Broadcasters today find themselves competing not only for retailers’ ad dollars, but in some cases with retailers who are creating ad networks to promote products on their websites and in-store. But a new survey from the Association of National Advertisers (ANA) reveals what the trade group says is an “unsettled marketplace.” Despite total spending growing dramatically, and double-digit spending increases expected over the next four years, CMOs are putting the ad channel under more scrutiny.
Retail media ad spending in the U.S. will reach almost $55 billion in 2024, up 26% versus a year ago, according to eMarketer. It projects retail media ad spending will make up more than a fifth of total U.S. ad spending by 2027, representing nearly one of every three dollars spent on digital advertising by 2020.
But the ANA’s latest report titled “Retail Media Networks: Optimism Tempered with Caution” says even as marketers are adding retail media networks to their plans, fewer marketers are expecting to spend significantly more on the platforms. And some say they may actually spend less.
The number of marketers expecting to add additional retail media platforms to their plans is also declining, despite the growing number of retail networks to choose from, with just 35% saying they will be using more — down from 58% in the ANA’s previous survey. The report labels that a “rationalization” based on the fact that most are measured purely on whether they bring any incremental lift to sales.
Most of the dollars that pay for retail media networks is coming from brand and shopper marketing groups, with more than a third (36%) reporting it comes out of media ad budgets. And just 15% of those surveyed say they would be open to using the retail networks to drive brand awareness and consideration, things CMOs have long turned to radio and TV to achieve.
“RMN funding remains a zero-sum game, with just 10% of respondents saying funding for retail media was somewhat or completely incremental, essentially flat from last year,” the report says. “This suggests a challenge ahead for the platforms, with the burden of proof on them to convince marketers to shift funds from other, proven channels.”
The survey of ANA members finds that 71% of respondents report that sales conversion remains the biggest goal for marketers currently using RMNs. But marketers expressed concern over the availability, reliability and timeliness of retail media network measurement data. The ANA says a majority (55%) of marketers see the lack of standardization across platforms as the greatest challenge. Nearly half (48%) say there is insufficient data showing how ads on RMNs can be attributed to sales. Four in ten of those surveyed also questioned the timeliness of the data and analytics provided to them. Brand safety may be a growing concern since made-for-advertising websites, as an example, are now part of some online offerings.
“The retail media space is exploding and, as with most relatively young channels, the ‘back end’ is still evolving,” said Bob Liodice, CEO of the ANA. “There are more retail media networks than ever before, and that heightens the importance of having standards across platforms that enhance measurement and an understanding of ROI. Once measurement catches up to the creative possibilities, members are telling us that retail media shows continued promise.”
Nearly two-thirds of respondents already think RMNs are a “have to buy” versus “want to buy.” And among those surveyed, a majority (57%) now spend between 10% to 39% of their marketing budgets on retail media. That is up from 48% a year ago.
While today’s focus is on sales, the ANA says 68% of marketers are already testing retail media network’s ability to influence mid- and upper-funnel objectives such as brand awareness and consideration, two areas where broadcast media like radio and television have long had a big role.
To help marketers figure out what’s next, the ANA has begun working with the Media Rating Council to develop a list of measurement must-haves and must dos for retail media networks. They say the goal is to allow for “apples to apples” comparisons between various networks. The end product may include impressions, audience demographics, reach, and guidance for the timeliness of post campaign data and analytics delivery.
MRC Executive Director George Ivie says they have had “strong encouragement” from the retailer networks to adopt standards and create measurement consistency to bring more transparency to the space. “We look forward to collaborating with ANA and our members to move these priorities forward,” he said in a statement.
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