforms such as Amazon, Tmall and Rakuten, omnichannel retailers such as Walmart and Carrefour, and social commerce on platforms such as Pinduoduo and TikTok is expected to grow 18.3% globally, growing 30 times faster than the broader online ad market and in stark contrast to an 8.1% drop forecast for the entire ad industry This year.
Rising e-commerce ad spend reflects a rapid increase in online shopping; consumers will spend an additional $183 billion online this year as a direct result of COVID-19, with total e-commerce sales expected to rise 30.4% – $677 billion – to $2.9 billion worldwide .
The report reveals that brands are flocking to leverage targeted advertising on e-commerce platforms to get closer to the consumer at the point of sale.
“With flat or declining advertising investments in most media as a result of COVID-19, e-commerce platforms – which have seen their penetration skyrocket – are well positioned to capture reallocated budgets using data to demonstrate advertising performance in a volatile economic climate,” noted James McDonald, Data Content Manager, WARC and author of the research.
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Alibaba controls the world’s third largest advertising company, Amazon is growing well ahead of Google and Facebook
Alibaba is expected to earn $23.5 billion from the sale of ad inventory on its e-commerce properties this year, giving it control of the third-largest ad business by revenue, behind Alphabet and Facebook. Alibaba’s advertising revenue – across its e-commerce properties like Taobao, Tmall and Lazada – is expected to grow 6.6% this year, though that growth will lag behind competitors.
Amazon, the fourth-largest ad seller by revenue, is among the fastest growing this year – company filings show its ad business grew 4.5 times faster than Facebook and 63 times faster than Alphabet in first half of 2020. As a result, Amazon is sure to earn $18.1 billion from ads this year, up 35.6% at a time when the broader internet advertising market is stable (+0, 6%).
Elsewhere, Chinese social commerce platform Pinduoduo is expected to see ad revenue jump 33.8% to over $5 billion, ahead of local rival JD.com with $3.6 billion. None of the e-commerce platforms monitored by WARC are expected to experience a drop in ad revenue this year.
Consumers will spend an additional $183 billion online this year due to COVID-19
Online sales are expected to grow 30.4% to $2.9 billion worldwide this year, according to data from Edge by Ascential. That’s an expected update of 8.2 percentage points — $183 billion — since the start of the COVID-19 outbreak. National growth rates range from +19.0% in the UK to +22.1% in the US and +37.6% in China.
Together, e-commerce sales will account for 88% of global retail growth in 2020. The top five platforms are expected to tighten their grip on the market this year, bringing in an additional $529 billion in revenue: Alibaba ( +$221 billion), Pinduoduo (+$122 billion) and Amazon (+$92 billion) are expected to lead the absolute growth.
Ad spend – especially in the FMCG sector – is shifting online due to sales trends since the COVID-19 outbreak. More than 8% of Unilever’s business is now done online; the company had made 71% (2.2 billion euros) of the total value of its e-commerce sales in 2019 in the first six months of 2020 alone.
Live streams grow to account for one-fifth of Chinese e-commerce; the West has been slow to capitalize on social selling
Online commerce is booming in China – it is expected to more than double to a sales value of $171 billion this year. That’s 10.2% of all e-commerce sales today, a share that’s expected to grow to one-fifth (20.3%, $421 billion) in the next two years alone.
Data from Yimian, a WARC sister company, shows that the top three platforms – Taobao, TikTok and Kwai – will see more than two-thirds (69.1%) of all live sales this year.
COVID-19 drove new consumers to the format; three in ten (30%) have spent more than before on products sold through live streams and intend to continue to do so. In total, live commerce has an estimated audience of 525 million, or 62.8% of China’s online population.
An example of a WARC report Global Advertising Trends: The Pivot to E-Commerce is available for download here. The full report is available to WARC Data subscribers. This latest report on global advertising trends complements the recently launched WARC guide to e-commerce.