Retail Media to Make Up One-Fifth of US Ad Spend This Year

Dan Meier 21 March, 2024 

Retail media spending is set to surge in the US this year, according to research firm Advertiser Perceptions, with the channel set to make up one-fifth of US ad spend in 2024.

The market intelligence company’s inaugural quarterly US Ad Market Outlook Report forecasts spending across CTV, social media and retail media, with the latter set to grow 30 percent in 2024.

The report suggests the growth will be largely driven by offsite programmatic retail media platforms. Over $20 billion of spend is expected to go to offsite programmatic retail media advertising this year, up $7.5 billion on 2023.

And the rise of retail media is set to continue next year, when the channel could represent almost one-quarter of US ad spend. According to the forecast, retail media spending will surpass $81.6 billion in 2025, making up 23.5 percent of all digital advertising in the US.

“Brands have been pouring money into retail media over the past few years,” said Eric Haggstrom, Director of Business Intelligence and Head of Forecasting at Advertiser Perceptions. “While we expect this trend to continue, retail media will evolve significantly in the coming years. As ad auctions on retailers’ own properties become saturated, brands will look to utilise retailers’ data to power their buys outside of retailers’ digital walls. 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.”

Spending sprees

But while programmatic retail media is on the rise, programmatic ad spending on mobile and desktop is forecast to be flat this year, or could reach single-digit growth. This poses clear challenges for publishers, though Advertiser Perceptions notes that retail media represents a “fast-growing pool of demand” for streaming services and publishers who sell programmatic advertising.

Digital ad spend is also expected to grow in the next two years, albeit at a slower pace than 2023. Digital ad spend grew 11.7 percent last year, according to the report, and will grow 10 percent in both 2024 and 2025, yielding an incremental $30 billion.

And social spend is also set to climb, driven by the increasing popularity of short-form video. The report said most social media growth will come from advertisers spending on shorts, mainly on TikTok, YouTube Shorts and Instagram Reels. In-stream and user-generated video conent are additionally forecast to pick up pace in 2025, according to the research.

CTV meanwhile is projected to see a boost in US spend this year, due to the elections and the Olympics. Advertiser Perceptions offered a “conservative” forecast of 16.2 percent growth for CTV, noting that the introduction of ads on Amazon Prime Video could push spending further.

“The advertising market will be strong in 2024, buoyed in large part by the presidential election and the upcoming Olympics,” said Eric Haggstrom. “Retail media, social media and CTV will be the biggest drivers of growth over the next two years, as advertisers not only prefer both the targeting and creative opportunities available through these digital channels but also can prove the ROI.”

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