A GroupM study estimates advertising accounts for 5% of Amazon.com’s revenues from commerce-related activity, and rated that as a “reasonable target” for other retailers working to catch up. he giant media buyer, part of WPP, estimates retail media makes up between 0% to 3% of revenues for other retailers.

Amazon dominates U.S. retail media, controlling 77.8% of spend in 2021, followed far behind by Walmart, at 5.2%, estimates eMarketer. Most major retailers have introduced retail media networks over the last decade to tap new revenue streams, including Dollar General, Ulta Beauty, Petco and Dick’s Sporting Goods over the last year.

GroupM predicts retail media spending will expand another 15% this year to $101 billion, accounting for 11% of total ad sales and 18% of digital ad sales. By 2027, retail media is projected to grow 60%, outpacing digital advertising’s growth. GroupM said the “promise of retailer first-party data, albeit residing in yet another walled garden, is tantalizing — enabling purchase-based targeting and closed loop measurement.”

Going forward, retail media spend is expected to be fueled by still healthy double-digit e-commerce growth, shifts from traditional advertising spend, as well as “the expansion of use cases and growth of non-endemic brands.” The expansion of “use cases” refers to retailers increasingly leveraging their data — i.e., website browsing behavior, e-commerce and in-store transactions — for off-site opportunities, such as third-party websites or for email or social campaigns. Walmart just announced plans to sell ads on TikTok and Roku. Retail media in the early days focused on on-site opportunities, such as display ads. 

“Non-endemic brands” refer to brands that do not sell any products through the retailer but seek to advertise to reach the retailer’s demographic. Retailers are expected to face competition for retail media advertising inventory from delivery and ride-share platforms, as well sites such as Marriott, which recently launched the hospitality industry’s first media network aimed at travelers.

GroupM wrote, “Scalability, differentiation and staying power, particularly in the context of the broader economic situation, will be the battle ground for many of the newer networks and their supporting technologies.”

Source: Retail Wire