In 2012, Amazon generated just over $600mm in revenue. At that time, retail media wasn’t even retail media. It was just advertising on Amazon.

Fast forward a decade and retail media is firmly entrenched in advertising budgets. In 2022, advertisers spent more than $40b on retail media.
 

To better understand this rapidly evolving category and identify patterns and trends, we analyzed a sample of just under $5b in retail media campaigns in 2022.

Here’s what we found. 

It’s Amazon’s World

The retail media world has had no shortage of new entrants and shake ups over the past few years. In 2016, Target launched Target Media Network (rebranded to Roundel in 2019). Home Depot opened its media doors. Walmart even launched its demand-side platform, Walmart DSP, in 2021.

Despite the growth of retail media and the endless stream of new options, many advertisers are finding it difficult to part ways with their first love: Amazon.

In 2022, Amazon captured nearly 40% (37%) of the investment in retail media. Overall, 14.2k companies promoted more than 17k brands on Amazon.

“Amazon has such a tight grip on the digital space that they really sit in a category of their own,” said Todd Krizelman, CEO & co-founder of MediaRadar. “Other players are growing quickly, but it will be difficult for legacy brick and mortar retailers to beat Amazon on its own terrain.” 

It’s hard to blame them. 

Other retailers are walking on Amazon’s once unencumbered ground, but the retail media OG still has what most retailers can only dream of: $356b in sales. Those sales give Amazon the most valuable first-party data goldmine out there. Combine that data with the most mature ad tools in retail media, and it’s impossible to blame advertisers for sticking to what they know. 

Krizelman continued, “Retailers should explore other opportunities to extend retail media – such as in-store digital experiences or other channels like email newsletters, where Amazon doesn’t have as much traction.”

Retailers are finding one of those opportunities in their brick-and-mortar locations via in-store retail media, which gives advertisers the chance to engage consumers at the point of purchase. 

Walmart and Target are doing fine

We’re not dealing with a David- and Goliath-type story. Amazon is certainly Goliath, but so are Walmart and Target. 

General/mass retailers, both online (excluding Amazon) and legacy brick-and-mortar, including Walmart and Target, ranked a close second in ad spending (36%). 

In 2022, Walmart generated $2.7b in ad revenue as it enticed brands with its scaling ad tech, which now includes Intentwise, Perpetua, Quartile, and Sellozo as new API partners.

On an end-of-the-year call, Walmart CEO Doug McMillon, said, “We’re driving a lot of change in our company. We’ll keep shaping the business model by scaling our newer, mutually reinforcing businesses in areas like marketplace, fulfillment services and advertising.”

Last year wasn’t quite as kind to Target, but the Minneapolis-based retailer still has plenty to be optimistic about as it plans to scale its retail media network to $2b in business over the next few years.   

Overall, Amazon, Target, Walmart, and other general retailers seized nearly three-quarters (73%) of the total retail media ad investment in 2022.

Apple, HP, and Samsung Take Big Bites

Advertisers from every corner of the consumer world are taking a bite out of retail media, including houseware (6% of spend), snacks & desserts (6%), household maintenance products (5%), and furniture/decor (5%). 

The biggest bite, however, came from advertisers promoting consumer electronics, who accounted for 15% of the total retail media spending in 2022.

In 2022, consumer electronics advertisers invested more than $720mm in retail media; advertisers for Apple, HP, and Samsung were responsible for 11% of that investment.

For Apple, HP, Samsung, and other consumer electronics advertisers, retail media offers a straight line to consumers using transactional data. It also offers an equally, if not more, effective avenue for their ad dollars in the wake of other ecosystems embracing privacy. 

Apple has even strengthened its stance on privacy, releasing App Tracking Transparency (ATT) feature that allows iPhone users to decide if apps can track their activity across other companies’ apps and websites. 

As Apple, Google, and other major advertising ecosystems strike tried-and-true technologies from their ad tech—Google plans to sunset third-party cookies in 2024—advertisers will seek alternatives. There’s no question that retail media will be one of them. 

While consumer electronics advertisers have a particular fondness for retail media, advertisers in other industries are keen to allocate their budgets to these first-party data havens. 

Koch Enterprises and Kimberly-Clark (houseware category) combined to spend more than $35mm or 12% of the $294mm from houseware advertisers. 

Meanwhile, five major snacks & dessert advertisers—Mondelez, Campbell Soup, PepsiCo, Kellogg, and Blue Diamond—each invested over $15mm in retail media last year.

Walmart > Target

Target continues to invest in its retail media network, which has paid off. According to company executives, revenue has jumped by 60% over the past two years.

