Retail will underperform overall growth in the advertising market this year

Retail spending on ads is coming off an enormous growth spurt. Retailers’ total media ad spending will surpass $100 billion in 2024 for the first time, nearly double the $51.66 billion spent in 2019.

For five years, retail’s outsize increases were driven by growth in digital ad spending as more shopping moved online, and retail media networks (RMNs) emerged to target consumers closer to the point of purchase. This year, we will see moderate retrenchment as retail digital ad spending grows at the slowest rate since we began tracking this metric in 2017.

Retail’s total media ad spending will increase 7.3% YoY this year, below the average for all US industries (9.5%) for the first time since 2017.

Some of the recent biggest spenders on digital ads have pulled back. This trend will weigh on retail’s digital ad spending growth in 2024, when it will come in below all but three other industries.

• Chinese ecommerce players Temu and Shein disrupted the digital advertising market in 2023 as they competed to attract online shoppers by bidding up keywords—particularly in apparel and accessories and home goods.
• But Temu has also been on a global tear, expanding to nearly 80 countries since early 2023. It has diversified ad spending accordingly to acquire customers in new markets.
• Temu and Shein broke into the top ranks of US digital ad spenders in 2023, ending the year at No. 4 and No. 9, respectively, per Sensor Tower data. But by Q2 2024, Temu was the No. 5 top spender, while Shein had dropped out of the top 10.

Retail is also taking more spending out of traditional media.In most years since 2017, retail has cut its traditional media ad spending more slowly than average. But in 2024, retailers’ traditional ad spending will contract by 6.2%, while all other industries combined will grow by 1.8%. The increase is fueled by political ad spending, which leans toward traditional formats like TV and print media, in a unique presidential election year.

Read the full report, US Retail Industry Ad Spending 2024.