Retailers in recent months have gushed about the profitability of their media networks. Walmart said it generated $2.1 billion from its ads business last year. Nordstrom announced its retail media network brought in $40 million. Macy’s fetched more than $105 million from its own media offering in 2021. And they’re not alone—25% of retailers received more than $100 million in revenue from media networks last year, according to Forrester.
The windfall has made the ad networks one of the biggest growth trends in retail today—and given the sector a lucrative new revenue stream. However, with nearly every retailer now boasting its own ads program, the competition for an essentially fixed share of brand budgets is heating up.
“The big question is, how do you scale from here?” said Andrew Lipsman, principal analyst of insider intelligence at eMarketer, which predicts that retail media will account for more than $50 billion and receive nearly 20% of all digital ad spend by next year.
The landscape of retail media networks is more cluttered than ever. Every month or two a new retail media network emerges, Merkle Co., the Dentsu-owned marketing agency, reported late last year. Those vying for growth are not limited to grocers like Kroger, or mass-market stores like Target—chains including Best Buy, Dollar Tree, Walgreens and Lowe’s all have their own programs in which they use their own valuable shopper data to run targeted ad campaigns for brands.
The media offerings were initially limited to selling a vendor’s ads on a retailer’s own website and later grew to include some ad inventory outside of their own properties. But now more retailers are increasingly turning to other forms of media offerings, such as in-store digital ads, product sampling and campaigns on connected TV—and that is where experts say opportunities lie for expansion. At the same time, retailers have a chance to improve personalization strategies to better attract shoppers on behalf of brands.
"Retailers have to get more savvy at how they’re looking at their customer from end-to-end,” said Sherry Smith, executive managing director of global retail media at Criteo, a platform that partners with retailers such as Best Buy, Michael’s and Lowe’s on media programs. She called it a "3.0" stage of development, noting that progress has been “turbocharged."