More than half of retail media networks advertisers are reallocating budgets to RMNs, study
Retail Media was one of the fastest growing U.S. advertising channels in 2022, according to a new report by the Interactive Advertising Bureau (IAB) titled "Retail Media 2023: Operational Strategies to Meet the Growth Potential."
Jeffrey Bustos, VP, Measurement, Addressability, Data Center, IAB: "It's a sea change in how the biggest advertisers are planning to reach customers. Retailers have a treasure trove of first-party data that enables advertisers to reach high intent audiences and provide closed loop-measurement, and budgets are shifting accordingly."
The study, released at the IAB Connected Commerce Summit: Retail Reimagined, was created in partnership with BWG Strategy, and surveyed 200 RMN ad buyers at brands and agencies, as well as conducted over 30 interviews with senior decision-makers at retailers, brands, agencies, and intermediaries, including demand side platforms (DSPs), supply side platforms (SSPs), and data providers.
David Cohen, CEO, IAB: "At IAB we have a unique perspective given our experience over the past three decades of digital development, and the ecosystem-wide impact that RMNs are having. In some ways, we are reliving the formative years of the ad-supported internet and developing solutions for brands, buyers, ad tech and retailers to grow their businesses responsibly. We can, and are, helping RMNs realize their full potential which is very gratifying."
Key Findings: Greater Growth Ahead
RMN ad buyers are projected to increase spend by 11% year-over-year in 2023. These are defined as buyers at brands and agencies spending at least $5M on RMNs annually.
Among those increasing spending on RMNs, investments are expected to rise by nearly 20%.
Top reasons to buy: reach incremental audiences (55%); leverage retailer first-party data (52%); drive performance (48%); and leverage customer data (45%).
The Endemic Brand "Spend Tax" Grievance is a myth. Only 28% of buyers cite the requirement to spend as a top reason for buying.
To fund increased RMN investment, more than half (52%) are reallocating funds from across digital platforms, including social, search, and digital video/CTV while more than one-third (36%) are reallocating funds from linear TV, print and out-of-home.
Cross-RMN measurement standards and transparency around attribution windows, incrementality, and viewability, for consistent RMN comparisons will significantly help propel ad spend.
Key Findings: Areas of Opportunity
Retail media can grow even faster, but must first address key ecosystem-wide issues.
Improving measurement and data collection is the #1 opportunity area identified by buyers.
Over two-thirds of RMN ad buyers (69%) cited the need to resolve complexity in the buying process. While many RMNs operate in silos and lack automated buying and cross-RMN performance capabilities, some have begun to provide self-service and managed-service activation platforms. Private marketplaces (PMPs) have also begun to emerge.
Nearly 2-in-3 buyers (62%) cited the lack of measurement standards as a top challenge to continued growth, followed by nearly 60% wanting greater transparency.
60% of ad buyers want better collaboration and communication with RMNs. Tellingly, only one in ten (12%) ad buyers are "very satisfied" with their RMN partner relationships and communication.
Jeffrey: "Everyone notes a lack of alignment of stakeholders across shopper marketing, performance marketing, brand marketing and beyond. There's a big opportunity for brands to leap ahead of their competition if they do the work to align everyone's interests and provide a unified point of view and clarity around goals."
The full report can be accessed here
