Campaign India Team
Jun 05, 2024

WARC pegs global retail media advertising investment at $153.3 billion in 2024

However, retail media spend growth could slow to 10.6% in 2025, with spend reaching $169.5 billion, as trade marketing budgets are steadily exhausted.

AI-driven tools can identify meaningful commonalities among shoppers and create activations targeting them.
AI-driven tools can identify meaningful commonalities among shoppers and create activations targeting them.

Retail media advertising spending is forecasted to reach $153.3 billion worldwide in 2024. This was revealed in the ‘Future of digital commerce 2024’ report by the World Advertising Research Centre (WARC). This growth is fueled by advances in off-site targeting as commerce data gets infused into non-retail environments.

The annual report by WARC Digital Commerce looks at the trends in the retail media market. It also analyses how these could have an outsized impact on the future of this hyper-competitive industry. 

Gregory Grudzinski, reports editor of WARC Digital Commerce, and author of the study, said, “Following the explosion of digital commerce onto the advertising landscape, this report looks at trends in four areas that are having a profound impact on the future of this fast-growing and complex space to provide an overarching view of what the future holds and what marketers need to do today to prepare for it.”

Here are the key findings of the report:

Retail media ad investment maintains double-digit growth

According to WARC's analysis, the retail media continues to grow at a rapid pace and will reach $153.3 billion in 2024, up 13.7% year-on-year. This marks a slight acceleration on the 13.0% growth recorded last year but falls short of the 14.3% forecast for social media. 

Amazon is set to maintain near 25% growth in 2024, to reach $52.7 billion, as per WARC forecasts, bringing its global share of retail media spend to 37.3%. Excluding China, this equates to 62.3% of all retail media ad spend. 

Chinese platform Pinduoduo, which also owns e-commerce platform Temu, is set for an over 31.3% expansion this year to earn $28.2 billion, accounting for 45.9% of all retail media spend in China. Walmart reported a 26% year-on-year rise in e-commerce ad revenue in its latest earnings.

However, retail media spend growth is forecast to slow to 10.6% in 2025, with spend reaching $169.5 billion, as trade marketing budgets are steadily exhausted. 

WARC expects the retail media to grow rapidly and reach $153.3 billion in 2024, up 13.7% year-on-year.

AI is revolutionising marketing

Artificial intelligence (AI) presents an opportunity for brands to personalise products, promotions, and marketing efforts faster, vastly exceeding prior customisation attempts. AI-driven tools can be used to identify meaningful commonalities among shoppers and create activations targeting these commonalities. These could include customised product detail pages, social media posts, and loyalty program solicitations.

By 2030, the AI-enabled e-commerce market size is projected to reach $16.8 billion, growing at a 15.7% CAGR in the next seven years, according to InsightAce Analytic’s data. The ability to quickly render realistic or hyper-realistic images of people, products, and packages will be a powerful tool for creatives allowing more time for strategic planning and creative thinking.

Mert Damlapinar, managing principal of EPAM Systems, said, “AI is not an optional technology but a core component of e-commerce strategy, empowering brands to seamlessly integrate personalised experiences, optimise operations, and drive business growth.”

Shaping the omnichannel landscape

As the omnichannel space becomes increasingly complex, direct-to-consumer (DTC) brands are seeing significant growth driven by increased consumer acceptance of online subscription offerings. According to Shopify, DTC sales are expected to reach $161.2 billion in 2024, and $591.3 billion by 2032 at a 15.4%. CAGR.

At Kroger’s Q4 and fiscal 2024 earnings call in March this year, Rodney McMullen, chairman and CEO of the US retail company, said, “Customers value the ability to shop on their terms with zero compromises, and we are increasing the number of omnichannel households in our ecosystem. Customers who shop, both in-store and online, spend three to four times more compared to in-store-only shoppers.”

A report from Invesp stated that brands with effective omnichannel customer engagement strategies retain on average 89% of their customers, compared to a rate of 33% for companies with weak omnichannel customer engagement.

With people spending an average of 2.5 hours per day globally on social media, social commerce, and increasingly gaming commerce, are helping shoppers discover new brands and products.

Over the next 12 to 24 months, challenges for omnichannel marketers will center around measurement and optimisation. WARC's ‘Future of measurement’ 2024 report reveals that only a small percentage of marketers follow measurement best practices, while 22% say they don’t do any attribution modelling at all. 

Measurement and privacy to drive ‘clean room’ adoption

Data clean rooms are an environment where brands access anonymised shopper data. They allow retailers and brands to work together to create and target high-value customer segments, providing a more complete view of the customer journey and enabling accurate attribution of marketing investments to tangible business results.

According to a survey by the CMO Council, 54% of marketers in North America cited the ability to measure campaign results as a leading driver for their data clean room strategies.

Data governance is crucial for clean room adopters to ensure the ethical and compliant use of consumer data within these environments, essential to maintain consumer trust and reduce concerns of regulatory bodies. Brands without extensive first-party data may need to limit clean room functions to media attribution. 

Campaign India

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