Retail Media Budgets Are Growing. Where Are Investments Coming From?

May 26, 2023

Retail media spending will soon be bigger than linear TV advertising, according to a recent forecast. And while almost two-thirds of respondents to a recent survey [download page] from Skai indicate that current economic conditions have negatively affected their retail media budgets, more than 4 in 10 expect their retail media ad spending to increase this year, including 1 in 8 (13% share) who predict a large increase of 26% or more.

The study, based on a survey of 167 retail media brand/seller marketers, indicates that retail media investments are coming from a variety of sources. Most commonly, spending is coming as a percentage of sales or gross merchandise value (GMV), as cited by 38% of respondents, while almost one-third (31%) note that these are new budgets and not cannibalizing any existing channel.

The budgets that are most under threat from retail media are paid search and paid social, with one-third (33%) and three-tenths (29%) of respondents indicating that their retail media investments are deriving from those channels, respectively. To a lesser extent, about one-fifth (21%) say their retail media investments are coming from offline spend.

However, when separately asked if they had to pull money from a channel to fund retail media which channel would likely be most affected, respondents pointed first to traditional print, followed by traditional TV/radio.

Not surprisingly, there’s a strong focus on ROI that is a consistent theme. Far and away the most important metrics cited to measure retail media success are advertising cost of sales (ACoS) and return on ad spend (RoAS), each cited by 84% of respondents. By comparison, fewer than half (46%) cited the next-highest metric, sales, order volume, and revenue.

Likewise, the most critical challenge that could slow investment growth to retail media is a poor return on investment, as indicated by a majority (58%) of respondents. And the biggest retail media activation challenge cited is driving positive ROI.

Luckily, though, retail media appears to be meeting objectives. Virtually all respondents (96%) said that retail media achieved desired impact last year, while a majority (63%) said that not only did retail media achieve desired impact, but it also met (54%) or exceeded (9%) goal KPI expectations.

For more, download the report here.


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