Brands to spend $59bn on e-commerce advertising in 2020

(Christian Wiediger/Unsplash)
Adspend on e-commerce platforms is growing at 30 times the rate of other forms of online advertising. Photo: Christian Wiediger/Unsplash

Brands will spend nearly $59bn (£46bn) on advertising across e-commerce platforms in 2020, due to the rise in online shopping caused by COVID-19, research suggests.

Adspend across e-commerce websites, “omnichannel” retailers, and social commerce is growing at 30 times the rate of other forms of online advertising, according to international marketing intelligence service WARC.

While investment in the wider advertising industry is set to fall by about 8.1% over the year, advertising across sites including Amazon, Tmall and Rakuten; retailers such as Walmart and Carrefour; and e-commerce on social media platforms like TikTok, is set to shoot up by 18.3%, the expert predicted.

This is largely result of brands trying to capitalise on the rapid increase in online purchasing, and the “shifting complexion of sales” during the COVID-19 crisis that has caused a lot of retailers to move their advertising spend online, the analysis suggests.

The study highlights that more than 8% of Unilever's (ULVR.L) business is now done online, with the company making 71% — €2.2bn (£2bn,$2.5bn) — of its total 2019 e-commerce sales in just the first six months of 2020.

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“Brands are flocking to leverage targeted advertising across e-commerce platforms as a means of getting closer to the consumer at the point of purchase,” WARC said.

Consumers will spend an extra $183bn online this year, as a direct result of the crisis. Total global e-commerce sales are set to rise by 30.4% — $677bn — to $2.9tn, according to data from Edge by Ascential.

Domestic growth rates will be up by about 9% in the UK, 22.1% in the US, and a massive 37.6% in China, the research suggests.

Overall, e-commerce sales will account for 88% of global retail growth in 2020, with the top five platforms — Alibaba (BABA), Alphabet (GOOGL), Facebook (FB), Amazon (AMZN) and Pinduoduo (PDD) — raking in an extra $529bn combined.

Alibaba has seen the sharpest forecast upgrade since the start of the COVID-19 outbreak, up $221bn. It is followed by Pinduoduo, up $122bn, and Amazon, up $92bn.

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The study also found “livestreamed commerce”— similar to late-night TV shopping channels, but streamed via e-commerce and social media platforms — is taking off in China. Livestreams will double to a sales value of $171bn this year — representing a tenth of all domestic e-commerce sales. This will likely grow to fifth within in two years, WARC predicted.

The top three platforms — shopping website Taobao, and video-sharing apps TikTok and Kwai — will account for nearly seven in 10 (69.1%) live-streamed sales in 2020, according to data and AI company Yimian.

Live-streamed commerce has an audience of about 525 million people — 62.8% of China's online population — and nearly a third (30%) of users have made more purchases via livestreams since the COVID-19 outbreak, than they did before it, and intend to keep doing so, the data shows.

"With ad investment flat or falling across most media in the wake of COVID-19, e-commerce platforms — which have seen penetration balloon — are in a strong position to capture reallocated budgets by using sales data to demonstrate ad performance during a volatile economic climate,” James McDonald, head of data content at WARC Data said.