US Retail Media Ad Spending Will Reach $31.49 Billion in 2021

Retail media ad spending in the US will surge 53.4% to $31.49 billion this year, according to eMarketer. The company forecasts that the fast-emerging segment of digital advertising carves out a prominent position in the space.

“Retail media is digital advertising’s third big wave,“ said Andrew Lipsman, eMarketer principal analyst at Insider Intelligence. “Following the search ad market led by Google and the social ad market led by Facebook, this third wave led by Amazon is now cresting—and ad budgets are ready to be unleashed with a fury.“

US retail media ad spending is continuing to gain a share of the overall US digital ad market, reaching 14.9% in 2021. That share is expected to rise to 19.3% in 2023, as retail media evolves to attract larger brand budgets. This year’s growth of 53.4% follows a nearly identical growth of 53.3% in 2020. Last year’s surge in e-commerce spending initially lured budgets toward these channels, while this year’s growth reveals that budgets are still catching up to the opportunity.

Although growth rates will moderate in the next couple of years, eMarketer anticipates that total US digital retail media ad spending will surpass $50 billion by 2023. This year, they estimate that 65.8% of retail media spend will come from sponsored search, and 34.2% will come from display advertising, with display gaining share in the coming years.

“Retail media has traditionally been dominated by sponsored product listings, but marketers are shifting spend toward more upper-funnel advertising to complement their search-based strategies,“ said Peter Vahle, senior forecasting analyst at Insider Intelligence. “Bringing purchase-based targeting and closed-loop attribution to display, video, and CTV ads has big brands now fully embracing the power of retail media.“

Amazon will have a 77.7% share of US digital retail media ad spend by the end of 2021, but its share will decline by a few percentage points in coming years amid greater retail media competition. Walmart, the No. 2 player at 5.4%, is expected to see ad revenues rise by 69.0% in 2021 to $1.71 billion. Instacart is expected to jump 86.4% to $550.0 million this year. eBay and Etsy are also included in the forecast, accounting for 1.4% and 0.6% of retail media digital ad spending, respectively. Other retailers will vie for a 13.1% share this year.