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- Marketers this year are expected to spend $128 billion on retail media.
- Some of this uptick is coming at the expense of traditional channels, Google, and trade budgets.
- In the US, Amazon, Walmart, and Instacart are leading the way in retail media.
Marketers this year are expected to spend $128 billion on retail media, or advertising on ecommerce sites, according to a new global forecast from the marketing research firm WARC.
Retail media — which WARC forecasts to be up 10.2% over last year and to grow another 10.5% next year — appears to be coming at the expense of Google search and traditional offline media channels like linear TV, experts said.
Retail media has become one of the hottest categories in advertising in the past couple of years, partially due to marketers who are worried about the economy investing in ads that more directly drive purchases, experts said.
Alex Brownsell, WARC head of content, said some of this uptick is coming at the expense of traditional channels, such as linear TV, print newspapers and magazines, and audio.
Spend on linear TV is expected to drop by 5.4% this year, bringing its share of total global ad dollars down to 16.3%, according to WARC. Ad budgets placed on "newsbrands and magazines" will fall 5.9% and audio down by 0.8%. Meanwhile, retail media is forecast to grow its share to 13.3% of total ad spending.
Retail media players are also managing to capture some search spend that was ordinarily placed with Google, according to Bill Fisher, Insider Intelligence principal analyst. US search spend on retail media properties is expected to grow 18.7% this year, while search spend outside retail media is expected to grow just 5%, per Insider Intelligence.
Google has careened back and forth over different shopping strategies and cycled through a handful of e-commerce leaders over the years as it sought to take on Amazon to become the first choice of shoppers. Despite offering Shopping Ads and analytics and order management tools, industry analysts usually don't consider Google as a retail media operator.
The biggest beneficiaries of the retail media surge include Amazon, which is expected to account for more than a third (34.6%) of global retail media spending in 2023 and remains the incumbent and dominant player by far. It also includes supermarkets like Kroger, ecommerce sites like Farfetch, and apps like Uber.
However, not all retail media spend is coming at the expense of Google and traditional advertising channels. Forrester's second-quarter marketing CMO pulse survey found that the majority of retail media spend is coming from existing trade and shopper marketing budgets.
Retailers are cannibalizing those budgets to fuel growth of their retail media networks, said Nikhil Lai, senior analyst at Forrester.
Retail media sellers are aggressively going after a bigger cut of ad budgets by expanding their ad formats beyond search. Amazon has a range of video, streaming, and social commerce offerings. Walmart is expanding its in-store advertising business, bringing more ads to self-checkout screens and in-store audio. And Instacart detailed in its recent IPO filing that it intends to roll out "shoppable products brand pages."
But not every retail media network is set to become a big ad player. Insider Intelligence forecast in March that Instacart (42.8%) and Walmart (39.1%) will be the two fastest growing players in all of US digital advertising this year, ahead of non-retail media companies like Apple and TikTok. Amazon is expected to grow by 17.4%.
Forrester's Lai said that there's a long-tail of retail media networks that lack sufficient traffic on their sites and in their apps to earn the spending that the triopoly of Amazon, Walmart, Instacart generates, so they'll likely focus on letting advertisers find their customers across other sites.