40% of Marketers Now Use Shoppable Video Ads, Underpinning ‘Storeless’ Economy

 In Industry Trends

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Dive brief:

  • The coronavirus pandemic has accelerated a shift from the brick-and-mortar consumer economy to a “storeless” environment by as much as 500%, permanently altering the brand value chain, according to a new report the Interactive Advertising Bureau shared with Marketing Dive. The trade group’s “Brand Disruption 2021” findings cite data showing that store closings in the U.S. will nearly triple to 25,000 this year from 9,300 last year, challenging brands to reach consumers directly through digital channels.
  • Directly “shoppable media,” such as livestreams, social commerce, virtual consultations and shoppable-ad formats, will be the fastest-growing advertising categories in the near future as retailers and brands seek to reach consumers who are more likely to shop online, per the IAB. Livestream-generated sales are expected to double to $120 billion worldwide this year.
  • The percentage of marketers who use shoppable video ads is set to grow to 40% this year from 33% in 2019 and 25% in 2018 as advertisers seek to boost direct sales. Marketers expect to increase their media spending on paid search 26% this year and on social media 25%, making those channels the fastest-growing categories in digital, the IAB found.

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1094009490, Nattakorn Maneerat / EyeEm

Dive insight:

Marketers must be prepared for a continued shift toward e-commerce as content and commerce become more prominent parts of the digital media landscape — a convergence that’s been considerably sped up by the pandemic. While the prospect of a successful coronavirus vaccine led to speculation this week that brick-and-mortar retailers may see a comeback next year, brands can expect that much of the environment will remain permanently altered, making their direct selling efforts through digital channels essential.

The online media environment has at the same time become more democratized, giving smaller brands a chance to compete with bigger rivals. While 200 major advertisers are responsible for 88% of U.S. network TV revenue, social media giant Facebook has 10 million advertisers worldwide, most of which are small business seeking to reach nearby customers with targeted ads. This disruption is having a significant effect on product categories like cosmetics. While the top 20 beauty brands generate 96% of retail sales in brick-and-mortar stores, they only capture 14% of e-commerce sales, according to data cited by the IAB.

On-demand media have also trained consumers to expect immediate gratification, a factor that affects how brands and retailers do business. With e-commerce growing its share of total retail commerce in the U.S. seven times since 1995 to 23%-25% currently, retailers including Walmart are changing their operations and store designs to better satisfy consumer demand.

The percentage of the top 500 retailers that offer buy online, pickup in store service has risen to 43% currently from 7% as of last December, according to the IAB. As consumers grow more accustomed to these services, they’re likely to continue to seek them from brands and retailers even after the health crisis subsides.

Major digital platforms are also adjusting to the trend. Facebook, Google, Pinterest and other Big Tech heavyweights have ramped up their e-commerce features since March, often putting the spotlight on small businesses. The pivot has paid out, as almost all of the big digital advertising players saw blowout revenue growth in the third quarter.

Facebook has been particularly aggressive on the commerce front, building out shopping-minded capabilities across its core social network, WhatsApp and Instagram. Instagram is in the midst of expanding its shopping technology to Reels, a new feature for sharing short video clips, along with livestreaming service IGTV. Over the summer, the photo-sharing app debuted Instagram Shop, a hub showing personalized recommendations, exclusive items and collections of products from brands and creators. Meanwhile, WhatsApp is opening new ways for users to check out products for sale in Facebook Shops, the social network’s online storefronts, and buy items directly from a business chat.

Similarly, more traditional media stakeholders are investing in e-commerce to keep up with consumers. NBCUniversal this week partnered with PayPal as part of an expansion of its One Platform Commerce initiative that looks to bring shoppable ad formats and content to the network owner’s various properties.

There is no endorsement, affiliation, or sponsorship between Getty Images and the companies/services mentioned/linked within this article.

This article was written by Robert Williams from Marketing Dive and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.

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