What $5b in Spend Can Tell Us About the Future of Retail Media
In 2022, despite the rapid growth and diversification of retail media with over $40 billion spent and new entrants like Target, Home Depot, and Walmart launching platforms, Amazon dominated the space by capturing nearly 40% of the $5 billion analyzed retail media investment due to its unparalleled $356 billion in sales, extensive first-party data, and mature advertising tools, making it difficult for legacy retailers to compete on Amazon’s digital turf.
It wasn’t long ago when retail media was still that shiny new object advertisers were staring at, but only a few went near—mostly big brands. In 2012, Amazon generated just over $600 million in revenue. At that time, retail media wasn’t even a defined category; it was just advertising on Amazon.
Fast forward a decade and retail media is now firmly entrenched in advertising budgets. In 2022, advertisers spent more than $40 billion on retail media. To better understand this rapidly evolving category and identify patterns and trends, a sample of just under $5 billion in retail media campaigns in 2022 was analyzed.
It’s Amazon’s World
The retail media world has seen many new entrants and shakeups over the past few years. In 2016, Target launched Target Media Network (rebranded to Roundel in 2019). Home Depot opened its media doors. Walmart 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 Amazon. In 2022, Amazon captured nearly 40% (37%) of the investment in retail media. Overall, 14,200 companies promoted more than 17,000 brands on Amazon.
“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.”
Other retailers are entering Amazon’s once unencumbered ground, but Amazon still has what most retailers can only dream of: $356 billion 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 understandable why advertisers stick with Amazon.
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 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
Amazon is certainly the dominant player, but Walmart and Target are also significant. General/mass retailers, both online (excluding Amazon) and legacy brick-and-mortar, including Walmart and Target, ranked a close second in ad spending (36%).
In 2022, Walmart generated $2.7 billion in ad revenue as it enticed brands with its scaling ad tech, which now includes Intentwise, Perpetua, Quartile, and Sellozo as new API partners.
Walmart CEO Doug McMillon stated, “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.”
Target, while facing challenges, still has plenty to be optimistic about as it plans to scale its retail media network to $2 billion 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 investing in retail media, including houseware (6% of spend), snacks & desserts (6%), household maintenance products (5%), and furniture/decor (5%).
The largest share 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 $720 million 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 direct line to consumers using transactional data. It also offers an effective avenue for their ad dollars as other ecosystems embrace privacy.
Apple has strengthened its stance on privacy, releasing App Tracking Transparency (ATT), which 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 phase out traditional ad tech—Google plans to sunset third-party cookies in 2024—advertisers will seek alternatives. Retail media is poised to be one of them.
While consumer electronics advertisers have a particular fondness for retail media, advertisers in other industries are also allocating their budgets to these first-party data havens.
Koch Enterprises and Kimberly-Clark (houseware category) combined to spend more than $35 million, or 12% of the $294 million from houseware advertisers.
Meanwhile, five major snacks & dessert advertisers—Mondelez, Campbell Soup, PepsiCo, Kellogg, and Blue Diamond—each invested over $15 million 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 the analysis, Walmart dominates Target in the general retail category.
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% year-over-year, 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.
From Shiny Object to Utter Dominance
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.”
Retail media is making this a reality.
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