DISCUSSION
Rivals take notice as ads account for five percent of Amazon’s retail revenues
Written by Tom Ryan
A GroupM study estimates advertising accounts for five percent of Amazon.com’s revenues from commerce-related activity and rated that as a “reasonable target” for other retailers working to catch up.
The giant media buyer, part of WPP, estimates retail media makes up between zero to three percent of revenues for other retailers.
Amazon dominates U.S. retail media, controlling 77.8 percent of spend in 2021, followed far behind by Walmart, at 5.2 percent, estimates eMarketer. Most major retailers have introduced retail media networks over the last decade to tap new revenue streams, including Dollar General, Ulta Beauty, Petco and Dick’s Sporting Goods over the last year.
GroupM predicts retail media spending will expand another 15 percent this year to $101 billion, accounting for 11 percent of total ad sales and 18 percent of digital ad sales. By 2027, retail media is projected to grow 60 percent, outpacing digital advertising’s growth.
GroupM said the “promise of retailer first-party data, albeit residing in yet another walled garden, is tantalizing — enabling purchase-based targeting and closed loop measurement.”
Going forward, retail media spend is expected to be fueled by still healthy double-digit e-commerce growth, shifts from traditional advertising spend, as well as “the expansion of use cases and growth of non-endemic brands.”
The expansion of “use cases” refers to retailers increasingly leveraging their data — i.e., website browsing behavior, e-commerce and in-store transactions — for off-site opportunities, such as third-party websites or for email or social campaigns. Walmart just announced plans to sell ads on TikTok and Roku.
Retail media in the early days focused on on-site opportunities, such as display ads.
“Non-endemic brands” refer to brands that do not sell any products through the retailer but seek to advertise to reach the retailer’s demographic. Retailers are expected to face competition for retail media advertising inventory from delivery and ride-share platforms, as well sites such as Marriott, which recently launched the hospitality industry’s first media network aimed at travelers.
GroupM wrote, “Scalability, differentiation and staying power, particularly in the context of the broader economic situation, will be the battle ground for many of the newer networks and their supporting technologies.”
- This Year Next Year: 2022 E-Commerce & Retail Media Forecast – GroupM
- Walmart Connect expands the reach of its ads to TikTok, Snap, and Roku – Insider Intelligence/eMarketer
- Walmart Connect Announces Innovation Partner Program With TikTok, Snapchat, Firework, TalkShopLive and Roku – Walmart
- Alcohol Delivery Company Drizly Debuts Ad Platform, Hires New Marketing Chief – The Wall Street Journal
- Kroger Precision Marketing expands private marketplace to include video and CTV advertising – Kroger Precision Marketing
- Sam’s Club Announces First-to-Market API Integration Enhancing Sam’s Club Member Access Platform (MAP) – Sam’s Club
- Best Buy Expands Retail Media Network To Deliver Ads Through Criteo – Ad Age
- Retail Media Needs A Reality Check – Adexchanger
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