Although retail media is currently dominated by product search ads on ecommerce sites, recent advancements by Amazon, Walmart, and others indicate a much stronger push into display, video, and connected TV (CTV) advertising.

Retail media has revolutionized the search ad market, where most of the focus still is. But display and video ads that target consumers higher in the funnel are becoming a more important part of the mix, and technological innovation is ushering in new ad products that bring together the best of branding and the best of performance marketing.

The COVID-19 outbreak undermined many of our pre-pandemic US forecasts. Insight can now be gleaned by examining the difference between what we thought would happen as of February 2020 vs. what our forecasts now show.

Traditionally, the entertainment vertical doesn’t allocate many ad dollars to search ads, and the pandemic will make search—like desktop—even less relevant, since the industry primarily uses search ads to drive traffic to ticketing sites. We predict the entertainment industry will spend just $1.32 billion on search this year, a 30.5% drop from 2019.

Total ad spending in France and Germany took a big hit in 2020, as a result of the pandemic. But digital advertising bucked that trend and will lead a strong double-digit recovery in ad outlays during 2021.

US advertisers are dedicating more of their display budgets to digital video as social video and CTV advertising climb to new heights.

Hence, when its spending collapses, search ad publishers like Google feel the pinch. Travel will spend 58.8% of its digital ad dollars on search this year, compared with the total figure across verticals (40.4%). The $1.91 billion that travel will spend on search ads will be the least it has budgeted for the format since 2016, a 40.5% YoY decline.

In addition to Google, CPG search ads are increasingly geared toward Amazon and (to a lesser extent) big-box retailers and grocers like Walmart, Target and The Kroger Co. As grocery ecommerce becomes more prevalent, CPG advertisers will have an even greater incentive to buy search ads on these platforms. However, heavy investments in display and video will continue to overshadow search ad spending.

In 2020, nonvideo display ads will account for the largest share of automotive digital budgets (33.7%), followed by video ads (31.9%) and search ads (29.1%). Display and Video. We expect the automotive industry will spend $7.18 billion on display ads this year, down 10.0% from 2019. Display’s share of automotive digital ad budgets will grow, however, to 65.6% in 2020, up from 59.7% in 2019.

Financial services marketers are using display, particularly video, for brand awareness and communication, while search ads target consumers actively reassessing their personal finances.

The healthcare and pharma industry will spend $5.30 billion on search advertising in 2020, up 13.3% from 2019. Search will amount to 55.6% of all the digital ad dollars spent by healthcare and pharma this year, which is significantly higher than the average of 40.4% across industries. Search is used at several different levels of the healthcare and pharma industry.

Last year, for example, the travel industry spent $5.84 billion on search ads, or about 11% of the search ad market—and that spending was heavily concentrated on Google. That money is largely gone this year, and it’s not expected to come back quite the same, with major OTAs now suggesting they have been too reliant on paying Google for traffic in the past.

We expect search advertising to increase 12.5% this year to $3.53 billion. Colombia will be home to the region’s fastest-growing search ad market, at 15.4%, followed by Brazil (13.7%) and Mexico (11.0%). Overall, search advertising will be an effective way for brands to target consumers with relevant ads as consumer spending habits shift online in response to this “new normal.”

Merkle, another performance agency focused on search, social and ecommerce channel advertising, also reported that 69% of its clients’ US search ad clicks on Google and Microsoft search ad platforms came from mobile devices in Q3 2019, with almost all of that total coming from mobile phones (64%).

Google will see its first ever contraction in digital ad revenues, as search advertising will struggle compared with display. What is the outlook for global ad spending in 2020? Overall ad spending will decline by 4.9% worldwide this year, a significant drop from last year’s 6.3% growth and from our pre-pandemic 2020 forecast of 7.0% growth.

The emphasis in the older reports was on search ads as a relatively measurable, performance-oriented format. That remains true, but there are other digital platforms and formats now where advertisers might retreat for a greater emphasis on performance, e.g., Facebook (including Instagram), Amazon and affiliate links.

Mobile search will become a larger portion of overall search revenues. Mobile search will pull in $33.86 billion in 2020, which will push up its revenue share of total search 2.6 percentage points to 62.3%. The loss of ad dollars from travel advertisers affected desktop more than mobile.