As retail media grows, it is changing. At the moment, search remains retail media’s bread and butter and sales ads are the best awareness drivers. In the future, in-store media and shoppable video ads may take on a bigger role. But no matter how ad formats change, one thing is for certain: Measurement will be key for retail media’s continued growth.
Many retailers are leaning on algorithms and predictive technologies like AI and machine learning to help serve customers more personalized, curated ads.
Price is one of the most important factors in purchasing decisions, which means retailers need to balance ads that promote discovery and predictive analysis with ads that serve more practical purposes like discounts or deals.
US retail media search ad revenues will grow at a rate nearly four times faster than the rest of search advertising this year, according to our forecast.
Amazon will account for nearly all of the $29.69 billion US retail media search ad spend this year, though Walmart and Instacart are also contributing to retail media’s share of search ad spend, per our forecast.
In-store retail media has the potential to reach hundreds of millions more consumers, including those who are less reachable by digital advertising.
Though in-store retail media ad spend will only reach $240 million in 2023, we expect it to grow rapidly over the next four years, more than tripling by 2027, per our forecast.
Still, it will continue to make up a small fraction of retail media ad revenues for the foreseeable future as retailers figure out what works and what doesn’t work for the in-store environment.
Fifty-seven percent of retail media ad agency professionals think shoppable video content will be the next frontier of retail media, per the Path to Purchase Institute.
And a few retailers are already on the forefront.
The top two barriers to retail media’s growth are poor return on investment (ROI) and the inability to prove incrementality, per a survey from Skai and BWG Strategy.
To prevent brands from abandoning their retail media investments, retail media networks must stop thinking like retailers and start thinking like media companies, according to our analyst Andrew Lipsman.
This means embracing media standardization, providing multiretailer third-party measurement, and operating less like a walled garden and adopting a more open approach.
This was originally featured in the Retail Daily newsletter. For more retail insights, statistics, and trends, subscribe here.
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