“To us, Roundel is more than a digital advertising platform or another revenue source on the P&L,” said Target’s Chief Growth Officer Christina Hennington. “The goal is for our guests to have a tailored, relevant experience while helping our vendors reach the guests who are most likely to be interested in their products. Said simply, Roundel makes us better merchants, more consistently serving our guests with the products they want. This is why our approach to digital advertising looks different than others.”

Despite that investment, Target still trails Walmart. According to our analysis, 

Walmart dominates Target in the general retail category. 

Walmart isn’t just separating itself from Target; it’s gaining ground on Amazon—at least regarding return on ad spend (ROAS). In Q2 2022, Walmart’s ROAS increased by nearly 83% YoY, thanks mainly to its sponsored product ads’ improved reach and relevance.

While Amazon still commands the lion’s share of retail media spending—eMarketer predicted that Amazon would receive more than two-thirds of retail media spending in 2022—the clear performance gains inside Walmart’s walls will undoubtedly push advertisers its way.

Many of those advertisers will be promoting consumer packaged goods (CPG).

“Our data shows CPG brands are spending heavily on Amazon, as well as general retailers like Walmart and Target, and on grocery stores,” said Todd Krizelman, CEO & co-founder, MediaRadar. “This increase in spending could be attributed to Amazon’s vast selection, competitive prices, and convenient delivery options. As the retail industry continues to evolve, retail media networks will become an essential part of the marketing mix for both advertisers and retailers.”

Top CPG advertisers in 2022 included Kellogg, PepsiCo, L’Oreal, Unilever, and P&G. 

From Shiny Object to Utter Dominance

We tend to avoid hyperbole when talking about our data, but retail media’s rise has been astounding—and it’s far from over.

By 2027, some predict retail media spending will account for 60% of total digital ad spending. 

Nikhil Lai, Senior Analyst, Performance Marketing at Forrester, says, “Advertisers’ use of RMNs [retail media networks] encompasses the entire purchase funnel from awareness to point of purchase. Essentially, retail media holds the entire funnel accountable to delivering a verifiable revenue impact.”

Lai’s statement perfectly encapsulates a dream that’s eluded advertisers for decades. 

Retail media is making it a reality.

For more insights, sign up for MediaRadar’s blog here.

According to the International Monetary Fund, real GDP in the U.S. is expected to increase by 1% in 2023, down from 5.7% in 2021 and 3.2% in 2022. 

Higher-than-expected inflation, interest rate hikes, layoffs and unprecedented global events are snowballing into a perfect storm of budget concerns for many Americans. 

Despite the outlook, many consumers refuse to turn a blind eye to retailers, especially as the holiday season nears.

Unsurprisingly, some retail advertisers are taking notice—and their strategies could tell us how they’ll spend in 2023. 

MediaRadar Insights on Retail Advertising

If we used retail ad spending as the proxy to temperature-check the economy, the thermometer wouldn’t raise any alarms.

Through Q3, retail advertisers invested $11.1b, representing a 13% YoY increase from the same time last year; their average monthly investment grew from $9.7mm last year to $1.1b through October 2022. 

For the most part, 2022’s quarterly spending levels have surpassed those of 2021. Spending in Q1, for example, increased by 32% YoY, while Q2 and Q3 each spiked by 8% ($3.2b).

The only noticeable slowdown came in June and July, but that makes sense given that the U.S. officially entered a recession in June, and retailers were taking the pulse of consumers. 

When retail sales beat expectations in June, advertisers had renewed conviction consumers wouldn’t be deterred. As a result, spending rebounded in August and September by 9% and 13% MoM, respectively. 

Which Retail Advertisers Spent Big? 

Driving retail spending were advertisers in five categories: general, food and drug, apparel, home furnishing/goods retailers, and online department stores. 

Combined, these advertisers spent more than $6.6b, or 60% of the investment from the retail industry.

General Retailers

Retail ad spending through Q3 demonstrates that, as a whole, advertisers are confident consumers will spend.

As we move through the shopping season, this confidence will persist, especially with Americans spending between 6% and 8% more this holiday season.

That said, the slight decrease in spending from general retailers indicates that some frugality remains.  

Dollar General 

Advertisers for Dollar General increased spending by 77% and 22% YoY in Q1 and Q2. After a slight decrease in July, spending spiked in August and then exploded in September by 275% YoY.  

Interestingly, advertisers poured considerable dollars into print ads, indicating that some retailers may still hold traditional formats in high regard.

While the print-heavy strategy could be nothing more than a seasonal shift, there could be greater meaning behind it:

• Dollar General is taking a new approach following leadership changes. 
• Retailers are investing in traditional ads to break through the digital noise and prepare for the downfall of third-party cookies.

Note on the second point: Dollar General is the only retailer investing heavily in print. This could indicate an isolated strategy shift or show that they’re ahead of the curve. 

