Retail media to rescue as Brexit still haunts UK market

Retail media is set to help shore up the UK advertising market, which is facing the squeeze from the cost of living crisis and Brexit, and is forecast to exceed television revenue by 2028.

That is according to the latest “This Year, Next Year” mid-year forecast from GroupM, which predicts the medium is set to grow 9.9% globally this year alone.

The report also predicts that the total advertising revenue of retailer-owned ecommerce sites will reach $125.7bn by the end of the year, and will account for an estimated 15.4% of global ad revenue by 2028.

GroupM also revealed that the medium was now the third fastest growing advertising channel behind digital out-of-home and connected TV, although these are in a much lower league spend wise.

The WPP agency’s global advertising growth estimate for 2023 remains unchanged from its December 2022 forecast at 5.9% growth. It found that, excluding US political advertising, global advertising in 2023 will total $874.5bn. GroupM further predicts 6.0% growth in 2024.

The 5.9% expected growth in 2023 will be a decline in real terms, given that the International Monetary Fund expects global inflation to hit 7% this year.

In the UK, lower ad growth of 4.8% is anticipated. GroupM’s global president of business intelligence Kate Scott-Dawkins said: “The UK remains a little more challenged. In addition to coming out of the pandemic, we’re still seeing the effects of Brexit on the economy.”

Retail media proves the exception this year. Notably, of the top 25 media owners by ad sales globally, five are in retail media (including Amazon and Alibaba) and 17 are in digital.

However, Scott-Dawkins said there are “share shifts” in retail media, with players like Walmart, Tesco and Sainsbury’s increasingly taking market share from Amazon as the overall retail media market grows.

The opportunity for UK supermarkets to offer retail media spend was first flagged up in 2019, when DunnHumby Media predicted that grocery retailers could claw in an extra £1.7bn worth of revenue by using the customer data and insights they already have under their noses to monetise their owned media. Since then, most major UK retailers have jumped into the advertising market.

Scott-Dawkins said that we have now reached a point where, globally, continued price increases have created added “friction” in consumer spending. GroupM has been working under the assumption that the economy would be able to manage a “soft landing”, which at present appears to be a distinct possibility. She concluded: “We expect, in the second half of the year, more of a recovery story.”