Retail media – advertising sold by retail-based companies like Amazon, Walmart, and Target – was considered a test and learn advertising channel not so long ago. Now it has blossomed into one of the fastest growing new revenue streams for retailers. GroupM estimates that global ad revenue for retail-based companies was $88 billion in 2021 and will reach $101 billion this year. This amounts to 18% of global digital advertising and 11% of total advertising.
If those numbers aren’t jaw-dropping enough, consider that GroupM expects retail media advertising to increase 60% by 2027. That beats the growth rate forecast for all digital advertising, meaning that retail media will take an increasing share of digital ad revenue over the next five years.
What’s the big attraction? Retailer first-party data can enable purchase-based targeting and closed loop measurement. The caveat, of course, is that it resides in yet another walled garden.
GroupM defines retail media as “any advertising revenue accruing to a retail-based company, including marketplaces.” It estimates that Amazon is far out front when it comes to ad revenue as a percentage of e-commerce, ballparking its share of revenue derived from advertising at 5%.
“This 5% high-water mark for advertising revenue could be a reasonable target for others, who presently fall somewhere between 0% and 3% today,” GroupM says in its report, entitled “This Year Next Year: 2022 E-Commerce and Retail Media Forecast.” How close retailers can get to that target will depend on their ability “to build out their media product offerings globally in order to create competition among significant numbers of manufacturers for the privilege of reaching prospects, and further developing a platform to sell impressions to non-endemic marketers.” Non-endemic refers to advertisers that use retail media buys to target consumers even though they’re not selling any products through the retailer.
Another factor is beefing up retail network ad inventory by partnering with publishers who can use the retailer’s data to create more value for their media impressions. “We estimate that retail media will continue to grow, despite recent softness in overall e-commerce, driven by non-endemic brands as well as typical retail brands,” GroupM says.
The list of retailers that have entered the advertising business is a long one. In addition to Amazon, Walmart, and Target, it includes Best Buy, Walgreens, CVS, Kroger, eBay, Dick’s Sporting Goods, Macy’s, Costco, Wayfair, Etsy and Lowe's One Roof Media Network.
“We do think there is continued opportunity especially in the U.S. and other markets,” Kate Scott-Dawkins, Global Director of Business Intelligence at GroupM, said at a briefing about the agency's new report, as reported by Ad Age.