Retail media is now the third-largest digital advertising channel behind paid search and social advertising. Predictions indicate that retail media spending will reach $160 billion by 2027, accounting for 18% of global digital advertising and 11% of total advertising.
Retail media’s rapid growth is due to marketers’ ability to influence shoppers within online stores and closer to the point of purchase, expanding the customer journey and driving higher conversion rates.
However, retail media is not without challenges for marketers. In our State of Media 2023 survey, 167 retail media brand/seller marketers were asked more than 35 questions about the challenges they face, success rates, and their plans for retail media in the coming year.
Here are the most important findings from our survey.
Retail media continues to deliver
As first-party data becomes the best way to deliver personalized messaging and product recommendations to consumers, retail media remains one of the most effective ways to both access that data and target shoppers based on their preferences. In fact, most retail media advertisers say that their retail media strategies met–or even exceeded–their expectations last year.
96% of those surveyed said their retail media programs achieved the desired brand impact last year. Retail media largely achieved the desired brand impact and either met (54% indicated) or exceeded (9% indicated) goal KPI expectations in 2022 for the vast majority of respondents. Only 4% saw little to no impact on the brand or desired objectives.
The Outlook Is High
Because retail media has proven so effective at helping brands achieve their marketing goals across channels, it has become an increasingly important piece of the marketing puzzle. In our survey, 47% of respondents said that somewhere from 11% to 35% of their marketing budget goes to retail media. And that number is likely to rise next year. In fact, 87% of marketers reported that their organizations plan to maintain or increase spending on retail media in the coming year, while 93% believe it will remain a priority for the next two years.
And as budgets increase, brands are also reimagining the possibilities for retail media advertising. While keyword-triggered listings in retailer search engine results pages have been the bulk of retail media advertising, retailers are looking to support the adoption of display, video, and CTV advertising to reach consumers further up the funnel. Marketers can also leverage retailers’ rich browser/buyer-targeting data across the web, extending beyond online ads to out-of-home ad formats within physical stores.
Economic conditions are being felt
Retail media has sustained rapid growth over the past few years, especially during the height of the COVID-19 pandemic. And now, economic impacts are still affecting the retail media industry. When asked how the current economic conditions have affected their 2023 retail media budgets, nearly two-thirds of respondents reported a strong or slightly negative impact.
In 2023, the focus is on profitability, which means retailers will be pressured to make more data available to optimize programs. In order to combat economic impacts, most retailers are looking to integrate their own insights into those provided by retail media advertising platforms. For example, some retailers are exploring clean rooms, such as Amazon Marketing Cloud, to safely co-mingle proprietary back-end data with highly granular insights.
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Marketers are Quickly Adapting
There are also indicators that the retail media boom of the past few years has taught retailers a thing or two. The majority of our respondents, 89%, said their retail media programs are average, above average, or excellent in maturity.
As marketers become more adept at navigating the retail media landscape, they’re looking to experiment with new solutions to boost ROI and explore an omnichannel approach to connecting with consumers. Retail media provides an excellent landscape for uncovering insights about both in-store and online shoppers. Omnichannel retailers like Walmart and Target offer brands the opportunity for closed-loop measurement, providing a better understanding of how offline shopper marketing and online retail media complement each other to unlock the next era of growth for CPGs.
For an in-depth look at the ways retail media is changing in 2023, download our full “State of Retail Media 2023” report.
Looking to stay updated on the latest trends and strategies in retail media? Don’t miss out on “Retail Media Thursdays,” a series of engaging discussions with industry experts. Gain valuable insights, discover new perspectives, and uncover the strategies that leading retail marketers are implementing.
Click here to watch our video series, “Retail Media Thursdays,” and gain actionable insights for your retail marketing strategy.
Are you hitting your retail media growth targets? If not, give Skai a try!
As part of Skai’s omnichannel marketing platform, our Retail Media solution empowers brands to plan, execute, and measure digital campaigns that meet consumers when and where they shop. Built with best-in-class automation and optimization capabilities, our unified platform allows you to manage campaigns on 1000+ retailers, including Sam’s Club MAP but also Amazon, Walmart, Target, and Instacart, all in one place.
For more information on Skai’s integration with Sam’s Club MAP or to see our platform in action, schedule a quick demo.
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