Just weeks after benchmarking the retail media marketplace, the GroupM Business Intelligence team had an interesting – and somewhat existential – conversation during their weekly “This Week Next Week” podcast about the overall nature of consumer commerce, and the size of marketing within it.
The conversation was spurred by the team’s play-by-play breakdown of The Trade Desk’s quarterly earnings call, including its calculation that the “total shopper marketing” category (including things like shopper loyalty programs and sponsored listings) is half a trillion dollars.
Just to remind you, the GroupM team recently benchmarked total retail media spending by advertisers on ecommerce platforms to be $101 billion – or about 11% of its estimate for total media spending this year. GroupM officially project that will rise to $160 billion by 2027, but hedged that a bit saying it could be as much as half a trillion dollars by then, depending on how things play out.
What I found most interesting about the team’s reaction to The Trade Desk’s stat was their soul-searching about how the category should actually be defined and what goes into it.
“So many of the elements of what go into what we’ll call ‘shopper marketing’ are so fundamentally fuzzy, because different companies account for these in different ways. Is it real money or is it not real money,” GroupM’s Brian Wieser said, adding: “Or is it money that is, for example, coupons? Is that part of shopper marketing, or is that a discount from revenue but it gets called revenue?”
“Shopper marketing is a term that gets thrown around,” GroupM’s Kate Scott-Dawkins added, noting that GroupM prefers to call it “commerce media.”
But it was the number Wieser thew out next that really got me thinking about what the size of the overall marketplace really is. Using the term TAM, or the total addressable marketplace, marketers participate in, Wieser said it’s probably more like $6 trillion, not the $2-3 trillion you normally hear industry pundits and economists use to dimensionalize it.
“Marketing broadly is -- call it 5% of all global company turnover -- let’s call it $6 trillion,” he explained adding: "If you said that, people would say, ‘$6 trillion -- that’s like a made-up number. We need something more manageable.' So you come down to a smaller one?"
Really? Is that how it gets done? Fudging numbers down so people are more comfortable with the proportions of them?
Don’t get me wrong -- I’m not implying that’s something the GroupM team does. I think they have one of the most disciplined ways of looking at -- and defining -- the categories that comprise advertising, media and marketing spending. But I’ve also commented a number of times recently on their soul-searching about the building blocks --what GroupM calls “line items” -- that go into the totals.
And for me, what they are really talking about is what I have historically described as "dark universes" of marketing and media that either aren’t seen or are not rigorously measured and therefore have not existed for many people in the ad industry. Until they stumble on them and begin factoring them as pieces of the puzzle they can see, think about and calculate.
The funny thing to me about GroupM’s recent retail media benchmark, or even this week’s conversation about what goes into “commerce media,” or not, is that it’s not new. When I began covering advertising, media and marketing 40 years ago, it was something Wieser’s predecessor at his old Interpublic job – the late Bob Coen – would talk regularly about, before discounting the parts he personally didn’t define as “advertising” for the purposes of his calculations.
But back then, most media economists had numbers for what they called “below-the-line marketing” spending – the parts that weren’t advertising – but included things like PR, consumer promotion and trade promotion that are at least part of what GroupM is now calling commerce media.
And back then, the analysts estimated it was about equal to total ad spending, and that about as much money went into trade promotion (giving money back to retailers to gain distribution and in-store promotion) as went into consumer promotion (giving money in the form of discounts or other premiums to consumers to get them to come into the stores).
There were other good nuggets in the team’s analysis of The Trade Desk’s earnings call in this week’s podcast, which you can listen to below, but this was the highlight that got me thinking about the big picture – and how big it really is.