We are aware of the rapid growth of vertical advertisement for relatively a long time, and Amazon is definitely the big winner of this trend. But there is some changes happening inside this market: we see more retailers trying to take a share of advertising business, and they generate huge volumes. This is good news for brands, since they have more channels to choose from and may avoid being squeezed by Amazon.
In 2021, retailers fully embraced their role as advertising platforms. Why this happened in 2021? Retail margins were even smaller than before thanks to the inflation and rising logistics cost. And retailers finding themselves increasingly squeezed by Amazon's low prices and free-shipping, having the ads as an additional revenue source enables them to compete on price and keep the customers coming back.
Though Amazon still dominates with 77.7% of US digital retail media spend, companies like Walmart and Instacart both grows rapidly, which will post threats to Amazon: Walmart's digital advertising revenues hit $1.55B in 2021, increased 53.5% compared to last year. Instacart is expected to reach $1B in 2021, which also increased greatly with comparison to $300M in 2020.
Will this trend of diversification last? I think it will. Retailers benefit a lot from the revenue in ads which cost almost nothing. They have strong motivations to enlarge their pie in ads business by improving their ads effects to take brands' budget in. From the brands' perspective, all new digital marketing channels with a large traffic worth a try, and brands are more than willing to see the competition between medias become fierce.
Source: https://www.emarketer.com/content/retail-media-networks-hit-their-stride-2021
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