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Welcome to the Digiday+ Research Briefing, your weekly curation of media and marketing research insights. Digiday+ members have access to the research below.
In this edition, we share focal points from Digiday’s recently released report on how retail media is growing as a marketing channel.
As retail media continues to heat up as a marketing channel, some retailers like Kroger are taking steps to in-house their self-service ad platforms in order to more fully control their retail media networks (RMN). An early player in the retail media space, Kroger is building its own self-service platform to better compete and improve its retail media business, and big-box chain Lowe’s announced earlier this year that it would do the same.
Indeed, retail media is becoming a cornerstone in many marketers’ strategy playbooks, according to Digiday+ Research’s recent report on retail media for our CMO Strategies series. Digiday found that over a third of marketers (38%) said they use retail media advertising, putting the channel just behind display ads and social media in popularity.
For now, Amazon is the clear main character in the retail media story, with more than three-quarters of respondents (76%) saying they use the platform for selling their companies’ products. As a sales platform, Amazon has an advantage over other RMNs due to the sheer volume of consumer data it collects. That means Amazon can offer brands access to more consumers, and their data, than other RMNs — putting it in the No. 1 position as a retail media partner in terms of scale.
Key findings:
Amazon plays a unique secondary role when compared to other RMNs. The huge pools of consumers who visit Amazon regularly access the site not only to make purchases, but also to use it as a search engine for discovering new items — similar to how they might use Google. Therefore, many marketers are now using Amazon as a platform to raise awareness for their brands, whether or not they sell on the site.
Retail media is not without its challenges. Aside from growing privacy laws, a big concern for marketers posed by the channel itself is the cost of media. Digiday’s survey found that 92% of respondents said the cost of media was a big concern in the retail media channel — also a common concern for marketers across channels.
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The global economy is in a state of flux, and so is the economy of TV and streaming production and development, as distributors seek to manage costs in a way that presents both opportunities and challenges to producers. Netflix and CNN Films are showing producers a new willingness to co-finance original productions that would provide producers greater rights to projects, and HBO Max is putting deals on hold, according to entertainment executives.
At the same time, the costs of production have increased with the broader macroeconomic trends of rising inflation, rising interest rates and ongoing supply-chain constraints, which are putting a further twist on the production and development market.
As production costs are increasing, ad-supported streaming services can still rely in part on ad revenue to balance their budgets. YouTube, with the largest audience reach of all the streaming platforms, received the greatest portion of both advertisers’ ad placements and 2022 budget allocation, according to Digiday+ Research’s recently released report on ad-supported streaming services. The overwhelming majority (83%) of brand and agency respondents said they currently place ads on YouTube, and more than half (60%) said YouTube consumed the largest portion of their 2022 budget. Hulu and The Roku Channel were second and third, respectively, for both ad placements and ad spend.
Key findings:
Slightly more than half (52%) of respondents said they currently place ads on Hulu, which had an audience size of 48 million monthly subscribers at year-end 2022. But less than a quarter (23%) said they devoted the largest portion of their 2022 budget to Hulu.
Nearly one-third of respondents (31%) said they currently place ads on The Roku Channel, while only 6% said the platform consumed the majority of their 2022 budget.
Pluto TV and Paramount+, both owned by Paramount Global, came in next to last for ad placements at 15% and 13% respectively. Only 2% of respondents said Pluto TV received the largest portion of their 2022 budget, and none said so of Paramount+.
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