The rise of retail media has been nothing short of meteoric. So much so that GroupM, the world’s largest media buyer, projects advertising revenue from this channel will overtake television by 2028. According to the company’s 2023 Global Mid-Year forecast, advertising revenue from retail media channels is forecast to grow 9.9% and reach $125.7 billion in 2023. Retail media is now the third-fastest growing advertising channel this year, behind digital out-of-home screens and connected TV. However, it is a beast that is likely to dwarf both as this segment of the market continues to grow apace.
The report published on Monday by WPP-owned GroupM echoes a previous forecast by the market research firm eMarketer. Retailers like Amazon, Walmart, and Target to grocers the likes of Carrefour, Ahold Delhaize, Tesco and Sainsbury’s are desperately seeking ways to attract big advertisers to their websites. Establishing brand presence on retailers’ websites serves a dual purpose for retailers: product sales earn revenue, while advertising targets further increase profit margins. Consumers, in the meantime, benefit from a more tailored, more personalized browsing experience.
During the pandemic, the shift towards digital channels by shoppers has been remarkable. This shift has made retail media more attractive for advertisers and unique opportunities for increasing ad spend. With the rise of retail media, there is now an informative alternative to diversify ad spending beyond the previously dominant digital ad platforms of the “duopoly” (Google and Facebook). When combined with the fallout from new digital privacy regulations, such as GDPR, retailers like Amazon and Walmart, among others, now have the ability to generate first-party data. First-party data, in particular, offers a distinct advantage over third-party data, provides more targeted and effective advertising campaigns, ultimately fostering growth in retail media.
Ultimately, conglomerates such as Walmart and Amazon have found ways to cash in on this growing trend. In the digital age, their swift moves to establish themselves have paid off. For instance, Walmart Connect saw revenues rise by almost 30% to $2.7 billion in its fiscal year, while Amazon disclosed $11.6 billion in revenue from its ad business in the fourth quarter. European retailers such as Dutch grocer Ahold Delhaize are beginning to enter the fray. The company hopes to grow its retail revenue channel from businesses beyond grocery stores to €1 billion by selling ads on its supermarkets’ websites and monetizing insights on consumer data, according to CEO Frans Muller.
Consultants McKinsey anticipate that retail media networks have the potential to generate £1 billion worth of profit in the UK grocery sector alone within two years. Sainsbury’s, Britain’s second-largest supermarket group, has already created Nectar360, a solution that combines its loyalty scheme with marketing services. The grocer aims to make a profit of over £90 million ($113 million) from the business by 2026. As Mark Given, Sainsbury’s chief marketing officer, commented, “more and more brands are using Nectar360 to improve their return on ad spend and grow their business.” It is clear that the move toward retail media is a game changer that will continue to revolutionize advertising and the way consumers interact with brands.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.