Retail media has the potential to become one of the biggest growth engines in the history of digital media, our analyst Max Willens said.
Over 1 in 6 dollars spent on digital ads in the US will go toward retail media this year, a 17.1% slice of all digital advertising, according to our forecast.
There are three major factors contributing to retail media’s growth.
1. The rise in ecommerce sales
Total retail ecommerce sales in the US will grow 10.0% this year to reach $1.148 trillion, coming out to about $5,262.14 in sales per digital buyer, per our forecast.
“Which is just basically another way of saying that most Americans buy lots and lots of things online,” said Willens on a recent “Behind the Numbers: The Daily” podcast episode. That means US consumers have a high exposure to digital advertisements, and retailers can use their purchase data to make the targeting and delivery of those ads more efficient and accurate.
2. Proliferation of ad formats
While the core of retail media spending is sponsored search ads, retail media networks offer a variety of ad formats, including connected TV, video, off-site display, audio, and in-store media.
“[Advertisers] can use retailers to target consumers almost anywhere with any kind of digital advertising, and that is very powerful.”
Growing out a new ad format can be a bit of a challenge. To get advertisers to sign on, you need to prove that it’s worth their marketing dollars, which you can’t do unless you have advertiser partners already in place.
With retail media, those partnerships already exist, making it easier to build out entire ad networks. “[Retailers] already have relationships in place with thousands, if not millions, of potential ad buyers,” said Willens.
Speed bump ahead: The space is evolving quickly—maybe too quickly for ad buyers and sellers.
The bottom line: Despite potential challenges, retail media is a gold mine for advertisers because it taps directly into their concerns and interests, said Willens.
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