Kohl’s

Advertisers for Kohl’s increased spending by 25% YoY, with August (up by 61% YoY) and October (up by 36% YoY) experiencing the biggest spike as it rolled out holiday-focused initiatives. 

For Kohl’s, the increased budget comes not only in the months leading up to the holidays but during a time in its history when it’s attempting to regain its once-dominant status. 

A strong push from these advertisers in Q4 and into Q1 2023 is likely as it tries to pry sales away from Amazon, Walmart and others.   

Apparel Advertisers

Retail spending trickled into the apparel advertising category, with advertisers increasing their budgets by 20% YoY to $1.48b. 

The top three advertisers—Gap, JAND (Warby Parker), and Signet Jewelers—accounted for 18% of the category’s spend. 

Gap

For Gap, the 8% increase comes as it tries to reestablish itself following a sales dip during the pandemic.

Part of that new identity—at least in the short term—could be a penchant for discounts. 

Katrina O’Connell, Gap’s executive vice president and chief financial officer, recently said,  
“While our third quarter results underscore the initial progress we are making toward rebalancing our assortments and reducing inventories, we continue to take a prudent approach in light of the uncertain consumer and increasingly promotional environment.” 

Other retailers likely find themselves in a similar situation as they offload an unprecedented amount of inventory.   

Warby Parker

After starting as an online-only retailer, Warby Parker (incorporated as JAND) has continually innovated, which includes an expansion to brick-and-mortar retail.

Understandably, ad spending has followed suit. 

Through Q3, Warby Parker increased its spending by 12% YoY. As the uncertain economy persists throughout 2023, the company’s affordability will position it to excel, translating to more ad budget.

Signet Jewelers

Signet Jewelers finds itself in a different situation. In a down economy, jewelry usually isn’t on the top of shopping lists. 

Despite that, Signet Jewelers—think Kay Jewelers, Zales, Jared, and Diamond Direct—increased spending by 25% YoY. 

As surprising as that may seem, it could speak to the company’s go-to-market strategy in 2023 and how it’ll spend its budget.

Bill Brace, president of Jared and Jewelry Services at Signet, recently said that its new limited-edition high jewelry collection reflects “an intentional move to push up and attract a higher-end customer with products not normally seen in Jared.”

If Signet Jewelers does focus on higher-end customers moving forward, it could be immune to ad spend cuts given that its customers are more likely to spend during a recession. 

Food & Drug Advertisers

Food and drug retailers invested $1.49b in ads through October, representing a 9% YoY decrease.

CVS and Walgreens accounted for 12% of that, with a combined spend of $176mm.

CVS 

Despite the competition from Walgreens and other players, CVS decreased its spending by 12% YoY.

That said, spending has been on an upward trend of late, rising in August, September and October by 85%, 73% and 38% MoM, respectively.

It’s hard to pinpoint the reason behind the ebbs and flows of CVS’s strategy, but it does align with business moves that include an acquisition of Signify Health and a push into primary care.

Walgreens

Walgreens took a different approach, increasing its budget by 6% YoY. Not only that, but it mirrored CVS’s end-of-year increases in August (up by 10% YoY), September (up by 30% YoY) and October (up by 8% YoY). 

Despite lower quarterly sales, Walgreens’ investment in consumer healthcare services could ignite its ad strategy in 2023 as it looks to establish its identity.  

Home Furnishing Advertisers

Home furnishing retailers increased their ad investment by 30% YoY to $940mm.

The three top advertisers—IKEA, Steinhoff International Holdings and Wayfair—accounted for 36% of the category’s spend.

IKEA 

On the heels of record sales, IKEA increased its ad investment by 43%YoY. 

The spending, despite weakening consumer confidence, speaks to the company’s 2023 ad strategy—one that’s ripe with ads. That said, IKEA understands the state of the economy, which could put its budget into question. 

Jesper Brodin, Ingka CEO, said, “We have deep respect for the year we are in…and we are prepared for a tough winter for people everywhere.”

Wayfair

Advertisers for Wayfair increased spending by 72% YoY. (Wayfair is up by 85% in all retail advertising categories.)

A level deeper, they increased their budget in October by 40% YoY and 52% MoM, a move undoubtedly indicative of how they’ll spend during the holidays.

That said, layoffs and declining sales could put pressure on them to do more with less.  

Steinhoff International Holdings

Unlike IKEA and Wayfair, Steinhoff International Holdings (Mattress Firm, Sleepy’s, etc.) decreased spending by 25% YoY.

While that’s a sizable decline, these advertisers could be in a position to increase their budgets in the wake of market growth and strong underlying financials that point to a strong 2023 and beyond.  

Online Department Stores

The retail industry is synonymous with two companies: Amazon and Walmart. 

Unsurprisingly, these two retail giants were the driving forces behind the 68% YoY increase in spending from online department store advertisers. 

