Overall digital ad spend predicted to increase.
Advertising spend is likely to be up 5.6% in the U.S. this year to $360 billion, according to financial analyst Brian Wieser. Before you write this trend off based on the impending election year. The increase excludes political advertising, which on its own Wieser expects to hit $15.5 billion across all media. The moderately bullish forecast is on the back of positive economic data and sees a return to “mid, single digit growth,” which is where we were in the 2000’s.
Growth is good for the ad industry and marketers, but what caught my eye was how the media pie is being sliced. As you might expect, dollars are being diverted to digital and what we now call performance media. Wieser says that digital advertising should carve off 76% of all advertising spending in 2028 (versus 64% in 2023). This year, digital ad revenue is predicted to grow at 10.7% — close to double ad spend overall. Within that figure, what Wieser calls out as ‘commerce media’ — or more broadly known in the industry as retail media – and social commerce will lead the pack.
Focusing on retail media, Wieser believes that channel will rocket to $82 billion in ad revenue by 2028, by my calculations about 19% of all ad spend. Globally, GroupM states that retail media will top television revenue in that year.
Whatever the specific number, retail media is big business today, and seemingly has grown up overnight led by big marketplaces like Amazon. Retail media used to be much more about Trade spend centring on compulsory co-op expenditure between suppliers/manufacturers with retailers, ending up in product displays, endcap promotions, in-store signage, and catalogs. Most marketers paid only minimal attention, preferring to focus on the “sexier stuff” such as TV ad productions.
Today, like commerce marketing generally, retail media has been transformed from boring to brilliant. There are three reasons for the change. Firstly, marketers have woken up to the fact that retail media gets their brands closer to consumers at point of purchase – when people are in shopping mode. Secondly, retail is no longer just about bricks and mortar, but an entire ecosystem, from social to site to store, which can be activated in creative ways at any point. And retail media is digitally led, which means it’s consistently measurable so that spend can be attributable to sales. Finally, over the last couple of years, pioneered by Amazon, retail media has been opened to non-endemic (non-native) brands. That means brands promoting a product or service that isn’t sold by the retailer.
Let me give you an example. I’m a consumer searching on Amazon for bathing suits, luggage, and adapters. Suddenly, up pops an ad for an airline selling cheap flights to an island destination. The advertiser is capitalizing on gaining the captive attention of an audience, aligned with adjacency. That’s non-endemic advertising on retail media.
Walmart recently announced that it is broadening its Connect retail media business to allow access to non-endemic marketers. Expect the trend to spread rapidly through retail worldwide. The other advantage to prioritizing this type of media is the rich data that is available to the marketer. In fact, retail media is redefining the role of retailers from purely places to shop and buy to media publishers monetizing audiences and data.
There is a catch with retail media, however. The inclination is to go straight for the sale and put all the emphasis on getting the transaction. Smart marketers resist the temptation, and balance brand and conversion, which is what I call bringing together brand love and brand buy. Consumers – even those consciously in the mood to shop – need to be entertained and engaged before being sold to. You must earn their attention and interest, and that requires a Creative Commerce approach. The benefit of placing a brand message and experience in a channel built for buying, is you can focus the message on driving brand engagement knowing with confidence it will end in a purchase.
Alongside “commerce media,” Wieser also cited social as capturing an outsize share of spend. That’s likely because of the explosion of social commerce. What we are seeing overall is a positive collision of brand building and performance across all media – connecting with consumers and shoppers in the right way, at the right moment to get the right results, and being able to track and optimize both media and messaging along the way.
This is an exciting time for marketers – growing budgets and a growing array of channels in which to target consumers. In the pre-digital era, it was often “spray and pray” – create and distribute large, mass media campaigns, and hope for the best. As 19th Century Philadelphia retailer and advertising pioneer John Wanamaker famously said: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Today, we can target spend and track efficiency and effectiveness in ways that Wanamaker could never have imagined.
Television advertising was once the king of the jungle. Well now, the media mouse that has roared is retail media, and it should be part of every marketer’s consideration set.
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