S4M study: Drive-to-store is a €55bn sector for retailers

S4M has released the findings of an independent drive-to-store advertising research study carried out on its behalf by research firm, IHS Markit. S4M said The State of Drive-to-Store Advertising 2019 is the first study to assess the size of the advertising market across all types of media from a drive-to-store campaign perspective. The study surveyed 400 advertisers from all retail sectors in support of the market data and forecasts generated by IHS Markit. 

Key numbers:
In 2019, drive-to-store will represent €55bn (£49bn) for retailers, 58 per cent of the industry’s total advertising budget globally.

In the US, 2019 saw the same percentage attributed to drive-to-store, reaching €19bn.

Automotive is the leading sector in drive-to-store investments with €15bn spent in 2018.

In the US, the automotive industry also takes the lead, ahead of the grocery industry with €6bn and €4bn respectively in 2018 and €7bn and €6bn forecast for 2023.

In 2023, mobile will become the major format for drive-to-store investment, growing from 19 per cent in 2018 to 26 per cent in 2023 globally. In the US, this growth will reach 28 per cent in 2023, up from 22 per cent in 2018.

The advertising impact, particularly on sales and the number of in-store visits, is the first factor that pushes retailers to invest in drive-to-store. Conversely, advertisers who do not measure the impact of their drive-to-store campaigns name their unfamiliarity with the measurement tools available on the market as the main reason for it.

Key findings:
Drive-to-store growth is driven by digital – Generating in-store traffic has always been one of retail’s main goals, and advertisers are dedicating an increasingly greater part of their advertising strategy to it. Indeed, drive-to-store continues to grow, with worldwide forecasts showing that it will amount to 65 per cent of retailers’ total advertising investments in 2023, compared to 54 per cent in 2018. This growth is strongly led by the digital, which is the leading medium used by retailers to increase the number of in-store visits. In fact, in 2023, digital will represent 68 per cent of worldwide drive-to-store spend, compared to 54 per cent in 2018.

Advertisers are increasingly looking for activations that can be measured and optimized in real time – The rise of digital-to-store can be explained by a growing demand for effective and measurable solutions. These new solutions are a result of the staggering growth in mobile use and its technical specificities, especially when it comes to geolocation data, which enables brands to bridge the gap between the online and offline world. This is why the drive-to-store media mix will evolve tremendously in the coming years, led by mobile and social media, which are considered the two highest performing media channels to generate traffic in points of sales by the advertisers surveyed.

Incidentally, by 2023, mobile will become American retailers’ favourite channel, with the study forecasting that they will allocate 28 per cent of their drive-to-store advertising spend to it. In comparison, the study forecasts that retailers will spend only 4 per cent of their drive-to-store budget on out-of-home as well as on leaflets, and only 3 per cent on desktop. Despite these figures, retailers will continue to use traditional media in their media mix to attract consumers to stores. They will, however, turn more heavily to digital solutions like on-demand TV, programmatic audio, and digital out-of-home.

Retailers want to measure the concrete impact of their drive-to-store strategy in stores, giving up more traditional media KPIs – The study shows that advertisers who set up a drive-to-store strategy are mainly looking for ways to measure the concrete impact generated in their points of sale. Because of this, the number of visits, particularly incremental visits, and sales in stores are the first key performance indicators (KPIs) mentioned by advertisers as a way to measure the impact of their drive-to-store strategy. Traditional media KPIs such as reach, clickthrough rate and repetition rank last.

Some sectors are more inclined to drive-to-store – In the US, drive-to-store advertising is already well established, and its growth will outpace the wider market to reach around 64 per cent of all retail spend by 2023. The automotive business will maintain its dominance in the drive-to-store market with €7bn, or 52 per cent of its total advertising budget, forecast for 2023. But this is not the only vertical which is investing massively in drive-to-store. The grocery and restaurant sectors are the next largest categories with €6bn and €5bn invested respectively.

Moreover, digital media will dominate the US retail landscape across all categories and will account for almost 70 per cent by 2023. Mobile will maintain its lead in the drive-to-store market with a 28 per cent share by 2023 and social media will grow from 9 per cent in 2018 to 21 per cent by 2023.

You can read the full report here