Dive Brief:

• Global advertising revenue for retail-based companies will grow from $88 billion in 2021 to $101 billion this year, according to GroupM's "This Year Next Year: 2022 E-Commerce & Retail Media Forecast." 
• This year's retail media spend represents 18% of global digital advertising and 11% of total advertising. GroupM estimates that retail media advertising will increase roughly 60% and reach $160 billion by 2027. 
• The GroupM forecast demonstrates the rapid growth of retail media as a part of advertising, with the media agency predicting that the space will see greater competition, decoupling of data from inventory and greater participation by non-endemic brands in the next few years.

Dive Insight:

Retail media continues to grow and is now forecast by GroupM to make up more than a tenth of total global advertising spend this year — a piece of the pie that will only increase as it sees a growth rate that exceeds that of all digital advertising. The surging spend is commensurate with the frenzied development of retail media networks as brands look to tie their advertising closer to the troves of first-party shopper data that retailers command.

GroupM defines retail media as any advertising revenue accruing to a retail-based company, including marketplaces, but excluded marketing solutions, software providers and ad tech companies such as Shopify, Pacvue and Criteo, along with similar revenue from non-retail based companies, including Google Shopping and Instagram Shopping.

To benefit from the growth of retail media, retailers will have to build out media product offerings and develop platforms to sell impressions to non-endemic marketers, per the forecast. Retailers could also partner with publishers who can use data to increase the value of media impressions.

These tactics could help retailers increase advertising revenue as a percentage of e-commerce gross merchandise value (GMV). GroupM estimates Amazon's percentage at 5% — a high watermark that serves as a "reasonable target" for other retailers that fall between 0% and 3% today.

Retailers will also need to balance advertising inventory on their owned-and-operated platforms along with off-site opportunities that deliver increased inventory and ad budgets. However, removing the retailer's data from the ad inventory undercuts the value proposition of retail media; GroupM said that retailers that can trace sales or have highly adopted loyalty programs will fare better as competition increases.

Despite the softening of the e-commerce market from its pandemic-spurred heights, GroupM forecasts that global e-commerce will make up 19% of global retail sales in 2022, growing to 25% by 2027, per the report.