Retail Media Spend Is Headed Upward, Study Says

Retail media, that in-store marketing channel utilized by many CPG brands, is headed for at least a modest boost in spending, judging by The State of Retail Media 2023 report, a study from Skai, conducted with BWG Strategy.  

Of the companies polled, 42% plan to increase their retail media spend, 13% by a lot and 29% by a little. Another 51% will stay the same, and 7% expect a small decrease. 

Current economic trends have affected retail media budgets in these ways: 

  • They have had a strong negative impact — 13%
  • They have had a slight negative impact — 52%
  • They haven’t impacted our retail media budget at all — 23%
  • They have had a slight positive impact — 11% 
  • They have had a strong positive impact — 1%

Is the investment worth the cost? The answer is yes for access to first-party shopper data/targeted audiences, 50% say. Another 34% answer yes for incremental merchandising space and other return-on-relationship benefits. And 16% say no/it’s complicated.

Where is the money coming from? It is being taken out of these line items:

  • % of sales/GMV — 38%
  • Paid search — 33% 
  • New budgets — 31%
  • Paid social — 29%
  • Offline spend — 21%
  • Traditional print — 17% 
  • Shopper Marketing/Trade/Co-op — 17% 
  • Sponsorships — 14% 
  • Out of home — 10%
  • Traditional TV/Radio — 8% 
  • Online-other — 8%

That last category would presumably include email.

Retail media produced these results in 2022:

  • Negative impact on brand or desired objectives — 1% 
  • Little or no impact on brand or desired objectives — 3%
  • Achieved desired brand impact, but did not meet goals — 33% 
  • Achieved desired brand impact and met goal KPI expectations — 54% 
  • Achieved desired brand impact and exceeded goal KPI expectations — 9%

Brands use these KPIs to measure retail media success:

  • Advertising cost of sales — 84%
  • Return on ad spend — 84%
  • Sales, Order Volume Revenue — 46% 
  • Cost per Acquisition — 43% 
  • Profit — 30%
  • Average Cost-Per-Click — 25%
  • Share — 20%
  • Media cost — 13%
  • Viewability — 10%
  • Cost of goods sold — 10%

There are many challenges that could hamper investment:

  • Poor return on investment — 58% 
  • Proving incrementality of investment — 37% 
  • Selling more direct-to-consumer (D2C), less reliance on retailers — 26% 
  • The challenges of managing so many retailers — 24% 
  • Supply chain issues and specific retailer fulfillment constraints—22%
  • Poor or inconsistent content—10% 
  • Missing talent or expertise for the retail media space—8% 
  • Lack of product assortment for our desired audience—8% 
  • Too new, not enough best practices to maximize the investments—7%

Skai and BWG Strategy surveyed 167 brand/seller marketers in North America. 

Next story loading loading..