Retail Media Will Add Fuel To The Fire For M&A In AdTech
If you think those “sponsored” products on Amazon are an innocuous little niche of advertising, think again. Those sponsored positions are what are now known as retail media, which has become the third-largest U.S. digital advertising channel after paid search and paid social campaigns. Even more impressive, eMarketer expects it to nearly double, from $31 billion in 2021 to more than $61 billion by the end of 2024, when it will account for almost 20% of digital advertising spend. The question to ponder is how other marketplaces will compete with Amazon in particular as retail media becomes increasingly competitive.
Retail Media Will Add Fuel To The Fire For M&A In AdTech
Currently, Amazon dominates the space with almost 78% of retail media ad revenue in 2021, trailed by Walmart at a significantly lower rate of 5.4%. Consulting firm BCG estimates that in 2021, 68% of Amazon’s overall profits came from advertising with related operating margins of 75%.
Retail Media Will Add Fuel To The Fire For M&A In AdTech
The brick-and-mortar stalwarts of Target, Kroger and DICK’S Sporting Goods have all piled into retail media, as have digital-only players such as Instacart, Wayfair and Gopuff. COVID-19 has only improved the business case. U.S. consumers spent $1.7 trillion online during the first two years of the pandemic — $609 billion more than in the previous two years — driving spend into retail media.
Retail Media Will Add Fuel To The Fire For M&A In AdTech
Thus, retail media is poised to become the newest competitive battleground in digital advertising. But what, exactly, is the playing field? What capabilities do retailers need? Will this landscape accelerate mergers and acquisitions, and what should we expect in such regard?
Retail Media Will Add Fuel To The Fire For M&A In AdTech
1. The playing field.
The digital advertising industry had a history of putting ads where people least wanted to see them. Banners, pop-ups, search ads, social ads and retargeting ads are inherently annoying and are renowned…
Retail Media Will Add Fuel To The Fire For M&A In AdTech
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