As they struggle to compete with Amazon and fast fashion, retailers are the top advertisers in the US, accounting for 13% of total ad spend. However, ensuring that those ads make an impact continues to be a major challenge.
Digital ad spend has surpassed its TV counterpart, and marketers are expected to spend $83 billion on digital ads this year. Retailers are focusing mainly on programmatic, which allows them to target individuals with specific interests rather than viewers of specific sites, according to L2’s Digital IQ Index: Specialty Retail. However, Sephora is a notable exception. The beauty retailer continues to place most ads directly, mainly on JCPenney.com, as the company is its primary retail partner.
This could be a savvy strategy, as programmatic advertisers face the challenge of making sure that ads appear on high-quality, impactful publisher sites. Many brands that buy billions of ad impressions per year, including Kay Jewelers and Zales, fail to achieve a high quality score for their ad placements, according to L2’s study — indicating that many of these impressions are failing to make an impact. If that continues, more retailers could follow in the footsteps of Procter & Gamble. One of the biggest digital advertisers in the world, the company cut ad spend by $140 million and saw almost no effect on sales performance.