Overall digital ad spending is expected to increase.
U.S. advertising spending is likely to rise 5.6% to $360 billion this year, according to financial analyst Brian Wieser. Before writing off this trend based on the impending election year. This increase does not include political advertising, which Mr. Wieser himself predicts will reach $15.5 billion across all media. The somewhat bullish outlook predicts a return to the “mid-single-digit growth'' of the 2000s, backed by strong economic indicators.
Growth is good for the advertising industry and marketers, but what caught my eye is how the media pie is being carved out. As you might expect, the money is being directed towards digital and what we now call performance media. Wieser says digital advertising should account for 76% of all ad spending by 2028 (up from 64% in 2023). This year's digital advertising revenue is expected to increase by 10.7%, and overall advertising spending will nearly double. Within this number, what Wieser calls “commerce media,” or more commonly known in the industry as retail media, and social commerce will likely lead the way.
Focusing on retail media, Wieser believes advertising revenue for this channel will soar to $82 billion by 2028. This equates to about 19% of all ad spend by my calculations. Globally, GroupM says retail media will be the top TV revenue generator for the year.
Whatever the specific numbers, retail media is big business today, and it has grown seemingly overnight thanks to large marketplaces like Amazon. Retail media used to be about trade spending, centered on forced cooperative spending between suppliers/manufacturers and retailers, and ultimately on product displays, end cap promotions, in-store signage, and catalogues. It extended to Most marketers paid minimal attention, preferring to focus on “sexier stuff” such as TV ad production.
Today, just like commerce marketing in general, retail media has gone from boring to amazing. There are three reasons for the change. First, marketers have recognized the fact that retail media brings brands closer to consumers at the point of purchase, when people are in shopping mode. Second, retail is no longer just bricks-and-mortar stores, but an entire ecosystem that can be activated in creative ways at any time, from social to sites to stores. Additionally, retail media is digitally driven, which means spend can be consistently and measurably attributed to sales. Finally, in recent years, Amazon has pioneered the opening up of retail media to non-native brands. This means brands that promote products and services that are not sold by retailers.
Let's take an example. I'm a consumer looking for swimwear, suitcases, and adapters on Amazon. Suddenly, an advertisement pops up for an airline offering cheap flights to your island destination. Advertisers take advantage of adjacency-aligned viewer attention. It is non-endemic advertising in retail media.
Walmart recently announced that it is expanding its Connect retail media business to reach more than just local marketers. This trend is expected to spread rapidly around the world through retail. Another benefit of prioritizing this type of media is that marketers have access to a wealth of data. In fact, retail media is redefining the role of the retailer from a pure place to shop to a media publisher monetizing their audience and data.
However, retail media has its pitfalls. They tend to sell quickly and put all their emphasis on closing the deal. Smart marketers resist temptation and balance brand and conversion. This is what I call the link between brand love and brand buying. Consumers need to be entertained and engaged before being sold to, even if they are consciously in the mood to shop. You need to capture their attention and interest, and that requires a creative commerce approach. The benefit of placing brand messages and experiences in channels built for purchase is that you can focus your messages on driving brand engagement, knowing that they will definitely lead to a purchase.
Wieser cited social as accounting for a large share of spending, along with “commerce media.” This is probably due to the explosive growth of social commerce. What we're seeing across the board is a positive collision of brand building and performance across all media. It's about connecting with consumers and shoppers in the right way, at the right time, getting the right results, and being able to track and optimize both media and messaging. road.
These are exciting times to be a marketer. Budgets are increasing and so are the number of channels targeting consumers. In the pre-digital era, it was “spray and pray”, creating and distributing mass media campaigns and hoping for the best. as 19th Century Philadelphia retailer and advertising pioneer John Wanamaker famously said: The problem is, we don't know which half is which. ” Now, Wanamaker can target spending and track efficiency and effectiveness in ways he never imagined.
Television advertising was once the king of the jungle. Now, it's retail media that is gaining attention as the media mouse, and that should be part of every marketer's consideration.
