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US retail media ad spending will reach $31.49 billion in 2021, up 53.4% from 2020 

Retail media has emerged as the third wave of digital advertising, following search and social 


In our inaugural forecast, we estimate that retail media ad spending will surge 53.4% to $31.49 billion this year, as the fast-emerging segment of digital advertising carves out a prominent position in the space.  

“Retail media is digital advertising’s third big wave,” said Andrew Lipsman, eMarketer principal analyst at Insider Intelligence. “Following the search ad market led by Google and the social ad market led by Facebook, this third wave led by Amazon is now cresting—and ad budgets are ready to be unleashed with a fury.” 


US retail media ad spending is continuing to gain share of the overall US digital ad market, reaching 14.9% in 2021. That share is expected to rise to 19.3% in 2023, as retail media evolves to attract larger brand budgets.  


Insider Intelligence debuts its eMarketer retail media forecast 

This first-of-its-kind forecast builds upon our existing ecommerce channel advertising forecast, which accounted for ad spend on retailer-owned and -operated websites and apps. Our definition of retail media expands beyond ecommerce channel ads to include display, video, and connected TV (CTV) ad revenues powered by retailers’ first-party data delivered via demand-side platform (DSP) to third-party websites and apps—a modest but increasingly important segment of the market.  


This year’s growth of 53.4% follows nearly identical growth of 53.3% in 2020. Last year’s surge in ecommerce spending initially lured budgets toward these channels, while this year’s growth reveals that budgets are still catching up to the opportunity. Although growth rates will moderate in the next couple of years, we anticipate that total US digital retail media ad spending will surpass $50 billion by 2023. 


This year, we estimate that 65.8% of retail media spend will come from sponsored search, and 34.2% will come from display advertising, with display gaining share in the coming years. 

“Retail media has traditionally been dominated by sponsored product listings, but marketers are shifting spend toward more upper-funnel advertising to complement their search-based strategies,” said Peter Vahle, senior forecasting analyst at Insider Intelligence. “Bringing purchase-based targeting and closed-loop attribution to display, video, and CTV ads has big brands now fully embracing the power of retail media.” 


Amazon’s retail media dominance encounters growing competition 

Amazon will have a 77.7% share of US digital retail media ad spend by the end of 2021, but its share will decline by a few percentage points in coming years amid greater retail media competition. 


Walmart, the No. 2 player at 5.4%, is expected to see ad revenues rise by 69.0% in 2021 to $1.71 billion. Instacart, another up-and-coming firm in retail media and a new addition to our forecast, is expected to jump 86.4% to $550.0 million this year. eBay and Etsy are also included in our forecast, accounting for 1.4% and 0.6% of retail media digital ad spending, respectively. Other retailers—including Target, Best Buy, The Home Depot, Walgreens, CVS, Macy’s, Wayfair, Uber, DoorDash, and Gopuff—will vie for a 13.1% share this year. 


About Insider Intelligence 

Insider Intelligence aims to be the world’s leading research service focused on digital transformation. Our mission is to empower professionals with the data, insights, and analysis to make grounded decisions in a digital world. Each year, we produce nearly 300 reports, 7,000 charts, 1,500 newsletters, and 200 forecasts across the industries of Advertising, Media, and Marketing; Financial Services; Healthcare; and Retail and Ecommerce. Insider Intelligence is owned by European media giant Axel Springer S.E. and was formed in 2020 from the combination of eMarketer and Business Insider Intelligence (BII). 

Posted on November 17, 2021.