Top US retail media companies
Enterprise retailers might have an incredible opportunity to add new revenue streams through collaboration with top retail media companies. Who are the top market players? What are their value propositions? What types of retail media ads are most successful?
In this article we’ll break down what’s going on in this new and exciting market.
Retail media promises to bring new growth and opportunities
According to Andrew Lipsman (Insider Intelligence) Retail media will be a $45B market in 2023, and will continue growing by $10B a year.
Insider Intelligence has just released its first ever forecast of US Retail Media ad spend, which includes estimates for ecommerce channel ads and off-site targeted ads powered by retailers’ 1st party data.
Some highlights from the forecast:
- Retail media ad spend is surging – the market will rise 53.4% to $31.49 billion this year and will surpass $50 billion by 2023.
- Competition is heating up – Amazon has 77.7% of the retail media market, but dozens of other RMNs are in the mix. Walmart and Instacart are two I’m watching closely next year, but there’s plenty of innovation happening at Target, Best Buy, Home Depot, Kroger and others.
- Retail media is moving up the funnel – the market has been driven by bottom-funnel search ads, but spend is shifting faster into display, video and CTV. Retail Media + CTV is a massive opportunity that will disrupt advertising as we know it.
After the wave crests, the full force of the wave is unleashed. In short, budgets are ready to flood in. The apex, technically, is that the growth rate should peak this year. But at 50%+, that’s to be expected. Growth rates come down, but nominal increases of ~$10B per year over the next few years represent a pretty dramatic shift.
Andrew Lipsman – Principal Analyst, Retail & Ecommerce
TOP US Retail Media Companies
Who are the top market players and what are their value propositions?
| Unique visitors in July 2021 (in millions) | % change vs July 2020 | % change vs July 2019 | |
|---|---|---|---|
| Amazon | 206.5 | 8% | 6% |
| Walmart | 125.2 | 6% | 3% |
| eBay | 69.7 | -3% | -8% |
| Apple | 73.3 | 31% | 2% |
| Etsy | 63.6 | 3% | 23% |
| Target | 63.4 | 0% | 6% |
| The Home Depot | 60.7 | -3% | 20% |
| Lowe’s | 50.5 | 9% | 43% |
| Best Buy | 38.7 | 2% | 11% |
| Wayfair | 38.1 | -27% | 2% |
Source: Comscore Media Metrix Multi-Platform
- More than half of top 15 US ecommerce retailers have their own media networks, many of which were launched during the pandemic.
- The top independent retail media networks correspond closely with the most trafficked sites.
Walmart Connect
While Walmart Connect technically launched in January 2021, in truth it represents an evolution of the US giant’s existing Walmart Media Group. Walmart serves more than 90% of US households, providing advertisers with the opportunity to reach shoppers at enormous scale.
- Retail media revenue in 2022: 3 billion USD
- Retail media revenue in 2021: 2,1 billion USD (38% YOY growth)
- Average IN STORE monthly visits: 960M
- Loyalty Program: Walmart +
- % YOY growth: 136%
- Offerings: Sponsored products, onsite and offsite display, and in-store advertising
Target Roundel
Target overhauled its retail media group in 2019, rebranded as Roundel, and set its sights on modeling its ad business after Amazon.
Last year, Roundel integrated self-service platform CitrusAd into its offer, making it much easier for brand advertisers to launch and manage their own Target Product Ad campaigns, or work through CitrusAd managed services.
- Average IN STORE monthly visits: 56M
- Retail media revenue: 1 billion USD
- Offerings: Sponsored products, Google search display, onsite and offsite display, connected TV
Home Depot, Retail Media+
Home Depot records over 1.6 billion annual customer transactions, 2.2 billion online visits, and more than 1.3 billion mobile site visits, making the retailer’s digital properties a valuable advertising space for partner brands.
- Average IN STORE monthly visits: 132M
- Loyalty Program: Pro Xtra
- Offerings: Onsite and offsite advertising, email advertising
AMAZON Advertising
Amazon set the pace for retail media networks in 2012 and has since dominated the industry with 89% of retail media ad spending in the United States.
