Total retail sales in the U.S. topped $4.5 trillion in 2021.
Yes, that’s a trillion with a “t.”
By 2025, that number is expected to rise to $5.35 trillion.
But it’s not just consumers who love retailers. Advertisers do, too.
Retail media networks.
According to MediaRadar data, more than 23 thousand companies (roughly 38 thousand brands) have spent more than $3 billion on retail media since May 2021.
The “Why” Behind the Rise of Retail Media
We know why consumers adore retailers, but why are retail media networks pulling at the heartstrings of advertisers?
The Addressable Audience
It takes a lot of people to spend $4.5 trillion, which is one of the big reasons advertisers love retailers.
Every person who bought something from a retailer is part of their media network’s addressable audience.
Said another way, retailers have shopper-level data on millions of customers that advertisers can use.
Let’s put this into perspective.
As of 2020, Amazon reported 200mm Prime members, which means Amazon has purchase-level data on each and every one of them.
That’s hundreds of millions of data points into what people buy, how much they buy, how often and so much more.
Now take this and carry it across all retail media networks, including Walmart and Target.
First-Party Data > Third-Party Data
The writing’s been on the wall for years, but it’s now impossible to ignore.
Third-party cookies (and other third-party identifiers) are going away.
Apple officially blocked third-party cookies in 2020.
In early 2021, Google followed suit, banning third-party cookies on Chrome, the world’s most popular browser.
Then, Apple’s update to iOS 14.5 gave iPhone users the ability to ask apps not to track them, making mobile app IDs (MAIDs)—the technology that enables effective mobile targeting—obsolete.
Retail media networks don’t use third-party data or identifiers.
Instead, they use first-party, shopper-level data to deliver timely and relevant ads.
For example, a CPG brand could promote its toothpaste to Walmart customers who bought a competing toothpaste in the past six months.
Privacy Concerns and Regulations
In addition to the downfall of third-party cookies, new laws and regulations—think CCPA and GDPR—are adding a layer of complexity by regulating how advertisers collect, store and use consumer data.
As a result, advertising in the future will rely on a brand’s ability to find data that doesn’t cross any existing or forthcoming privacy lines.
Since consumers willingly provide their data to retailers, i.e., they log in to Amazon or Target to make a purchase, retail media networks fit the bill.
It gets better.
The ads are more personal because retail media data is from past purchase behavior, meaning people are often more receptive.
In fact, 88% of users reported seeing the benefit of personalized advertising.
Retail Media Data from MediaRadar
Now that we know why retail media is hot, let’s see how that popularity impacted ad spend.
Between May 1, 2021 and January 31, 2022, more than 23.5 thousand companies (approximately 38 thousand brands) bought ads on retail media networks.
Of the companies, 14% bought ads every month; we saw a 59% retention rate from December to January.
Meanwhile, 24% of the companies advertising in January 2022 were first-time buyers.
Specifically, more than 88% of spending went to native ads, while 11.5% went to display.
Unsurprisingly, Q4 saw the most spending thanks to the holiday season rush (December saw the most at over $426 million), followed by Q3 due to the holiday buying season starting earlier.
Conversely, advertisers spent the least in May, allocating around $218 million to retail ads.
Top Spending Categories
The Tech category, consisting of Consumer Electronics (up 16% QoQ), Telecommunication Holding Companies—think AT&T and Verizon—Software, Tracking Technology and Security Technology spent the most.
The Food category, which includes Snacks & Desserts, Meat/Seafood/Poultry, Baked Food, Athletic/Performance Food and Food Conglomerate grew from $160 million in Q3 to more than $201 million in Q4.
The Retail category, including Bakery, General Retailers and Apparel/Accessory Retailers increased by 58% QoQ, exceeding $82 million in Q4.
These categories are spending the most thus far in 2022.
In January, they collectively spent over $250 million.
Also in January, the Tech category accounted for 23% of buys, followed by Home Furnishings (20%), Food (17%), Beauty (9%) and Retail (5%).
Top Retail Sites by Spend
Amazon, Target and Walmart attract the most dollars, with ad spend totaling more than $2.3 billion.
Advertisers spent more than $1.36 billion on ads during our tracking period, accounting for 45% of retail media spending.
Most of this spending came from the top 5 categories, which accounted for 73% of sales. (For comparison, top categories for Walmart and Target accounted for 76% and 60% of total ad spend, respectively.)
There’s little differentiation between 3 of Amazon’s top categories.
Home Furnishings accounted for 20% of spend, while Tech and Food made up 20% and 19%, respectively.
Specifically, Reckitt Group (Finish, Easy-Off and Woolite) was a top advertiser on Amazon.
Mondelez (Ritz, Nabisco and Good Thins) led the Food category.
Fujitsu heavily promoted its scanners, propelling it to the top of the Tech category in terms of spending.
As Amazon improves its ad capabilities, expect more spending to come its way, especially from top consumer brands looking for more cost-efficient inventory.
Walmart’s largest ad category is Technology at 28%, almost 2x Food (14%) and Home Furnishing (17%).
Brother, showcasing its printers and scanners, was a top Tech advertiser.
With its Finish dishwashing detergents and Easy-Off, Reckitt Group also appears as a top advertiser within the Home Furnishing category.
While Amazon is the leader, Walmart is gaining ground, thanks largely to the introduction of its DSP in 2021.
Walmart Connect, the advertising arm of the business, was up 240% on a two-year basis, according to the November 2021 earnings report.
Food and Tech both accounted for 17% of total ad buys, followed by Home Furnishing at 12%.
Amazon was a top buyer due to a hefty investment to promote its products, Fire Tablet, Alexa, Fire TV and Ring.
In the Food category, PepsiCo spent a lot promoting the company itself and Pepsi and Gatorade Sports Drinks.
The Clorox Company was a large advertiser with its Home Furnishing category for cleaning.
Target was one of the first-movers in the retail media network space, rebranding its media business long before others recognized the value of shopper data.
Target doesn’t get the same attention that Amazon and Walmart do, but it’s still building its reputation.
Target’s Roundel partners with brands to create campaigns across channels, like Target.com or brand-safe channels like Pinterest, PopSugar and NBCU.
More Top Advertisers on Retail Media Networks
The ten top spenders only account for 10% of ad buys—there’s a lot of ad spend distribution.
Since May, CPG brands have bought over $500 million on ads, accounting for around 17% of all buys (across 22 sites).
Big CPG players like Mondelez, Hormel, Unilever and Kellogg took advantage as well, spending over $20 million and as much as $46 million to promote their brands.
Looking deeper into the CPG category:
- Reckitt Group placed 14% of its total spend on retail sites (95% on native ads and 5% on display ads).
- Kellogg Company placed 10% of its total spend in retail sites (90% to native ads and 8% to display and mobile).
- Mondelez places 18% of its total spend in retail sites (94% on native ads and 6% on display ads).
As third-party cookies fall by the wayside and privacy concerns persist advertisers have one option: Find another—but equally as effective—way to get in front of consumers.
To the delight of advertisers everywhere, one of those ways is already here: Retail media networks.
Retailers, including Amazon, Walmart and Target are sitting on a goldmine of consumer data advertisers have been begging to get their hands on.
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