According to eMarketer’s latest ecommerce forecast, ecommerce ad spend will increase by 27.8 percent year-over-year (YoY), reaching $23.92 billion this year, or 12.5 percent of all digital ad dollars. That increase comes after 2020 experienced a 50 percent increase YoY in ecommerce channel advertising. The firm’s forecast will be reexamined and likely increased as Amazon (up 87 percent YoY) and Walmart (up 95 percent YoY) post higher growth for their respective ad businesses in earnings reports. 

The pandemic caused a boom in ecommerce, increasing the influence of digital retail media by expanding the number of retail sales transacted online. Emarketer estimates that the share of online US retail sales increased by an exceptional 11 percent in 2019 to 14 percent in 2020, and will continue growing through the end of 2025 by over one percentage point annually.

Digital retail media’s influence isn’t confined solely to ecommerce. Offline purchases are also affected– especially given the increase in digitally transacted ads that have a physical presence outside of the home and apart from personal electronics. Emarketer predicts that total retail sales in the US will increase by 7.9 percent in 2021 to upwards of $6 trillion.

Given that digital retailers have significant audiences, they also have significant amounts of audience data. Roughly 90 percent of digital shoppers, for example, will make at least one purchase via a digital channel in 2021. That equates to 209.6 million digital buyers in the US—higher than the number of people who will use social media at least once per month.

As for online grocery sales, this year marks the first in which a majority of US consumers will buy groceries online. Emarketer estimates that 142.9 million individuals ages 14 and up will shop for groceries digitally in 2021, or 50.5 percent of the population in that age range. 

According to ChannelAdvisor and Dynata, US shoppers began their product search on a retailer site or marketplace like Amazon before making a digital purchase in August 2020. 

Overall, the structure of the retail media market is comparable to other performance channels such as social media and traditional search. Sometimes, companies that began in these other sectors have expanded to serve clients interested in retail media. Platforms or publishers in this instance are usually retail marketplaces or retailers, as opposed to media companies like Facebook and Google.

In the US, retail marketers offer an array of solutions in their retail media networks. In August 2020, 60 percent of respondents offered social media, 57 percent offered data and first-party audience insights without media and 55 percent offered on-site (.com) banner ads and display advertising. Only 33 percent and 21 percent offered on-site (.com) brand pages and closed-loop reporting, respectively.

The most important retailers selling retail media include Amazon, Walmart, eBay, Kroger Co. and Instacart which recently onboarded chief executive Fidji Simo—who previously oversaw Facebook’s main “clue” app—and president Carolyn Everson (also of Facebook). Emarketer expects more brands of all types to focus more heavily on retail media as other sources of customer data become less obtainable. 

Retail media is changing as it changes advertising more broadly, according to eMarketer’s research. As more brands and retailers inject themselves into this space, eMarketer predicts that retail media will continue disrupting traditional advertising due to third-party data deprecation, the rise of connected television (CTV) and subsequent decline of linear television, retail media’s move up the funnel and consumers’ impatience with retail media ads. 

Many retailers have built out their ad business offerings in the last couple of years, including Walmart, Best Buy, CVS and Target, to name a few. As a result, advertisers must make more decisions about which and how many platforms to advertise on. Additionally, due to the increased spending and increased complexity in the market, advertisers are under more pressure now than ever before to utilize technology and even experts to ensure funds are spent as efficiently as possible.

One approach to make this process easier, according to experts eMarketer tapped for its report, is for brands to, at a minimum, test ads on the retail platforms where they sell products and then focus only on those that provide the most value. One issue that may arise here is that platforms may share results that differ from each other, for example with different attribution windows. Advertisers may need to engage tech solutions to make sense of the data across platforms.

Nevertheless, the retail media expansion and the array of retailers venturing into the space doesn’t necessarily mean that current market leaders should be worried. Emarketer actually expects Amazon to carry on with its growth of ecommerce channel ad spending through the end of 2023.

As Emarketer notes, despite the fact that most of the focus remains in the search ad market, retail media has transformed it into a different beast entirely. Still, video and display ads targeting consumers with the purpose of making them aware of the brand are becoming a more valuable element as time progresses. Innovation in technology is producing new products that fuse the best of performance marketing and branding.

Internet users are mostly indifferent to digital ads, but not all are treated equally, as eMarketer found. Consumer surveys have reported that interruptive ads are the most frustrating, especially when they overtake the entire screen and prevent individuals from reading text or force them to wait for a video to play. On the other hand, less-invasive ad formats where the ad fits in with the content of the page are less bothersome especially when the message is useful or relevant.

EMarketer also found in prior years that Amazon buyers in the US relatively rarely reported noticing ads on the site. When they did notice the ads, they were more likely to describe them as useful or helpful rather than distracting or untrustworthy.

To tap into the growing opportunity in retail media advertising, eMarketer suggests endemic brands prepare to use more data clean rooms and run tests as retailers launch new ad platforms, formats and targeting options. 

For non-endemic brands, the firm notes that although they may not see the obvious benefits of advertising directly in a retail environment, there’s a place for them as well—such as financial service firms, automakers and more. As tracking users becomes more difficult, retail media will look like an increasingly attractive option for brands that don’t sell through retailers.