Despite the similarities, including retail media networks and benefits tied to monthly subscriptions (Amazon Prime and Walmart+), their ad teams have moved in different directions. 

Amazon & Walmart

Amazon increased its budget by 62% YoY (that’s 10x the next largest advertiser). 

Overall, Amazon’s Q1 and Q2 budgets were up by 121% and 14%, respectively. August, September and October increased as well to the tune of 59%, 37% and 53%.

On the other hand, Walmart decreased spending by 45% YoY. 

Overall, the Fortune 1 company reduced its budget by 31% across all retail categories, with October’s investment—although it still exceeded $40mm—down by 70% YoY. 

The contrasting strategies are equally intriguing and puzzling, but they could offer a glimpse into how the companies will spend in 2023. 

Walmart did nothing but grow in 2022. While Amazon still has 45% of the eCommerce market compared to Walmart’s 5.7%, the latter edges out the former in groceries and Black Friday buzz.  

Given Walmart’s continued growth without more ad spend, it’s possible the company believes brand equity is enough to boost its bottom line.

Meanwhile, Amazon’s big push could indicate it’s feeling pressure from Walmart and other major players, including Target, Best Buy, Costco and others. 

That said, it could also have something to do with the fact that it needed to get eyes on its $715mm “Lord of the Rings” series (the most expensive TV show of all time).

What’s the Rest of 2022 Hold for Retail Advertisers?

We’ve been in a shaky economy for long enough to understand how consumers and advertisers will respond.

For instance, most people won’t be giving up their next vacation—more than half of Americans view leisure travel as an important budget priority, even during a recession. 

Many travel advertisers have responded to the surge by increasing their budgets. 

Retail advertisers are doing the same in the face of consumer resilience—despite the recession and rising inflation, the average consumer is expected to spend $1,455 this holiday season. 

For that reason, retail advertisers will likely continue to spend for the remainder of 2022 and into 2023. 
For more insights, sign up for MediaRadar’s blog here.

The Fuse Media: The Convergence of Technology & Media conference is the only hosted buyer event that brings together top technology executives in media. The seminar brings together some of the brightest minds in media and technology to discuss how these media companies can adopt the right tech quicker and more efficiently.

The 2018 Fuse Media conference was held in Philadelphia, PA from Monday, October 1st to Wednesday, October 3rd. This year, attendees benefited from:

1. Expert analysis of next gen publishing technology and trends
2. Case studies that probed leading tech tools and solutions in a no-holds-barred setting
3. Intel and high-level meetings with leading vendors
4. Connections with like-minded industry technologists that are elevating the media business

Attendees stayed in the heart of Center City – at the Loews Philadelphia Hotel.

3 Takeaways from the 2018 Fuse Media conference:

1. Data and technology is changing what it means to be a media company

2. Artificial Intelligence (AI) can be transformative … if you’re willing to fail

Kartik Hosanagar, University of Pennsylvania technology and digital business professor at The Wharton School, spoke. He talked about the history and opportunities surrounding Artificial Intelligence (AI). Here is Hosanagar’s list of five practical steps to start in machine learning:

• Set up an AI brain trust of 8 to 12 people in the organization (insiders and outsiders)
• Brain trust identifies a set of activities within your organization that you can automate using machine learning (ML)/Artificial Intelligence (AI)
• Classify them into short-term and long-term initiatives
• Construct a two-year ML portfolio, consisting of four to five short-term projects and at least one long-term project
• Figure out how the AI team will fit into the organizational chart: build or buy versus centralized or decentralized

In Hosanagar’s eyes, media companies should continue experimenting with AI, even if they fail early on, and to consider underlying business adjustments required to take advantage of AI, such as organizational learning and consensus building.

3. Inefficiency is a real problem. Time – not budget – is the #1 obstacle to tech adoption

Brian Kroski, American Media’s Digital Strategic Advisor, and Rob Keenan, the President of Keenan Media, explored objectives and obstacles associated with tech adoption. For instance, media companies often lack the time and resources to evaluate new technologies when making technology investments.

Kroski and Kennan were also the first ones to discuss Publishing Executive’s newest research report entitled “Tactics for Creating a More Agile Digital Tech Buying Strategy.” In this presentation, they dove into the tactics media companies are employing to streamline their technology evaluation and adoption efforts.

To overcome that lack of time and resources, Kroski and Kennan offer media companies the following solutions: invest in the brains of the tech stack – audience analytics, social media, and search engine optimization (SEO).

The overall 2018 FUSE Media Summit confirmed technology is here to stay and here to enact change in the media industry. As publishers, we need to find the right technology and continue experimenting with others like AI. If we want to survive and thrive, it’s vital to adopt technology sooner rather than later. It is also important to allocate both time and financial resources to ensure success with tech adoption and implementation.