Updated: Jun 2
If there is one industry that seems to attract the most significant growth, it is the digital advertising sector. In 2019 alone, the total market share of digital advertising was worth US$166 billion and is expected to reach the US$350 billion of valuation by 2026, with a compound annual growth rate (CAGR) of 18.5%, based on the Global Digital Advertising Market report. Similarly, global media spending grew unprecedentedly despite economic and political turmoil.
What is driving this growth? E-commerce.
According to the data provided by Statista, the global e-commerce market reached sales amounting to US$3.5 billion, which represented 14% of the global retail sales. Based on the above data, it is safe to assume that the numbers will continue to perform strongly in the new decade.
How is this going to impact the digital advertising industry?
Selling goods online is much more challenging than offering products on brick-and-mortar stores - the competition is tougher, and the digital noise is louder. Store owners must make sure that their message is getting across their target markets. As such, it is critical for e-commerce startups to utilize the best modes of digital advertising that would convert leads to sales.
E-commerce Investing in Mobile Advertising
The growing use of smartphones among online consumers is what drives e-commerce startups to invest in mobile advertising. The availability of accessing different services and content through various apps are transforming how people communicate. Many rely on their mobiles to carry out most of their tasks, such as browsing the Web, reading books, playing games, watching videos, and accessing social media platforms. For this reason, most e-commerce startups are spending their resources on mobile monetization, particularly the in-app and video ads. Through strategic ad placement, they can showcase their products through in-app advertising in exchange for rewards and extended game time for the user.
However, mobile advertising has a notable decline after its tremendous run in its first few years. Perhaps, it is due to the changing consumer behavior and the demand for better advertising regulations and fraud protection.
Social Media Favoring Growth of In-App Advertising Segment of E-commerce Startups
When it comes to the in-app advertising segment, social media is where most e-commerce startups are diverting their attention to. These social media platforms permit startups to advertise their products and services on the Internet because it allows them to have direct interaction with their clientele. Due to this, digital advertisers are continually developing creative in-app ads that can capture the interest of different age groups in various geolocations. Of all ad types, video ads are going to change the landscape of digital advertising as new platforms such as YouTube and Netflix are paving the way for advertisers to promote their products through effective visual content.
Based on all these observations, both e-commerce and digital advertising serve to benefit each other. E-commerce spending would propel the growth of digital advertising. Effective digital advertising, on the other hand, would ensure ad placement can convert leads to sales. And with the way things are gong now, both industries will grow exponentially in the years to come.
If you want to know how digital advertising can impact your e-commerce startups, see how AlgoriX can help you.