By Kimeko McCoy • December 4, 2024 •
Ivy Liu
Walmart’s acquisition of smart TV manufacturer Vizio is official as of this week. The move further bolsters Walmart’s ad business, adding streaming capabilities to potentially attract more brand dollars. Walmart is just one on a growing list of retail media networks that’s after those dollars. Advertisers, however, are keeping the purse strings tied tight on brand budgets for now.
As more retailers launch their own ad networks, competition continues to grow for trade and shopper budgets. To meet that competition, Walmart and other retailers are eyeing brand budgets, rolling out ad opportunities in streaming, social and other off-platform channels. But the retail media space still faces challenges related to measurement and return on ad spend. Until those challenges are solved, advertisers don’t seem interested in parting with brand marketing dollars.
“None of my clients have said we’re getting ready to throw in a ton of dollars, and especially brand dollars, at this next year,” said Sarah Hoffman, group director of connections at TBWAChiatDay. “I do think that they’ve got some work to do before anybody starts to run the piles of cash in their direction.”
It’s a similar story for Kopari Beauty, according to Toral Patel, vp of marketing and e-commerce at the beauty brand. Per Patel, Kopari is investing in retail media networks for performance marketing. But when it comes to brand awareness, Kopari is considering other media channels outside of retail media to build customer loyalty and retention, like email and SMS messaging.
“We do invest in the retail media networks, more bottom-of-funnel. But top-of-funnel, we’re still considering whether or not to invest there,” Patel said.
Historically, retail media networks have been a lower funnel marketing tactic — in other words, a performance marketing channel where advertisers are spending shopper marketing, e-commerce and trade dollars for conversion and sales. But as those dollars continue to stretch, retailers like Walmart are looking for ways to differentiate themselves by thinking beyond that lower funnel. Walmart isn’t alone in its pitch for upper-funnel, brand marketing dollars. The Home Depot rebranded its retail media network back in March, making that pitch clear. Also this year, Instacart and Roku expanded their ad partnership to offer shoppable ads, home screen ads and targeting.
Retail media ad spend in the U.S. is expected to hit $129.93 billion by 2028, up from $54.85 billion this year, according to eMarketer. Agency executives, however, say that bubble is likely to burst, especially if retailers can’t make good on their brand marketing bet, and offer measurement capabilities that marketers have come to expect from the likes of Meta and Google.
“As the lines between retail media and other channels like social, influencer, content and TV continue to blur, their growth projection is increasingly cannibalized,” Sammy Rubin, vp of integrated media at digital marketing agency Wpromote, said in an email. “Retailer-site or app-focused media is a very different consideration versus the broader RMN offerings that retailers are looking to scale.”
Seemingly, retail media networks are no longer the silver bullets the industry once thought they were, as questions around off-platform measurement, return on ad spend, murky negotiation processes and, of course, costs come into play. As the hype about RMNs dies down, “there’s some plateauing going on there,” said Kyle Lock, vp of marketing at turkey brand Butterball, referring to RMNs’ return on investment.
Butterball has plans to increase its overall marketing spend next year, and has done so since 2023, according to Lock. As for retail media networks, “it’ll grow as long as the return is there,” he said. (He did not outline spend specifics.) Even as retailers continue to push for brand marketing dollars, it’s not a priority for the food brand.
“We’re confident in the messaging that we developed to build a direct and deep and strong connection to our target consumer,” Lock said. “No one here feels beholden to, ‘We have to push X amount through X,Y and Z.’”
In their push for more brand marketing dollars, retailers have opened up off-platforms across social media and streaming services. But there have been growing calls for transparency and accountability from advertisers concerned about precise tracking to nail down how those media dollars are working.
Over the last year, Lock added, there’s been more questions around return on ad spend and success metrics when it comes to RMNs, and the amount of information retailers have to share on these things is lagging.
“It’s the question you know the answer to already, which is, I wish we had better and more [measurement and insights],” he said, noting that the retail media boom is still in its early days. “I just think it is a challenge for most brands to determine what actually is an attributed sale.”
That’s not to say that ad spend on RMNs is expected to stall anytime soon. The jury is still out on whether RMNs’ brand awareness offerings will pay dividends, especially as advertisers continue to evaluate retail media’s effectiveness amid budget constraints.
“Ultimately, the goal is total business growth — any investment, including retail media, that doesn’t deliver will be re-evaluated,” Rubin said.
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