Joshua Dreller
Sr. Director, Content Marketing @ Skai
Retail media competition is rising, and marketing organizations must continue to evolve. The State of Retail Media 2023 surveys 167 retail media marketers and provides a valuable snapshot of how practitioners approach the channel.
Read this complimentary report today to learn more about what’s happening right now in retail media in areas such as:
- Spending. Planned growth, investment sources
- Success. KPIs, last year’s results, multi-year outlook
- Operationalization. Challenges, data sources, budget fluidity
- Team structure. Outsourced vs. insourced, use of third-party tools
- Omnichannel. Coordination with shopper marketing, search/social integrations
In the last few years, retail media has seen an unprecedented boom.
In a short amount of time, retail media has gone from a “nice to have” channel to an absolutely necessary function in order to stay competitive in a changing retail landscape. And that growth does not show any signs of slowing. Forecasts predict it will reach $160 billion by 2027, making up 18% of global digital advertising and 11% of total advertising. Digital’s newest channel allows marketers to influence shoppers within online stores and closer to the point of purchase, expanding the customer journey and driving higher conversion rates.
In order to better understand marketers’ challenges and strategies, our State of Retail Media 2023 survey asked 167 retail media brand/seller marketers more than 35 questions about spending, strategy, and plans for an omnichannel approach in the coming year. And what we found is that retail media is still going strong after such a meteoric rise in the last five years.
Here are the most important ways that marketers are navigating that growth.
Optimizing retail media for an omnichannel strategy
One of the biggest takeaways from The 2023 State of Retail Media report is that brands are leaning on retail media to plan for an omnichannel future by using retail media advertising at every stage of the purchase funnel.
The number one use of retail media is still brand sales and conversion, but the number two use is actually brand awareness. These top and bottom-of-the-funnel uses are excellent indicators that retail media is a powerful tool no matter where buyers are in the purchase process.
Revenue is still top of mind
However, even as brands have increasingly begun to explore using retail media in every stage of the buyer’s journey, our survey shows that the most important KPIs center on growing revenue. According to our survey, the most crucial KPIs for retail media marketers are advertising cost of sales ACoS, return on ad spend and sales.
The good news is most marketers report that retail media is working to achieve these goals.
Retail media delivers
Retail media works! The State of Retail Media report found that 96% of surveyed individuals confirmed that their retail media programs achieved desired brand impact last year, with only 4% reporting little to no effect on objectives. In addition, 54% met, and 9% exceeded, their goal KPI expectations for 2022.
The reason behind the overwhelming satisfaction with retail media is the fact that it offers advertisers access to important consumer data at a time when consumers value personalization but still want privacy.
The top retail media platforms, Amazon, Walmart, and Instacart, offer marketers a wellspring of valuable customer insights when traditional targeting methods, such as cookies, are becoming increasingly unpopular among consumers concerned with keeping data private. Sponsored Products, recommendations based on past purchases, and even deeper insights into the ways that consumers use online research in-store are all important omnichannel solutions that retail media platforms can offer CPG brands looking for targeting solutions in a cookieless world.
Next year will be an even bigger
In 2022, marketers devoted a big portion of their budget to retail media. Nearly 40% of those surveyed are spending 36% or more of their total marketing budget on retail media. 85% are spending 11% or more. In the coming year, 42% plan to increase that number, with just 7% saying they plan to decrease their budgets.
And as marketers begin to feel increasingly confident in the retail media landscape, with 89% of respondents saying their retail media programs are average, above average, or excellent in maturity, they are looking for new ways to maximize that spend.
While keyword-triggered listings in retailer search engine results pages have historically 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 challenges mean marketers are looking for value
Even as marketers plan to increase spending on retail media, it’s not immune to the current economic conditions. 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 order to make the most of retail media spending in the midst of an economic crunch, marketers should look for ways to incorporate their own data with that of retail media platforms for a holistic, omnichannel approach to brand strategy.
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.
The forecast looks good!
One thing is clear from our survey: Retail media is here to stay. Two-thirds (66%) of respondents believe that retail media will increase in priority over the next two years; 49% believe it will somewhat increase, while 17% believe it will strongly increase.
However, despite the optimism, respondents believe that there is a low likelihood that retail media spend overtakes paid search or paid social in the next five years. What’s more likely is that marketers will increasingly look for ways to create a holistic strategy, combining insights from retail media success with first-party data in order to strengthen marketing efforts across channels.
The retail media channel is young, but its growth is off the charts and changing the face of ecommerce. As a result, investments will increase, competition will rise, and retailers must innovate to become true advertising publishers.
To learn more about what matters most to marketers this year, download our full State of Media 2023 report.
More like this
