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What $5b in Spend Can Tell Us About the Future of Retail Media

What $5b in Spend Can Tell Us About the Future of Retail Media 

It wasn’t long ago when retail media was still that shiny new object advertisers were staring at, but only a few went near. (Most of the time, that was big brands.) 

In 2012, Amazon generated just over $600mm in revenue. At that time, retail media wasn’t even retail media. It was just advertising on Amazon.

Fast forward a decade and retail media is firmly entrenched in advertising budgets. In 2022, advertisers spent more than $40b on retail media.

To better understand this rapidly evolving category and identify patterns and trends, we analyzed a sample of just under $5b in retail media campaigns in 2022.

Here’s what we found. 

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It’s Amazon’s World

The retail media world has had no shortage of new entrants and shake ups over the past few years. In 2016, Target launched Target Media Network (rebranded to Roundel in 2019). Home Depot opened its media doors. Walmart even launched its demand-side platform, Walmart DSP, in 2021.

Despite the growth of retail media and the endless stream of new options, many advertisers are finding it difficult to part ways with their first love: Amazon.

In 2022, Amazon captured nearly 40% (37%) of the investment in retail media. Overall, 14.2k companies promoted more than 17k brands on Amazon.

Top advertisers with Amazon graph

“Amazon has such a tight grip on the digital space that they really sit in a category of their own,” said Todd Krizelman, CEO & co-founder of MediaRadar. “Other players are growing quickly, but it will be difficult for legacy brick and mortar retailers to beat Amazon on its own terrain.” 

It’s hard to blame them. 

Other retailers are walking on Amazon’s once unencumbered ground, but the retail media OG still has what most retailers can only dream of: $356b in sales. Those sales give Amazon the most valuable first-party data goldmine out there. Combine that data with the most mature ad tools in retail media, and it’s impossible to blame advertisers for sticking to what they know. 

Krizelman continued, “Retailers should explore other opportunities to extend retail media – such as in-store digital experiences or other channels like email newsletters, where Amazon doesn’t have as much traction.”

Retailers are finding one of those opportunities in their brick-and-mortar locations via in-store retail media, which gives advertisers the chance to engage consumers at the point of purchase. 

Walmart and Target are doing fine

We’re not dealing with a David- and Goliath-type story. Amazon is certainly Goliath, but so are Walmart and Target

General/mass retailers, both online (excluding Amazon) and legacy brick-and-mortar, including Walmart and Target, ranked a close second in ad spending (36%). 

Top advertisers with general retailers graph

In 2022, Walmart generated $2.7b in ad revenue as it enticed brands with its scaling ad tech, which now includes Intentwise, Perpetua, Quartile, and Sellozo as new API partners.

On an end-of-the-year call, Walmart CEO Doug McMillon, said, “We’re driving a lot of change in our company. We’ll keep shaping the business model by scaling our newer, mutually reinforcing businesses in areas like marketplace, fulfillment services and advertising.”

Last year wasn’t quite as kind to Target, but the Minneapolis-based retailer still has plenty to be optimistic about as it plans to scale its retail media network to $2b in business over the next few years.   

Overall, Amazon, Target, Walmart, and other general retailers seized nearly three-quarters (73%) of the total retail media ad investment in 2022.

Apple, HP, and Samsung Take Big Bites

Advertisers from every corner of the consumer world are taking a bite out of retail media, including houseware (6% of spend), snacks & desserts (6%), household maintenance products (5%), and furniture/decor (5%). 

Top categories in retail advertising chart

The biggest bite, however, came from advertisers promoting consumer electronics, who accounted for 15% of the total retail media spending in 2022.

In 2022, consumer electronics advertisers invested more than $720mm in retail media; advertisers for Apple, HP, and Samsung were responsible for 11% of that investment.

For Apple, HP, Samsung, and other consumer electronics advertisers, retail media offers a straight line to consumers using transactional data. It also offers an equally, if not more, effective avenue for their ad dollars in the wake of other ecosystems embracing privacy. 

Apple has even strengthened its stance on privacy, releasing App Tracking Transparency (ATT) feature that allows iPhone users to decide if apps can track their activity across other companies’ apps and websites. 

As Apple, Google, and other major advertising ecosystems strike tried-and-true technologies from their ad tech—Google plans to sunset third-party cookies in 2024—advertisers will seek alternatives. There’s no question that retail media will be one of them. 

While consumer electronics advertisers have a particular fondness for retail media, advertisers in other industries are keen to allocate their budgets to these first-party data havens. 

Koch Enterprises and Kimberly-Clark (houseware category) combined to spend more than $35mm or 12% of the $294mm from houseware advertisers. 

Meanwhile, five major snacks & dessert advertisers—Mondelez, Campbell Soup, PepsiCo, Kellogg, and Blue Diamond—each invested over $15mm in retail media last year.

Walmart > Target

Target continues to invest in its retail media network, which has paid off. According to company executives, revenue has jumped by 60% over the past two years.

“To us, Roundel is more than a digital advertising platform or another revenue source on the P&L,” said Target’s Chief Growth Officer Christina Hennington. “The goal is for our guests to have a tailored, relevant experience while helping our vendors reach the guests who are most likely to be interested in their products. Said simply, Roundel makes us better merchants, more consistently serving our guests with the products they want. This is why our approach to digital advertising looks different than others.”

Despite that investment, Target still trails Walmart. According to our analysis, 

Walmart dominates Target in the general retail category. 

Retail ad spend on general retailers

Walmart isn’t just separating itself from Target; it’s gaining ground on Amazon—at least regarding return on ad spend (ROAS). In Q2 2022, Walmart’s ROAS increased by nearly 83% YoY, thanks mainly to its sponsored product ads’ improved reach and relevance.

While Amazon still commands the lion’s share of retail media spending—eMarketer predicted that Amazon would receive more than two-thirds of retail media spending in 2022—the clear performance gains inside Walmart’s walls will undoubtedly push advertisers its way.

Many of those advertisers will be promoting consumer packaged goods (CPG).

“Our data shows CPG brands are spending heavily on Amazon, as well as general retailers like Walmart and Target, and on grocery stores,” said Todd Krizelman, CEO & co-founder, MediaRadar. “This increase in spending could be attributed to Amazon’s vast selection, competitive prices, and convenient delivery options. As the retail industry continues to evolve, retail media networks will become an essential part of the marketing mix for both advertisers and retailers.”

Top CPG advertisers in 2022 included Kellogg, PepsiCo, L’Oreal, Unilever, and P&G. 

Tom RMS advertisers retail type breakdown chart

From Shiny Object to Utter Dominance

We tend to avoid hyperbole when talking about our data, but retail media’s rise has been astounding—and it’s far from over.

By 2027, some predict retail media spending will account for 60% of total digital ad spending

Nikhil Lai, Senior Analyst, Performance Marketing at Forrester, says, “Advertisers’ use of RMNs [retail media networks] encompasses the entire purchase funnel from awareness to point of purchase. Essentially, retail media holds the entire funnel accountable to delivering a verifiable revenue impact.”

Lai’s statement perfectly encapsulates a dream that’s eluded advertisers for decades. 

Retail media is making it a reality.

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