Retail media: From shopper marketing to $141bn sector

amazon 2The exponential growth of retail media looks set to continue despite the economic turmoil, with global spend poised to reach $128.2bn (£104.8bn) this year, and $141.7bn (£115.8bn) in 2024, putting it on track to overtake linear TV as the third-largest channel by spend within a few years.

So says WARC Media’s latest Global Ad Trends report, which examines the surging levels of retail media ad investment, the potential challenges for brands, and includes industry expert commentary about the future of retail data as an enabler of effectiveness across the media landscape.

Key findings outlined in “Retail Media’s Path to Consolidation” include the fact that Amazon is set to supplant Alibaba as the world’s largest retail media owner by ad revenue this year.

Between them, the two businesses earned an estimated $80bn in advertising revenue in 2022, equivalent to more than two thirds (68.3%) of global retail media investment.

Amazon occupies more than four fifths (87.8%) of the market outside of China, according to WARC estimates, and is forecast to earn $45.4bn in ad revenue this year, up 20.4% year-on-year.

Amazon is forecast to further accelerate in 2024, as its ad revenue reaches $52.7bn (+16%), compared to $42.1bn (+1.4%) for Alibaba.

For most marketers, retail media remains a lower funnel channel to drive sales conversion: less than a third (30%) of respondents surveyed by WARC and the Digital Shelf Institute use retail media to build brand awareness.

However, retail media networks are increasingly moving beyond search formats into video, audio and out-of-home through cross-channel partnerships, such as Walmart’s tie up with Roku and Kroger’s deal with Pandora.

This enables the unlocking of upper-funnel ad dollars with brand-building formats to improve campaign effectiveness.

Analysis of WARC Digital Commerce’s latest dComm Index data for Amazon found that Starbucks has emerged into a leadership position in the coffee and tea category, with the highest (9.1%) paid share of voice (SOV) in the category.

WARC analysis observed that a one percentage point change in Starbucks’ paid SOV is typically followed by a c.$1.6m increase or decline in Amazon sales.

WARC Media head of content Alex Brownsell said: “Retail media has been the advertising story of the decade. The unfashionable and often informal world of trade and shopper marketing has transformed into a $128.2bn digital advertising behemoth.

“What comes next will be less spectacular but more significant to brands, as deterministic retail media data begins to inform campaigns across the media landscape.”

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