In 2019, it integrated several of its services—the Amazon Media Group, Amazon Marketing Services, and the Amazon Advertising Platform—into one category known as Amazon Advertising.
- Retail media revenue: 31,15 billion USD (2022) vs 19,77 billion USD (2020)
- Amazon’s advertising arm represents 7% of the company’s total revenue of 469,8 billion USD (net sales)
- Average ONLINE monthly users: 183M
- Loyalty Program: PRIME, 200M members
- Offerings: Sponsored products onsite and offsite display
Instacart
Instacart is an American company founded in 2012 by a former Amazon employee. It operates a grocery delivery and pick-up service in the United States and Canada. The company offers its services via a website and mobile app. The service allows customers to order groceries from participating retailers with the shopping being done by a personal shopper.
- Retail media revenue in 2020: 300 million USD (2020)
- Ad revenue goal for 2022: 1 billion USD
- 1.4% of US digital retail media ad spending in 2020
Retail media execution
A quick look at the different Retail Media capabilities supported by retailer websites
Source: Profitero
Types of retail media ads
Search ads
Search ads let advertisers connect with motivated shoppers and capture demand with personalized ads using paid search, or seamlessly promote their brand and turn interest into sales with sponsored products.
Source: Criteo
Onsite (.com) banner, display, video and carousel ads
Digital onsite typically refers to any web-based property owned directly by the retailer. This can include websites and apps, and may extend to cover multiple banners in the case of broader “group” offerings.
Digital offsite media
Offsite media uses first-party data to deliver targeted digital advertising delivered away from the retailer’s own properties. This can include news or entertainment websites, or social media sites like Facebook, Instagram and YouTube. Sites tend to be pre-curated, ensuring brand safety for retailers and advertisers alike. Specific placements and formats vary from site to site, but banner and video ads are amongst the most commonly employed.
Digital personalization
One of the key advantages of retail media is that it allows brands and agencies to engage with customers based on their prior shopping behaviours. That can make it a great way to get the right product in front of the right person at the right time, something that can be done in real time via the use of digital personalisation.
Types of digital personalization:
- Recommendations: relevant product suggestions that can be surfaced within search results.
- Upsells: sponsored listings for products that go well with items that a shopper has already added to their basket.
- Reminders: a final nudge for customers to add a regular item to their basket, typically delivered at checkout.
Email sponsorship
A newsletter sponsorship is a paid advertisement placed inside an email newsletter. Compared to other advertising channels like websites or social media platforms, these placements tend to reach more engaged audiences while facing a fraction of the competition.
Store media
The oldest form of retail media is still a hugely effective way to reach out to shoppers, even with the growth of online grocery. One of the key benefits of store media is its sheer versatility, stretching from printed and digital signage through to sampling, experiential, and more.
Allows advertisers to show ads using TV and PC displays with in-store video or use geofencing and proximity messaging to reach app users.
Types of store media:
- Aisle fins: printed dividers that are fitted to shelves, typically used to highlight a new product or offer.
- Interactive screens: for use in everything from store navigation and personalised offers through to recycling and recipe inspiration.
- Radio: in-house radio channels provide the opportunity to deliver key messages to customers throughout the store.
Multichannel
Activities here can be spread across multiple formats, stretching from printed materials sent to the customer’s home through to digital coupons and vouchers delivered through an app. While untargeted, mass market campaigns to continue to dominate in some markets, many DTC campaigns now use loyalty data to ensure that shoppers receive relevant offers and promotions.
Types of multichannel D2C ads:
- App notifications: sent direct to a shopper’s mobile device to encourage them to go online or visit a store.
- Direct mail: usually in the form of reward vouchers or coupons tailored to a customer’s purchasing history.
- Coupon on receipt: generated on checkout, providing a discount on future purchases.
Pre-requisites
What attributes to consider when deciding what retail media networks to use for advertising?
The rapid growth of retail media means more and more advertisers are making it part of their marketing. However, the growing number of retail media networks available means it can be difficult to know how to get started.
