3 trends reshaping retail media in 2024: Search holds its value, while competition heats up

“In 2022, retail media hit the first of many milestones when it became the fastest US ad channel to eclipse $30 billion in spending—nearly twice as quickly as it took social media,” our analyst Max Willens said on a recent Meet the Analyst webinar. “That was just the start.”

Over the next five years, US retail media ad spend will more than double, reaching $129.93 billion by 2028, per our forecast. “It just shows you how much incredible growth and momentum lies in this channel,” Willens said.

Here are three 2024 trends driving transformation in retail media.

1. Search’s “intoxicating value proposition” keeps drawing advertisers

“Retail media search has gone from a sort of interesting subplot within the context of search ad spending into one of its main stories,” Willens said. “It's not difficult to understand why sponsored search grew so fast—it’s in an environment with lots of high-intent users and rich targeting capabilities, it’s extremely close to a potential transaction, and you have closed-loop measurement that's going to attract lots of advertising investment.”

Retail media search is digital advertising appearing on websites or apps that are primarily engaged in retail ecommerce or is bought through a retailer's media network or demand-side platform (DSP).

• Retail media search ad spend will reach $33.86 billion in the US this year, per our March 2024 forecast.
• Search will account for around $6 of every $10 spent on retail media through 2028.

As traditional search matures and is disrupted by generative AI and new entrants like Perplexity, “retail media search will keep gobbling up that market share,” Willens said.

2. Off-site channels boost retail media display inventory

“The growth of off-site retail media ad spending is down to so many different kinds of players coming in and shaping it, including new entrants such as TripleLift and Button finding novel ways of expanding supply possibilities and social media platforms facilitating offsite extensions,” Willens said.

• This year, US off-site retail media ad spend will grow 61.5% YoY, reaching $10.64 billion, per our forecast.
• Off-site retail will account for a growing share of total retail media ad spend through 2028.

The biggest driver of off-site retail media growth is connected TV (CTV), which is like search in its ability to quickly gain market share and fuel CTV advertising growth, Willens said.

• Advertisers will spend $4.19 billion on retail media CTV ads this year, per our forecast.
• It will grow at least 25% YoY through to 2028.

3. Commerce media is benefiting from retail media growth

Companies inside of the ecommerce landscape (such as Chase and PayPal) and outside (including Planet Fitness and Uber) have seen the meteoric rise of retail media and wanted to cash in, Willens said. These companies have figured out how to monetize their first-party data, fueling competition with retail media networks.

• 58% of brands and 51% of agencies worldwide are interested in commerce media offerings from verticals outside of retail, per December 2023 data by Criteo.
• Ad spend on financial media networks, a subset of commerce media, will reach $35 million in the US this year, and more than quadruple by 2026, per our June 2024 forecast.

As more commerce media participants enter the market, retail media networks must prove their value and convince advertisers to maintain their spending, Willens said.

Watch the full webinar here.

This was originally featured in the Retail Media Weekly newsletter. For more marketing insights, statistics, and trends, subscribe here.