Front-run the money
GroupM has revised up its advertiser spend forecasts, now predicting a market totaling $989.8bn by the year-end. The WPP-owned group forecasts a $1.1tn market in 2025, indicating it anticipates the investment growth curve to steepen.
Retailers continue to gobble up a greater slice of the ad pie. Per GroupM’s calculations, retail media will account for 15 percent of all ad spend this year, or circa $150bn globally, up around $50bn in two years. Amazon will likely take a third of that spend, having notched up $47bn in 2023 and still growing above 20 per cent year on year.
Walmart’s Connect ad business booked revenues of $3.4bn in 2023. Pacing at 25 percent year-on-year growth, revenue this year will likely range between $4.2bn-$4.3bn. However, its broader ads business could accelerate next year if the acquisition of connected TV maker Vizio goes to plan. If the retailer can integrate its retail ads business more deeply with TV dollars it will present a compelling package to marketers looking for end-to-end brand and performance buys – particularly if it can close the loop on measurement and attribution via hard sales data.
Off network attribution push
Amazon is likewise attempting to build out closed-loop ad-to-purchase reporting with video ads now rolling out globally on Prime. If it can successfully connect those ads to purchases on Amazon.com, the retailer has a significant new ad opportunity ahead. According to GroupM’s forecasts, CTV ad spend will top $38bn in 2024, up 20 per cent year on year (though the holdco has revised its previous methodology).
While joining the dots between the two fastest growing ad channels represents a smart move, retailers are also blurring the lines between advertising budget pots.
That’s because the retail media operators are powering into off network buys, using their shopper data to help advertisers reach customers on channels such as connected TV, social media and retail-specific digital out-of-home – some of those screens owned by the retailers themselves, some via specialist shopper OOH pure-plays.
In the US alone, Advertiser Perceptions predicts off-network retail media buys will top $20bn in 2024, representing circa 25 per cent of the market, up from 15 per cent in 2023. (Advertiser Perceptions forecasts the US retail media market will hit $81.6bn in 2024)
Hence the likes of Disney partnering with Walmart to target shoppers on Disney+ and Hulu – and close that attribution loop. Disney can carve out a greater share of marketer budgets because it can better target key customers for specific advertisers – and prove those ads landed. Walmart gains another channel to market and the opportunity to tap into new advertisers (or ‘non-endemic’ brands in industry jargon).
Deals! Deals! Deals!
Walmart also has a deal with Paramount and CEO Bob Bakish suggested the network is working on further partnerships as the retail media-CTV lines continue to overlap.
“We’re now excited about being able to go toe-to-toe in bringing retail media to Connected TV, where we can incorporate purchase data from large scale retailers to target and measure the impact of media investment on business outcomes,” Bakish told analysts in February. “This is fundamentally reshaping the marketing landscape, drawing budgets to Connected TV previously reserved for other formats like those associated with consumer and trade promotion as well as social media.”
He added: “Beyond that, there are other attribution players in the pipeline that have real scale – that includes retailers, credit card providers. So there is more to come there.”
NBCU last month expanded its partnership with Instacart to do much the same thing and most of the major retailers likewise have partnerships with SSPs for CTV extensions. With Netflix now scaling its ads business, it’s a safe bet that it will seek out partnerships with retailers beyond its current trial with $90bn France-headquartered multinational Carrefour.
Whales eye krill
There’s potentially further upside for both retailers, streamers and TV networks too: The ability to scoop up small advertiser krill with more locally targeted addressable buys at a lower entry point. Amazon is already attempting that approach – throwing-in video ad production for small businesses with $15,000 to spend and pushing them onto Twitch and Freevee.
How many SMBs are currently buying those packages remains to be seen. But Amazon has a habit of making money.
“In the long run, we believe Amazon will be able to draw incremental streaming budgets from SMBs that sell on their platform, but we expect minimal contribution in 2024,” according to Advertiser Perceptions’ Eric Haggstrom. Though he hedged his bets, adding, “these assumptions could be quickly disproven in the coming months”.
Either way, Haggstrom was unequivocal about the direction of travel:
“Media and ad tech companies need to form relationships with retail media platforms or risk missing out on one of the few large and quickly growing segments of the digital advertising market.”
Which suggests CTV and retail media’s future paths are headed in the same converging direction – with data dealmaking a-plenty along the way.
