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4 Trends That Sum Up the State of Retail Media Ad Spending

Retail media has been squarely in the spotlight of late as digital advertisers come to terms with the post-cookie world—the same one Google just pushed back—and the role shopper-level data will play in it. 

The shifting economy has advertisers searching for efficiencies and ways to maximize their budgets, and retail media data does just that. 

These forces are pushing more advertisers toward the walls of retail, evidenced by the fact that retail media ad spending is expected to surpass $40b this year—more than triple its pre-pandemic total. Globally, retail media ad spending is expected to reach $101b in 2022. 

There’s no doubt that retail media spending will continue its upward trend and become a mainstay tactic.

The question is: How high will it go, and what path will it take to get there? 

Current trends and spending habits give us a pretty good idea.

Here are four trends on the current state of retail media spending and what they mean for ad strategies moving forward.

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1. What Recession? 

Lingering pandemic concerns, widespread layoffs, rampant inflation and a recession are putting brands, consumers and advertisers in a tough spot. 

Retail media networks have thus far gone unscathed as spending has remained relatively stable.

Between Q3 2021 and Q2 2022, the number of companies investing in retail media hovered around 9k, while spending stuck to roughly $1b. 

The only increases came during the holiday surge, but that’s par for the course. 

Overall, this 12-month period saw more than 22k companies shell out more than $4b on retail media ads.

Why’s this important?

Because spending should be falling

During a time when most consumers are tightening their belts, conventional wisdom would have it that they’d spend less, giving advertisers fewer opportunities to boost their bottom line with ads. 

The fact that advertisers aren’t overreacting underscores retail media’s staying power and why the strategy will stick. 

As long as retail media remains (arguably) the most efficient and effective way for retail-aligned advertisers to get in front of consumers, they’ll shrug off the economic uncertainty—and any other curveballs—and spend more on these networks.

2. Come One, Come All 

There’s always something catching the eyes of advertisers. 

In recent memory, that was OTT and CTV as advertisers fled the rising ad loads on other channels and looked to take advantage of the popularity of streaming services.

Right now, that shiny object is retail media, attracting advertisers old and new alike. 

More than 40% of advertisers were new to retail media each quarter between Q3 2021 and Q2 2022 as companies like GMB Golf (athletics), KOOTION (technology), Unique Moments (jewelry) and Carlo’s Bakery (retail) collectively spent millions.

The steady stream of new advertisers makes it clear that any apprehension around retail media is waning. That said, the fact that most advertisers are spending less than $50k (77% of advertisers) indicates that they are still testing the waters. 

As more retail media networks open their doors, including Home Depot and Wayfair, a more diverse subset of advertisers will shift their budgets accordingly. 

For those dipping their toes in right now, time will translate to growing budgets and a larger group of “big spenders” that already includes 360 Lighting, Acer and Kimberly-Clark.

3. The Regulars

As new networks and advertisers continue to migrate to retail media, they’ll be met by a handful of advertisers who are already there.

These retail media “regulars” from the Technology, Home Goods, Food, Beauty and Apparel industries accounted for 76% of ad spending on these sites. 

For example, Technology advertisers invested an average of nearly $230mm each quarter while Home Goods advertisers spent $786mm.

Meanwhile, Apparel advertisers collectively increased their spending by an average of 8% quarter-over-quarter between July 2021 and July 2022. 

That said, the commonalities stop at the industry level. 

When it comes to strategy, Amazon had little ad spend difference between its top categories, an apparent result of its widespread appeal. 

Meanwhile, competitors Walmart and Target are trying to differentiate themselves. Walmart attracted a flock of Tech advertisers, and Target saw more Food advertisers.

For Walmart, Target, and frankly, every other retail media network, long-term success may rely on carving out a niche and becoming the preferred destination for a smaller group of advertisers. 

4. Amazon, Target and Walmart Remain on Top

Everyone is vying for a slice of the retail media pie—and with the continued growth of online shopping, it’s hard to blame them. 

Despite new entrants giving advertisers more avenues for their ad dollars, the OGs—Amazon, Target and Walmart—are still on top.

Of the $4.1b invested in retail media between July 1, 2021, and July 31, 2022, 78% went to Amazon, Target and Walmart. 

Unsurprisingly, nearly half went to Amazon (45%), with Walmart and Target capturing 22% and 11%, respectively. 

Here’s the surprise: Walmart was the only network that saw spending increase quarter-over-quarter (18%).

While Amazon and Target saw minimal decreases—1% for Amazon and 5% for Target—the shift is telling.

Amazon isn’t necessarily losing its luster, but other options are gaining appeal.

As the retail media world grows and other players strengthen their offerings, this trend will continue (but don’t expect Amazon to fall too far).

What’s Next for Retail Media?

The digital advertising world is notoriously unpredictable.

What’s not in question, however, is the future state of retail media: up and to the right. 

That’s the only direction retail media can go. Spending increases are all but guaranteed for the foreseeable future, especially as new networks emerge, and existing ones take theirs to the next level. 

That’s good news for advertisers. But for retail media networks, it’s time to innovate.

Does Amazon have a firm grip on retail media budgets? Yes. 

Will that continue? More than likely.

But the shift is underway, and advertisers have made it clear they’re willing to spread the love. 

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