To make the process easier, here are a couple of things to consider:
- Traffic scale (reaching a large enough audience)
- Traffic quality (reaching the right audience)
- Segmentation capabilities
- First-party consumer insights data
- Closed-loop sales attribution
- Budget and resources
In-store Retail Media.
Why Physical Stores are the next major media channel
US retail media will surpass $40 billion this year and $60 billion by 2024, but that’s just online media. Retailers are now beginning to realize that their physical stores are also monetizeable media assets.
The digitization of the physical store—one of retail’s next megatrends—will radically transform retailers’ ability to provide dynamic, interactive media experiences at store shelves, endcaps, cooler doors, and checkout aisles.
As this trend emerges, we will come to realize that 𝗽𝗵𝘆𝘀𝗶𝗰𝗮𝗹 𝘀𝘁𝗼𝗿𝗲𝘀 𝗮𝗿𝗲 𝘁𝗵𝗲 𝗻𝗲𝘅𝘁 𝗺𝗮𝗷𝗼𝗿 𝗺𝗲𝗱𝗶𝗮 𝗰𝗵𝗮𝗻𝗻𝗲𝗹.
It’s easy to imagine brands getting excited about delivering ads close to the point of purchase for where the “other 85% of retail sales” occur. And it’s tempting to think of this as the ultimate performance advertising: run an ad for Kraft Mac & Cheese in the grocery aisle and drive an incremental purchase of the brand during the store visit.
And it will drive sales performance, but the bigger opportunity may be 𝗯𝗿𝗮𝗻𝗱 𝗮𝗱𝘃𝗲𝗿𝘁𝗶𝘀𝗶𝗻𝗴. Think about it this way: in-store digital media helps brands reach and influence consumers at scale, during opportune moments, in brand-safe contextually relevant environments.
It’s akin to traditional TV advertising, and maybe even better in the following ways:
- 𝗠𝗮𝘀𝘀 𝗔𝘂𝗱𝗶𝗲𝗻𝗰𝗲 𝗥𝗲𝗮𝗰𝗵 – at top retailers, brands can reach tens of millions of shoppers every week and more than 100 million every month. That’s national scale that TV rarely achieves anymore, and far outpaces their huge ecommerce audiences (see chart below).
- 𝗥𝗲𝗮𝗰𝗵𝗶𝗻𝗴 𝘁𝗵𝗲 𝗨𝗻𝗿𝗲𝗮𝗰𝗵𝗮𝗯𝗹𝗲𝘀 – it’s getting harder to reach the coveted 18-49 year-old “money demo” on linear TV, but they do shop in stores.
- 𝗛𝗶𝗴𝗵𝗲𝗿 𝗔𝘁𝘁𝗲𝗻𝘁𝗶𝗼𝗻 – linear TV audiences “second-screen” on their phones during commercial breaks, making attention even less scarce than it already was. In stores, most shoppers put their phones away and keep their eyes on the aisles.
For retailers, treating stores as a media channel could unlock brands’ national media budgets rather than just shifting spend from trade and shopper marketing. For brands, this represents a major solution for the rapid deterioration of linear TV advertising and other mass reach vehicles. Win-win.
Conclusion
Retailers have a wonderful opportunity to add a NEW revenue stream
In a world without cookies, brands are forced to rely less on third-party data.
First-party data emerged as a critical tool for advertisers to provide consumers with personalized and relevant experiences that move the needle.
By partnering with retail media networks, brands can access huge quantities of first-party data on customers’ search, browsing and purchasing habits. From there, brands and retailers can work together to design and optimize retail media ad campaigns based on valuable insights.
Loyal Guru’s advanced retail analytics module provides detailed, simple and visual reports on key performance indicators that enable actionable and effective business insights. With all data in one place, retailers can see how to allocate marketing dollars more efficiently, or create new monetization opportunities with CPGs.
If you’re a retailer and you’d like to talk about loyalty and personalization solutions in more detail, then get in touch with our team – we’ll be happy to show you examples or talk through your brand’s unique challenges.
