The value of global advertising revenue from retailer-owned e-commerce sites is growing so fast that the medium, known as retail media, is forecast to exceed television revenue by 2028.
GroupM, the world’s biggest media buyer, said it expects advertising revenue from retail media channels will grow 9.9% to reach $125.7 billion in 2023 and will surpass television revenue in 2028, when it will represent 15.4% of total ad revenue.
WPP owned GroupM’s 2023 Global Mid-Year Forecast report said retail media is the third fastest growing advertising channel this year behind digital out of home (OOH) screens and connected TV (CTV). However, those two channels are a fraction of the size of retail media.
The report echoes an earlier forecast from market research firm eMarketer.
Retailers from Amazon, Walmart and Target to grocers such as Carrefour, Ahold Delhaize, Tesco and Sainsbury’s are working aggressively to attract big advertisers to their websites.
For retailers, getting consumer brands who sell products through their websites to pay for advertising is a double win – they earn from every product sold and make money from the ad.
Reflecting the premium that major consumer goods companies are prepared to pay for prominent positioning on retailers’ sites, profit margins for retailers from retail media can be as much as 90% – crucial income when returns from their main business line have been hit by the accelerating cost of living.
For the brands, increased use of digital channels by shoppers during the pandemic made retail media more attractive.
It also gives advertisers an option to diversify ad spending beyond Alphabet’s Google and Facebook-owner Meta Platforms, the two largest digital ad sellers, known in the industry as the “duopoly.”
However, the game changer has been the shift in the digital privacy landscape, such as the European Union’s General Data Protection Regulation (GDPR), which prompted major internet players to suppress the collection of personal data.