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Direct-response tactics still dominate retail marketers’ budgets

The US retail industry’s advertising spending on paid digital media will reach $11.05 billion in 2014 and rise to $17.39 billion by 2018, for a 12.8% compound annual growth rate between 2013 and 2018. Even though digital spending growth for the industry has begun to slow, retail continues to spend more than any other US industry and will maintain this lead for at least the next several years, according to a new eMarketer report, “The US Retail Industry 2014: Digital Ad Spending Forecast and Trends,” part of our new report series, “2014 Digital Ad Spending Benchmarks by Industry.”

US Retail Industry Digital Ad Spending, 2012-2018 (billions, % of total digital ad spending and % change)

The US retail industry is still very much skewed toward direct-response advertising. Direct response includes paid ad formats designed to drive some type of action, typically sales or leads. Stores need customers coming through the doors, and ecommerce thrives on conversions. eMarketer’s 2014 analysis of US digital ad spending shows a stronger emphasis on ads meant to trigger sales and leads than those intended to boost brand awareness, with a 70-30 split between objectives.

That division translates to $7.7 billion spent on online and mobile paid search, classifieds, online directories and paid ads embedded in email messages, compared with $3.3 billion for formats encompassing online and mobile banner ads, rich media, online video, paid social placements, in-game ads, content sponsorships and native ads.

US Retail Industry Digital Ad Spending, by Channel, 2014 (billions and % of total)

Consumers’ widespread use of mobile devices is helping drive retail’s turn to digital media. Shopping has become a cross-device activity, and advertisers are investing in ways to reach mobile users across all steps in the path to purchase. One result is that the retail sector has increased mobile ad spending.

eMarketer estimates that the US retail industry will pour 37% of its digital ad spending into mobile in 2014. With an investment of $4.09 billion expected for 2014, retail will be responsible for 23.1% of US mobile ad spending this year, the largest share among industries tracked.