On Wednesday, September 10, Digiday, Shiny and Trendy Retail shall be internet hosting Retail Media Promoting Methods, a one-day occasion targeted on all issues retail media. Keep tuned for protection from the occasion.
Again in 2018, Walmart CEO Doug McMillon felt that Walmart’s advert enterprise was “tiny.”
“Our knowledge has by no means been monetized,” McMillon instructed analysts on the time. “[The ad business] may very well be greater.”
Quick ahead to 2025, and Walmart’s promoting enterprise has now turn out to be a multi-billion-dollar behemoth. In 2024, Walmart’s promoting enterprise introduced in $4.4 billion in promoting income, up 27% year-over-year. Whereas it nonetheless pales compared to Amazon’s $56 billion promoting enterprise, Walmart’s promoting enterprise is rising at a barely sooner clip.
And, maybe most significantly, it’s turn out to be a major revenue driver for Walmart. Final 12 months, Walmart CFO John David Rainey mentioned that just about a 3rd of Walmart’s revenue comes from promoting adverts. And McMillion has mentioned that having an promoting enterprise has been useful as Walmart — like each retailer — is attempting to determine how a lot of the prices it will probably soak up from tariffs earlier than passing on worth will increase to customers.
However that’s not the case for each retail media community. There are actually greater than 200 retail media networks in the marketplace, in varied states of development or stasis. Macy’s, for instance, reported throughout its second-quarter earnings on Sept. 3 that the income generated by its Macy’s Media Community that quarter was $34 million, flat in comparison with final 12 months.
What has occurred, in keeping with analysts, company executives and different trade specialists interviewed for this text, is that whereas retail media stays a promising, fast-growing space of the promoting trade as a complete, development is now more durable to come back by. In response to a January report from the IAB, commerce advert spend is anticipated to develop 15.6% in 2025, in comparison with 25.1% development in 2024. EMarketer, in the meantime, is projecting that retail media will develop by 17.5% this 12 months, however by simply 10.4% by 2029.
In flip, retailers need to develop their retail media companies by operating adverts in additional locations – extending promoting alternatives in-store, and even via audio. They’re putting offers with social media firms like Meta or Pinterest, or CTV units like Roku to make use of their huge trove of first-party knowledge to assist manufacturers attain related buyers on different properties. And, they’re including extra self-service capabilities and automating elements of the promoting course of every time potential.
All this makes 2025 an essential inflection level for retail media, as networks are tasked with proving that they’ve constructed a strong flywheel that may proceed serving up development, even within the face of recent macroeconomic challenges like tariffs.
As Derek Nelson, senior director of measurement and retail media consulting at Ovative Group, put it, “the simple {dollars} are gone.”
“[Retail media] has gone from an rising media channel to a serious media channel, and with that maturity, it’s considerably inevitable, as we’re comping a a lot bigger base, that we’re going to see the charges of development begin to decelerate 12 months over 12 months,” Sarah Marzano, principal analyst at eMarketer, mentioned.
The haves and the have-nots
Over the previous 5 or 6 years, there’s been a gradual stream of shops both releasing new retail media networks or rebranding their present ones. Most just lately, Ace {Hardware} launched a retail media community on the finish of August.
Nelson from Ovative Group mentioned a lot of this exercise has been spurred by different retailers seeing how a lot cash each Amazon and Walmart have been capable of squeeze out of their promoting companies.
“I believe the board of each retailer within the nation was like, ‘Properly, what are we doing right here? These are enormous pots of cash that we’re not enjoying in,” mentioned Nelson, who primarily consults with retailers and different gamers on the sell-side of the retail media enterprise.
However Nelson mentioned the massive problem going through the retail media house proper now could be that many of those firms that determined to launch retail media companies employed third-party consulting companies to guage how huge their retail media companies may develop — and in some circumstances, these third-party companies could have provide you with whole addressable market sizes that didn’t make sense for that exact enterprise.
“You’ve obtained plenty of [retail media] leaders who have been put in place — in 2020, 2022, someplace in there — which might be up towards income targets which might be most likely [unachievable],” Nelson mentioned. “They’re all doing their greatest to develop income as rapidly as potential, they usually’re exhausting their owned media alternatives.”
As Marzano identified, one problem going through many retailers that determine to launch retail media companies is that the lion’s share of on-line gross sales within the U.S. nonetheless goes to some firms. And a minimum of proper now, most firms with retail media companies are focusing their consideration on internet marketing alternatives, relatively than offline.
Amazon, for instance, accounted for greater than 40% of U.S. retail e-commerce gross sales in 2024, in keeping with eMarketer, despite the fact that it accounted for simply 6.6% of all U.S. retail gross sales. Walmart, in the meantime, accounted for round 8.2% of all on-line gross sales.
