More marketers are using retail media, but is the investment paying off? Especially when you consider what your client could be giving up to fund them? Let’s see if taking away from media such as social media paid advertising is worth funding retail media.
Social Media Paid Advertising Overshadowed by Rise in Retail Media Spending
What is Retail Media?
According to an article by 8451, retail media advertising is, “a form of promotion on the media inventory of the retailer, with advertisers paying a platform or marketplace to showcase their products at or near the point of sale.” A few examples include:
- Sponsored products: Displayed on the retailer’s website pages
- Onsite and offsite displays
What’s Being Given Up
Other media types, such as social media paid advertising, are having their budgets chopped to fund retail media. According to research from skai, investments in retail media are coming from:
- A percentage of sales/GMV: 38% of brand/seller marketers agree
- Paid search: 33%
- New budgets: 31%
- Social media paid advertising: 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%
Only 31% of brand/seller marketers say that their retail media budgets are new and not disruptive to their advertising media budgets. That means that 69% of advertisers are taking away from the budgets of other ad media types. Those other ad media types are responsible for driving consumers to the sites where the primary form of retail media (sponsored products) are located. Taking budgets away from paid search, social media paid advertising, traditional ads and more could negatively impact not only website visits, but retail media’s impact, as well.
Is Retail Media Worth It?
By taking away budgets from paid search, social media paid advertising and other media types, retail media has to be worth it, right? Not necessarily.
According to skai, one of the top challenges brands that utilize retail media face is achieving a decent ROI. Approximately 58% of brand/seller marketers say that they struggle with a poor return on investment relative to other advertising channels. Other critical challenges marketers face with retail media include:
- Proving incrementality of investment: 37%
- Selling more direct-to-consumer, less reliance on retailers: 26%
- Managing so many retailers: 24%
- Supply chain issues and specific retailer fulfillment constraints: 22%
And that’s just a handful of the challenges skai lists.
Even in retail media programs, retail media isn’t all that’s included. According to skai, on a scale of 1 to 5 (1 being the lowest and 5 being the highest), marketers say that the importance of ad formats to their retail media programs are:
- Social media paid advertising: 3.7
- Retail media – sponsored products ads: 3.7
- Search engine ads: 3.6
- Retail media – sponsored display and retargeting: 3.6
- Retail media – sponsored brand ads: 3.5
Two out of the top five ad formats for next year’s retail media formats are social media paid advertising and search engine ads; two of the very ad media types retail media is pulling the budget away from.
What Works Best for Your Client?
At the end of the day, the ad media types that are going to work best for your client will be a mix unique to them and their target customers’ needs and wants. That may be retail media or maintaining the budgets of social media paid advertising and search engine ads. You can find out which will work best for your client by looking up their target audience’s profile on AudienceSCAN on AdMall by SalesFuel. There, you can see which ad media types influence the highest percentages of the audience to take action within the last year. With that information, your client can plan the best future ad strategy for their customers.
Photo by jaikishan patel