With the increasing popularity of online shopping, breaking records from Black Friday across Cyber Monday, one ad category is expected to grow faster than other channels.
In a recent update to its U.S. retail media ad spend forecast, Insider Intelligence reveals a strong growth trajectory for retail media, projecting a staggering $109.40 billion in spending by 2027.
This makes retail media the fastest-growing ad channel, with an anticipated annual growth rate exceeding 20% through 2027.
Retail media is poised to become the second-largest ad spend channel by 2027, almost on par with social media and trailing only search advertising.
Notably, overall spending on retail media is expected to surpass the combined spending on TV, digital audio and traditional television advertising in the same year.
Analysts Remain Skeptical Over Retail Media Growth
Insider Intelligence cautions that while retail media is a force to be reckoned with, it is not invincible.
An Epsilon report from June supports this claim, highlighting that 42% of advertisers worldwide are hesitant to increase their retail media ad spend through 2026.
This hesitation is due to the lack of standardization in measurement and ad formats across retail media networks, as well as difficulties in coordinating spend for programmatic display, social media and connected TV advertising.
Despite the obstacles, the success of retail media is fueled by a "winning positive feedback loop," according to the report.
More visits to websites result in increased ad views, leading to more transactions. These transactions generate valuable data for retail networks, making ad targeting more efficient.
This strengthens the relationship between advertisers and retail media networks, ultimately contributing to the increase in ad spending.
Amazon To Dominate Retail Media
Composing 75% of the U.S. retail media market this year, eCommerce giant Amazon is also expected to continue its position as the biggest retail media player in the future.
Even as Amazon loses some market share, the introduction of ads into Prime Video is expected to further push the overall retail media market.
"Walmart, to my mind, has been one of the most under-discussed media success stories of the last several years," Willens explained.
In addition to Amazon, Walmart trails as a noteworthy player in the retail media landscape, and is expected to double its ad business between 2023 to 2025, soaring from $3.19 billion to $6.18 billion.