Nonetheless, Marazno doesn’t see the retail media growth slowing down.
“It nonetheless makes plenty of sense [for retailers] to work actually onerous on optimizing the monetization methods on their web sites, as a result of even when the greenback quantity they’ll make pales compared to an Amazon, a Walmart or perhaps a Goal, that income is so margin-rich that it will probably nonetheless actually affect these retailers’ backside strains in a optimistic means,” she mentioned.
That, in flip, presents a problem for most of the extra nascent retail media companies, as they search to fine-tune their distinctive differentiators in a panorama the place the Amazons and Walmarts of the world dominate e-commerce gross sales.
Nick Drabicky, svp and gm at January Digital, a media company and consultancy that has labored with manufacturers like Kendra Scott and Carhatt, mentioned that when he seems to be on the “haves and have-nots” of the retail media world, there are three buckets of firms which might be doing effectively proper now. There’s Amazon, which stays the most important participant in retail media due to its dimension and since it has constructed such an unlimited promoting ecosystem that now encompasses upper-, mid- and bottom-funnel placements.
“You are able to do Thursday Evening Soccer, after which you are able to do Prime Video, after which you are able to do PDPs and sponsor manufacturers and sponsor tales, they usually all sit in the identical ecosystem,” Drabicky mentioned.
Then, he mentioned the opposite varieties of retail media networks he sees plenty of curiosity in are these that target CPG and wonder — Walmart, in fact, touches each. In CPG and grocery, Drabicky mentioned, “[Target’s] Roundel is definitely [a bigger player]. And then you definitely’ve obtained Kroger, which is kind of nipping at its heels, and Albertson’s, as effectively.”
Although Ulta Magnificence’s and Sephora’s promoting networks are nonetheless fairly younger — they each launched in round 20222 — each are attracting plenty of curiosity due to their affect on the sweetness world, Drabicky mentioned.
“Each are new, each are nonetheless unproven, however each have potential behind them merely because of the dimension of the buyer base they help,” Drabicky mentioned.
Searching for new areas of development
In essentially the most opportunistic circumstances, Drabicky mentioned his shoppers could spend as a lot as 50% of their advertising and marketing budgets on retail media.
However, this spend isn’t simply showing out of skinny air — as Drabicky put it, retail media is an incremental channel, which suggests many manufacturers are taking spend from some place else of their advertising and marketing finances and placing it towards retail media.
“It’s not like, rapidly, you [as a brand] simply have 10% extra to spend,” Drabicky mentioned. “It’s a must to take 10% from elsewhere. And so, in case you’re going to try this, [you’re choosing] channels which might be tried and true — it had higher have a return.”
In consequence, one of many largest ways in which retail media networks need to differentiate themselves is by investing extra in measurement instruments — particularly, incrementality, which goals to measure what gross sales wouldn’t have occurred with out that promoting spend.
Investing in incrementality or carry research has been a key space of focus for newer promoting networks, like Instacart. Kroger’s precision advertising and marketing arm, towards the top of final 12 months, launched incremental gross sales reporting to self-service programmatic campaigns. And different firms are attempting to push new types of measurement that they assume shall be helpful in convincing entrepreneurs that their explicit promoting community is worthy of their {dollars}. At its second annual promoting InFronts convention this 12 months, Dwelling Depot pitched advertisers on a brand new metric: ROMO, or return on advertising and marketing aims.
“It helps advertisers measure that influence that goes past the fast gross sales and aligns advertising and marketing efforts to your long-term enterprise aims,” Zach Darkow, senior director of selling and measurement at The Dwelling Depot, mentioned on the time.
Keith Bryan, founder and CEO of retail media consultancy Colosseum and the previous president of Greatest Purchase’s promoting community, believes that measurement and incrementality in retail media “should begin to embrace some extra pragmatic retail and model fundamentals, like: Are receipts going up on the fee of spending on a retailer’s retail media community? If the receipts aren’t going up as quick because the investments in retail media, then that’s an issue.”
Investing extra in mid- and upper-funnel placements that may gas model consciousness can also be an essential a part of the measurement story. Earlier this 12 months, Walmart rolled out a beta check to supply advertisers direct entry to CTV stock from Vizio, the sensible TV maker Walmart acquired final 12 months. Nelson mentioned he’s additionally seeing extra retailers put money into self-service capabilities.
All of it factors to the truth that retailers are more and more tasked with constructing a well-rounded promoting enterprise — not simply discovering new locations to slap extra adverts.
“If you happen to [as a retailer] need repeat purchases and also you need rising budgets, you’re gonna have to come back to the desk with extra than simply placement,” Drabicky mentioned.
