WARC increases retail media advertising investment to $153.3 billion

• WARC Increases Retail Media Advertising Investment to $153.3 Billion Globally in 2024

• Amazon ad revenue is forecast to reach $52.7 billion (+24.4%) in 2024 and $68.0 billion in 2025 (+18.9%)

• The AI-enabled e-commerce market is expected to reach $16.8 billion by 2030

• Changes in consumer behavior and advances in digital technology are shaping the omnichannel landscape

• Metering and privacy will continue to drive cleanroom adoption.

According to WARC’s latest analysis, global retail media advertising spending will reach $153.3 billion in 2024. Continued growth is driven by advances in off-site targeting as commercial data spills into non-retail environments. All the while, Amazon continues to strengthen its position in the retail media market.

WARC Digital Commerce has published its annual report analyzing trends that have a huge impact on the future of this dynamic and hyper-competitive space.

Grzegorz Grudziński, report editor, WARC Digital Commerceand author of the study states: “As digital commerce continues to explode in the advertising market, this report will look at trends in four areas that have a profound impact on the future of this rapidly evolving and complex space, providing an overarching look at what the future holds and what marketers need to do today to prepare for it.”

The key insights presented in the WARC Future of Digital Commerce 2024 document are:

Retail media advertising investments maintain double-digit growth thanks to off-site ad targeting

Investment in retail media continues to grow at a rapid pace. According to WARC’s latest analysis, global retail media advertising spending will reach $153.3 billion in 2024, up 13.7% year-over-year. This represents a slight acceleration from the 13.0% growth recorded last year, but is below the +14.3% forecast for social media.

Amazon’s dominance continues and is expected to maintain close to 25% growth in 2024, reaching $52.7 billion according to WARC forecasts, bringing its global share of retail media spending to 37.3%. Excluding China, this represents 62.3% of all retail media advertising spend.

Chinese platform Pinduoduo, which also owns e-commerce platform Temu, plans to grow 31.3% this year and earn $28.2 billion, accounting for 45.9% of all retail media spending in China. In its latest results, Walmart reported a 26% year-over-year increase in e-commerce advertising revenue.

However, retail media spending growth is forecast to slow to 10.6% in 2025, with spending reaching $169.5 billion as trade marketing budgets continue to deplete.

AI is revolutionizing marketing. The AI-enabled e-commerce market is expected to reach $16.8 billion by 2030

Artificial intelligence (AI) gives brands the ability to personalize products, promotions and marketing activities at an unprecedented level, far exceeding previous attempts at customization.

AI-powered tools can be used to identify significant similarities between shoppers and create activations that target those similarities, such as personalized product detail pages, social media posts, and loyalty program invitations.

The ability to quickly render realistic or hyper-realistic images of people, products and packaging will be a powerful tool for creators, giving more time for strategic planning and creative thinking.

Mert Damlapinar, Managing Director, EPAM Systemssays: “Artificial intelligence is not an optional technology, but a key element of an e-commerce strategy, enabling brands to seamlessly integrate personalized experiences, optimize operations and drive business growth.”

According to InsightAce Analytic, the AI-powered e-commerce market size is projected to reach $16.8 billion by 2030, growing at a compound annual growth rate (CAGR) of 15.7% over the next seven years.

Changes in consumer behavior and advances in digital technology are shaping the omnichannel landscape

As the omnichannel space becomes increasingly complex, direct-to-consumer (DTC) brands are seeing significant growth driven by increased consumer acceptance of online subscription offerings. According to Shopify, DTC sales are expected to reach $161.2 billion in 2024 and $591.3 billion by 2032 at a CAGR of 15.4%.

According to Invesp, brands with effective omnichannel customer engagement strategies retain an average of 89% of their customers compared to 33% for companies with poor omnichannel customer engagement.

During Kroger’s Q4 and FY2024 earnings call in March this year, Rodney McMullen, president and CEO of the American retail company, said: “Customers value the ability to shop on their own terms, without any compromises, which is why we are increasing the number of omnichannel households in our ecosystem. “Customers who shop both in-store and online spend three to four times more than those who shop exclusively in-store.”

As more and more time is spent on social media (an average of 2.5 hours a day worldwide), social commerce, and increasingly in-game commerce, is helping shoppers discover new brands and products.

Over the next 12-24 months, many of the challenges facing omnichannel marketers will center around measurement and optimization. Research published in the WARC Future of Measurement 2024 report found that only a small percentage of marketers follow measurement best practices; 22% say they do not use attribution modeling at all.

Metering and privacy will continue to drive cleanroom adoption.

clean rooms like Amazon Marketing Cloud are an environment where brands gain access to anonymous customer data. They enable retailers and brands to work together to create and reach high-value customer segments. This provides a more complete picture of the customer journey and allows you to accurately attribute marketing investments to measurable business outcomes.

According to a survey by the CMO Council, 54% of marketers in North America cited the ability to measure campaign results as a major factor influencing their data cleanroom strategies.

Data governance is critical for those implementing cleanroom solutions to ensure ethical and compliant use of consumer data in these environments, which is essential to maintaining consumer trust and reducing regulatory concerns.

Brands without extensive first-party data may need to limit cleanroom functions to media attribution.