Expecting Shoppers To Return, Retailers Are Increasing Ad Spend

March 5, 2021 • Out-of-Home

Post-pandemic, the impact of COVID will have a number of ramifications on the way people will live including shopping. Marketers and consumers are anticipating a strong 2021.

With the pandemic, many consumers opted to stay at home and shop online. For example, in-store traffic on “Black Friday” in 2020 dropped by 52% year-over-year. Conversely, Adobe Analytics reported, sales of online shopping on “Black Friday” totaled a record $9 billion, a year-over-year increase of 21.6% and “Cyber Monday” online shopping was even greater at $10.8 billion. The increase in digital ad spend in the latter half of 2020 helped to promote ecommerce sales. With online shopping becoming a way of life for millions, once vaccines become widespread, brick-and-mortar stores are hoping for in-store traffic to return.

One way to maintain brand awareness as the economy opens up and vaccinations become widespread for retailers is advertising. A few recent surveys have been encouraging.

Ad Spend: A majority of chief marketing officers are planning to increase ad spend in 2021. The CMO Council, in a survey of 200 global marketers, found 65% plan on increasing their ad spend in 2021 and another 24% expect no change in their ad budget, only 10% plan on spending less. In 2021, BIA estimates local retail advertising to increase year-over-year by 5.3%. Clearly, marketers are eager to recapture lost sales by increasing their ad budget.

Increase Sales: In an encouraging survey, The National Retail Foundation forecasts retail sales in 2021 to grow between 6.5% and 8.2%, the highest anticipated year-over-year growth in 17 years. Retail sales could reach as high as $4.4 trillion for the year (online will account for up to $1.19 trillion of the total). Moreover, an Ad Age-Harris Poll found 62% of consumers say they plan to shop in stores this spring at least once a week.

Out-of-Home Advertising: In 2021, the ad spend for out-of-home media is expected to rebound. Last year with the outbreak of COVID and ensuing economic slowdown, only digital media and local TV (from political) reported year-over-year increases in ad spend. The ad spend for all other traditional media dropped. For example, according to a report by Billboard Insider, out-of-home ad revenue dropped by 45% in the second quarter of 2020 compared to the previous year.

In 2021, with consumers spending more time outside their home including in-store shopping, industry analysts forecast a strong year for out-of-home ad spend. For example, in the U.S., MAGNA expects ad spend for out-of-home media in 2021 to increase by 11.3% after a decline of 24.2% in 2020. Similarly, Zenith forecasts out-of-home ad spend to reach $9.1 billion in 2021, a year-over-year increase of 11.1%.

In-Store Hand Sanitizers: One out-of-home marketing strategy retailers have been using to keep shoppers safe is the presence of sponsored in-store hand sanitizer kiosks. A recent survey from IRI, a market research and analytics company, found nearly every shopper (99%), said they feel safer shopping at stores that provide sanitizing hand stations at their entrances. A large majority of respondents said they plan to keep using wipes for their hands and shopping carts even after the vaccine becomes available to them. The survey also found 70% of shoppers took two or more wipes.

Terraboost Media, an out-of-home media company and manufacturer of sanitized hand wipes had sponsored the survey. The media company has thousands of ad-supported wellness kiosks across a number of prominent retail chains, including CVS and Walgreens WBA -0.1%, two primary locations for vaccinations. The brands that advertised on hand-sanitizing kiosks resonated with shoppers. With kiosks near the point-of-purchase, the IRI survey reported participating advertisers scored well in both upper funnel attributes as ad recall (47%) and lower funnel attributes such as purchase intent (34%).

Of the survey findings, Terraboost Media CEO Brian Morrison said, “More than one-third of respondents said that seeing the ads on the kiosks influenced shopping behavior. This kind of interaction between consumers and advertisers is incredibly valuable as our hand-sanitizing billboards are an opportunity for our advertisers to literally sponsor health, wellness, and the safety of their community when it’s needed the most.”

Retail advertisers have had a strong relationship with out-of-home media which will continue post-pandemic.

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