The retail media landscape is rapidly evolving, with many advertising agencies urging their clients to approach retail media network (RMN) spending more strategically. This comes in response to concerns over the increasing number of RMNs, high costs per thousand impressions (CPMs), and the lack of standardization across platforms. According to Digiday, ad agencies are advising caution, especially as retailers push for a larger share of marketing budgets that were traditionally reserved for national media campaigns.
Retailers are increasingly positioning themselves within the advertising ecosystem, trying to capture more marketing dollars. However, there are growing concerns among agencies about whether increased investment in RMNs actually translates to higher sales and brand awareness. One executive, speaking anonymously, highlighted that continued investment in sponsored products doesn’t always result in incremental sales and pointed out the diminishing returns that brands can experience with RMN spending.
Smaller retailers are particularly vulnerable in this crowded market. They must differentiate themselves by offering unique audiences that justify the cost of advertising. Without this, they risk losing out to larger retailers with more established networks. According to the Association of National Advertisers, two-thirds of advertisers do not plan to invest in new RMNs over the next few years. This hesitancy is further compounded by the lack of standardization in the industry, making it difficult for brands to measure the effectiveness of their spending.
Recognizing the need for uniformity, retailers like Kroger and Albertsons, along with trade groups such as the Interactive Advertising Bureau (IAB), are pushing for industrywide standards. These standards would help streamline the measurement process and give brands a clearer understanding of their return on investment (ROI) when advertising through RMNs.
Despite these challenges, advertisers are still heavily investing in retail media, with spending projected to grow significantly in the coming years. By 2028, retail media is expected to account for one out of every four dollars spent on advertising. In 2024 alone, retail media ad spending is forecast to grow by 26% to reach $54.85 billion. The bulk of this money will be directed toward major players like Amazon, which dominates the space, while Walmart remains a distant second.
However, retailers that offer advertisers the opportunity to reach new or incremental audiences, provide access to valuable first-party data, and demonstrate strong returns on ad spend have the potential to stand out in the increasingly competitive RMN market. These factors will be critical for any retailer looking to secure their place in the future of retail media.
To explore this trend further, the report titled “The Retail Media Opportunity” and the “US Retail Media Ad Spending Benchmarks: Q3 2024” provide in-depth insights into the ongoing shifts in retail media spending and its future potential.
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