Marketing Forecast from Ad-ology

As e-commerce continues to impact consumer shopping, analysts expect some sales channels to suffer more than others when it comes to the CPG category. Specifically, between now and 2015, Nielsen analysts are looking for supercenters and e-commerce sites to increase their dollar share of total channel sales by 5 points. These changes also suggest that marketing budgets for CPG are likely to change.

As e-commerce sales continue to grow, more retailers are seeking ways to further boost their online sales. While online sales aren’t expected to overtake or replace brick and mortar stores, the e-commerce channel is the fastest growing part of the business for many traditional retailers. Traditional retailers are finding that they can provide a wider range of choices online, without the need to take up space in their stores. To that end, some retailers are testing in-store kiosks. The kiosks are a place where brick-and-mortar retailing meets the Internet.

In 2009, e-commerce non-travel spending essentially remained flat at $129.8 billion according to comScore. The research shop indicates that 2010 should be a better year for e-retailers. This sentiment is echoed by Forrester Research which put forth its own numbers in a recent release. Forrester pinpoints 2009 e-commerce spending at $155.2 billion and predicts steady growth of 7% annually through 2012. At that point, Forrester analysts see growth increasing by 8% between 2013 and 2014, at which point online retail sales will ring up at over $249 billion.

To understand the full extent of the recession in the U.S. consider the 2% drop in e-commerce spending in 2009. Total spending for the year leveled out at $209.6 billion and was broadly divided between travel e-commerce spending at $79.8 billion and retail e-commerce spending at $129.8 billion according to comScore.

While the recession took a toll on shopping centers and strip malls across the country, the economic downturn has left the Internet poised to enter 2010 as a larger force in retail. Bargain seekers are turning to the Internet in droves to compare prices, hunt for bargains, download coupons and seek advice from fellow shoppers. Retailers are taking notice and are beginning to divert capital away from storefronts and to Web sites, investing in the technology to make online shopping easier, faster and cheaper. According to Credit Suisse Securities LLC, e-commerce sales will rise nearly 10% in 2010 to $144 billion after ending 2009 with an estimated 1.1% gain, the worst year on record.

US online advertising spending is set to drop in 2009 for the first time since 2002; eMarketer estimates online ad spending will be down 4.6%. However, the slowly recovering economy, combined with basic structural changes in how marketers and the public use media, will lead to Internet ad spending growth in early 2010. Video ad spending growth is expected to far outpace any other online format, running in the 34% to 45% range from 2009 through 2014. These extremely high growth rates are the result of video ads moving from the sidelines to center stage, becoming the main form of brand advertising in the digital space.