WARC: Retail media’s meteoric growth to cool down in ‘25

Dive Brief:

While WARC now expects retail media spending to grow at a slightly faster rate this year, with global marketing investments climbing 13.7% year over year to reach $153.3 billion, the space is headed for a cooldown next year.
A new report from the researcher revealed that retail media networks’ increased sophistication in leveraging shopper data to target offsite campaigns, including in non-retail environments, is helping fuel channel growth in 2024.
Retail media remains hypercompetitive but Amazon is enshrining a dominant position, with WARC expecting the e-commerce giant to command 37.3% of the market in 2024. However, some of retail media’s meteoric growth could soon taper off as brands max out their budgets.

Dive Insight:

WARC aligns with other forecasters in expecting retail media networks to see a bump in growth this year from their bigger push into offsite media. That said, the growth rate for one of digital’s booming channels appears to be decelerating after a long run on a meteoric upward trajectory. In 2024, WARC forecasts spend on social media to grow more quickly than for retail media at a rate of 14.3%. The “Future of Digital Commerce” report stated that retail media spending will grow more slowly in 2025, with the rate clocking in at 10.6% “as trade marketing budgets are steadily exhausted.”

Retail media networks rose to prominence thanks to sponsored search and display placements appearing on on-site properties that could catch the attention of consumers as they browsed and filled up their carts. But mature players in the space have started leveraging their first-party data troves to help brands target their campaigns elsewhere, including on trendy social media apps like TikTok and in the burgeoning connected TV (CTV) space.

In a sign of the trend, Disney Advertising in May struck a deal with Walmart Connect to use the big-box store’s retail media data to power ad campaigns on platforms like Hulu and Disney+. Programmatic buying is also a growing area of interest for retail media networks that want to extend their tendrils into the open web. A separate report from Advertiser Perceptions revealed that offsite programmatic retail media will generate $20 billion in 2024, leapfrogging 2023’s figures.

With dollars pouring in, retail media has seen power consolidate around a handful of platforms, Amazon chief among them. When factoring out China, where Temu owner Pinduoduo dominates the retail media landscape, Amazon accounts for 62.3% of global category market share, according to WARC.

Amazon’s revenue derived from advertising jumped 24% year-over-year in Q1 to $11.82 billion, and the company plans to see further traction as it introduces commercials to Prime Video. WARC believes Amazon will maintain 25% retail media growth in 2024 to hit $52.7 billion in revenue.