The advertising landscape is undergoing a significant transformation. As traditional television viewership declines and streaming services rise, advertisers are increasingly turning to retail media networks like Amazon, Walmart, and Kroger to reach consumers directly at points of sale.
The Shift from TV to Retail Media
For years, television was the prime target for advertisers. However, tech giants like Alphabet and Meta have captured a substantial market share through platforms such as Facebook. Now, a new trend is emerging: retail media networks. These platforms are part of e-commerce, retail, and consumer companies, attracting billions of dollars in advertising.
According to data from eMarketer and GroupM, global retail media ad spending is expected to more than double from $114.18 billion in 2023 to $233.89 billion in 2027. “What we hear from brands most directly is they no longer wake up with a recipe to buy X amount of TV, X amount of social, X amount of digital. They wake up every day trying to buy growth and outcomes for their business,” said Sean McCaffrey, president and CEO of GSTV.
Innovative Advertising Strategies
Retail media networks offer various advertising opportunities, from in-store displays and screens to websites, mobile apps, streaming services, and smart TVs. This type of advertising is precious because it comes with a wealth of first-party data. “If [brands] advertise with a digital ad, for example, and a customer transacts a week later in a store or club, we can connect that up for them and let them know that the ad worked,” said Walmart CEO Doug McMillon.
Walmart has been a significant player in this field, leveraging its vast data to optimize advertising strategies. The company recently agreed to buy TV maker Vizio to enhance its ad business further. Amazon leads the U.S. retail media network market, with approximately 75% of retail media ad revenue.
Navigating Privacy Changes
Changes in tech privacy regulations also drive the shift toward retail media. Google, for instance, has begun to restrict third-party cookies, which has affected how advertisers track and target users online. “These retailers have that kind of data,” said Tim Hurd, vice president of media activation at Goodway Group. Retail media networks have that balance with targeting, privacy, and compliance. I think that’s where the money starts shifting.”
The Decline of Traditional TV Advertising
The rise of retail media ads comes at a time when traditional TV viewership is declining. Pay-TV customer numbers and traditional TV viewership outside of sports continue to drop as more viewers move toward streaming. Media giants like NBCUniversal and Warner Bros. Discovery have reported declining ad revenue from traditional TV, while streaming ad revenue has grown.
“Linear TV advertising is still declining,” said Kate Scott-Dawkins, GroupM’s global president of business intelligence. “Retail media revenue grew from less than $1 billion in the U.S. a decade ago to a projected $42 billion this year — or $129.4 billion globally.”
The Future of Advertising
As the advertising landscape evolves, retail media networks are expected to play an increasingly crucial role. Advertisers adopt a 360-degree approach, targeting consumers through various platforms and channels. “It’s the new TV for mass reach advertising,” said Mark Boidman, head of media and entertainment investment banking at Solomon Partners.
In conclusion, the future of advertising is moving away from traditional TV towards more data-driven, targeted strategies offered by retail media networks. This shift optimizes exposure and ensures compliance with privacy regulations, creating a win-win situation for advertisers and consumers.
