Online Advertising Set to Soar

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August 16, 2011

Online advertising and marketing is quickly becoming a dominant venue for retailers and CPG companies to reach consumers, however store brands still remain in the shadows.

 The U.S. online ad market is on a sharp upward trajectory this year with spending set to increase 20.2 percent to $31.3 billion, according to researcher eMarketer Digital Intelligence. And based on an updated industry breakdown, retail and CPG will account for the largest shares of new spending.

Retail is already the top-spending category when it comes to online ad spending. eMarketer puts 2010 spending at $5.47 billion by retailers in 2010, expects $6.78 billion this year and estimates spending to grow to $11.08 billion by 2015.

CPG companies rank fourth in spending after retail, financial services and telecom. This group spent $1.82 billion on online ads in 2010, and will outlay $2.46 in 2011. By 2015, eMarker anticipates CPG online ad spending to reach $4.95 billion in 2015.

For store brands to compete and flourish, makers must take a page from CPG marketers, and retailers need to be more aggressive in featuring private label in addition to national brands in weekly ads and mailers. Often retail and CPG companies partner on ad spending, and for store brands to remain on equal footing, online marketing needs to keep pace.

The overall strong growth in online ad spending in the U.S., coupled with the fact that marketers of all types continue to become more involved with digital, means that each industry will post strong growth each year from 2011 to 2015, according to the research.

Most of these gains will be in double digits, or close to it. By 2015, total U.S. online ad spending will reach $49.5 billion, an increase of more than 58 percent over this year.

Time and again, the message to private label is clear: ignore online marketing at your own peril. Consumers are increasingly researching online before making buying decisions, often before compiling a shopping list and setting out for the store. Failure to reach out to shoppers through search engine ads, store ads or online weekly ads, could spell failure for a store brand.

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