Retail media on track to overtake linear TV within a few years

Retail media spending globally is poised to reach $128.2bn this year and to grow another 10% next year, according to WARC Media’s latest Global Ad Trends report. 

Global Ad Trends: Retail media’s path to consolidation, co-authored by WARC Media and WARC Digital Commerce, examines the surging levels of retail media ad investment, the potential challenges for brands, and includes expert industry commentary about the future of retail data as an enabler of effectiveness across the media landscape.

Why retail media matters

Retail media is the fourth-largest channel by spend and is rapidly nearing linear TV in third place. Apart from the implications for linear TV in slipping further down the pecking order, there is a growing belief that retail media will become more akin to an infrastructure underpinning the ad industry, rather than a channel in its own right. 

With the loss of third-party cookies, the potential to reach specific audiences will become a point of immense strength for retail media networks.

Takeaways

• Amazon overtakes Alibaba

Between them, Amazon and China’s Alibaba earned nearly $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, on WARC estimates, and is forecast to earn $45.4bn in ad revenue this year per WARC Media. Its 20.4% year-on-year ad revenue will see Amazon supplant Alibaba as the world’s largest retail media owner this year.

• Category spending 

Globally, technology and electronics brands spend the most on retail media, with total investment forecast to reach $23.8bn in 2024. Pharma and healthcare follows in second place, followed by CPG categories. Another growth category for retailers is nicotine: vape brands worldwide are forecast to spend $11.6bn on retail media ads in 2024, up 40% on 2021 investment levels.

• Retail media is moving beyond paid search formats

Less than a third (30%) of respondents surveyed by WARC and the Digital Shelf Institute use retail media to build brand awareness. But 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. 

• Lack of standards could be a problem 

A study by IAB Europe found that a lack of integration between networks is a common complaint, along with inconsistency in metrics and reporting – the latter an issue cited by 70% of buyers. But efforts to create standards that broadly match best practice across the digital ad ecosystem may be complicated by what retailers are able to implement, and how retail media differs across categories.

As marketers favour networks offering the most sophisticated campaign tools and the best ad measurement credentials, there is a rise of retailer alliances and a growing role for third-party ad tech.

Key quote

“Retail Media has been the advertising story of the decade so far. 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” – Alex Brownsell, Head of Content, WARC Media.

WARC members can read Global Ad Trends: Retail media’s path to consolidation in full here. Non-members can download a complimentary sample report here.