An M&M advertisement seen on a gas pump.
Courtesy: GSTV
The next frontier for the advertising market is not on television: it is in stores and on the phone.
Television had long been a key target for advertisers, until tech companies like Alphabet and GoalPrivately owned platforms like Facebook began to gobble up market share. While advertising dollars are rapidly shifting from traditional television to streaming, retail and consumer products companies are taking on a significant share of that mix.
The so-called retail media networks (the advertising serving platforms) of e-commerce, retail and consumer companies such as Amazon, Walmart and kroger are attracting billions of dollars in advertising, according to data from eMarketer and GroupM, the media investment arm of WPP, the world's largest advertising group.
Global retail media advertising spending is expected to double from $114.18 billion in 2023 to $233.89 billion in 2027, according to eMarketer. Retail media is expected to account for a larger percentage of digital advertising spending, which has begun to eclipse traditional media spending, growing from 18.9% of that segment in 2023 to 25.7% in 2027, according to eMarketer.
“What we hear most directly from brands is that they no longer wake up with a prescription to buy X amount of television, X amount of social media, X amount of digital media. They wake up every day trying to buy growth, trying to buy results for your business,” said Sean McCaffrey, president and CEO of GSTV, a moving media network with more than 29,000 screens at fueling points linked to retail convenience stores.
GSTV screens reach 115 million viewers per month in 49 states.
Brands are “more open-minded about where they can find those audiences,” McCaffrey said.
“It's the new TV for mass-reach advertising,” said Mark Boidman, head of media and entertainment investment banking at Solomon Partners. “If you want to reach someone quickly, it's better to get it in a store or on your app… It's a 360-degree approach.”
Cookies to carts
Walmart is turning the roughly 170,000 digital screens in its U.S. stores into advertising opportunities. For example, a company that makes a snack or beauty product might advertise in the television aisle of the electronics department.
Walmart
The type of advertising purchased through retail media networks is often found on in-store ads and displays, websites, mobile apps, streaming services, smart TVs, and social media. Not only is it fertile ground for an advertiser to pitch its offers to consumers looking to spend, but it comes with a wealth of first-party data.
The amount of data retailers have on customers – from casual to loyal shoppers – is extremely valuable to advertisers looking to optimize their exposure.
“Yeah [brands] advertise with a digital ad, for example, and a customer makes a transaction a week later at a store or club, we can connect them and let them know that the ad actually worked,” Walmart CEO Doug McMillon told CNBC earlier in this year. “That is the differentiating advantage we have.”
Walmart has been a particularly important player. While it remains a new frontier for the retailer, advertising has boosted the retail giant's profits in recent quarters. The company also recently agreed to buy TV maker Vizio in a bid to further boost its advertising business.
Of the companies eMarketer tracks, Amazon was considered the largest retail media network in the US, with approximately 75% of retail media advertising revenue. Other top networks by revenue include Walmart, Instacart, eBay and Etsy.
The shift toward retail media comes as advertisers face changes in technological privacy that have led to a reduction in data collection.
Earlier this year, Google began revamping the way it and other companies track users online, namely the use of cookies, which monitor Internet users' activity so advertisers can target relevant ads to them.
In January, Google began restricting cookies for 1% of users of its Chrome browser, with the goal of completely eliminating third-party cookies by the third quarter of this year. Advertisers have been debating how to make the transition.
Advertising and media executives note that retail media networks now dominate conversations at conferences and other gatherings, such as the Cannes Lions advertising festival. It's also often a highlight on earnings calls.
“[Retail media networks] having that balance with targeting, privacy and compliance. I think that's where the money really starts to move,” Tim Hurd, vice president of media activation at Goodway Group. “I think that's key. “These retailers have that kind of data.”
Taking away from television
Big brands that in some cases have stayed out of the TV advertising frenzy for years around America's biggest sporting event, the Super Bowl, are back on Sunday and spending big amid record-low advertising prices. It's been a bumpy couple of years, marked by pandemic-era moderation and political polarization, but the American football championship offers an increasingly unrivaled audience too big to pass up.
Olivier Douliéry | AFP | fake images
The rise in retail media advertising comes against a backdrop of major changes in the media landscape. The number of pay TV customers and traditional TV viewership (outside of sports) continue to decline as more viewers move to streaming.
And although advertising buying in digital and streaming media is recovering, traditional television is still lagging behind. That was clear in first-quarter earnings reports from media giants like Comcast NBCUniversal and Warner Bros. Discovery
Disney saw a first-quarter decline in advertising revenue from its traditional cable networks and Hulu, despite an increase in cable crown jewel ESPN; Warner Bros. Discovery reported a drop in advertising revenue; Paramount Global received the expected boost by broadcasting the Super Bowl; and NBCUniversal's domestic advertising revenue was flat. However, streaming advertising revenue for legacy media giants showed growth.
Outside of TV highlights like the Super Bowl and other live sports, advertisers are now strategizing on multiple fronts and spreading spending across TV, social media, e-commerce and digital, said Hurd of Goodway Group.
“Linear TV advertising continues to decline,” said Kate Scott-Dawkins, global president of business intelligence at GroupM, noting that in the last decade advertising revenue has shifted from print and radio to television and now digital. .
Retail media revenue grew from less than $1 billion in the United States a decade ago to a projected $42 billion this year, or $129.4 billion globally, Scott-Dawkins said, citing data from GroupM, noting that brands' advertising budgets may not shift directly from traditional television to traditional television. retail advertising on the site.
However, he added that traditional TV revenue can shift to smart TVs, based on data on customer spending habits that retailers can provide.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC.
