The trend: 2021 was the year that marketers fully embraced retail media networks—and the year that retailers fully embraced their role as advertising platforms.

What’s the appeal? For retailers, media networks function mainly as an additional revenue source, but they have other benefits.

• Retail margins have historically been small, and they’re getting smaller thanks to inflation and rising logistics costs. With retailers finding themselves increasingly squeezed by Amazon’s low prices and free shipping, having an alternative revenue source enables them to compete on price and keep customers coming back.
• Retailers also have access to lots of first-party customer data and valuable insights about how people shop. For example, a consumer packaged goods (CPG) brand that chooses to spend with Target would be able to reach customers where they are and identify people with purchase intent—and also potentially guarantee better product placements within the store or on the retailer’s ecommerce platform.

Major players: While Amazon still dominates with 77.7% of US digital retail media spend, companies like Walmart and Instacart are emerging as media networks to watch.

• We forecast Walmart’s US digital advertising revenues will hit $1.55 billion this year, a 53.5% increase for the year. For Q3, the company reported that its ad business had increased revenue by 240% over two years. While the retailer declined to share specific numbers, the CFO at the time, Brett Biggs, noted that “increased contributions from advertising revenue have helped offset cost pressures” from inflation and supply chain issues.
• Instacart had $300 million in revenue from advertising last year, and hopes to reach $1 billion by next year, per the Wall Street Journal.
• A study by Merkle found that 77% of CPG brands work with Amazon, while 56% work with Walmart Connect, 29% with eBay, and 27% with Home Depot.

A few key stats:

• In 2021, a quarter of retailers reported receiving more than $100 million in revenue from their media networks, according to Forrester.
• By 2023, we predict that retail media will exceed $50 billion and receive nearly 20% of all digital ad spend.

New entrants in 2021: Several retailers and commerce platforms made their media network debut this year, including:

• Albertsons
• Dollar Tree
• Gopuff
• Lowe’s

What to expect in 2022: With third-party cookies set to vanish next year, expect to see more advertisers turning to retail media networks to provide valuable insights into consumer behavior. At the same time, Amazon’s stranglehold on retail media spend will start to slip, giving competitors like Walmart and Instacart an opportunity to establish themselves.

• We anticipate digital retail media advertising will jump by 31.4% in 2022 to $41.37 billion, marking it out as one of the digital ad segments with the highest growth.
• However, retailers will need to come up with new ad formats and advanced capabilities to prove to brands they are effective at bringing in new customers.