Retailers are gunning for advertising dollars.
Retail ad is predicted to grow 31% to $41 billion this year, and Amazon, Walmart, Instacart, and others are building ad businesses to get a piece of it.
They're betting on the growth of e-commerce and the hope of offsetting retail's thin margins by pitching advertisers on the ability to reach their shoppers. They're also making big hires to support these ambitions.
Insider is keeping track of all the moves in the space.
Amazon dominates retail media
Amazon has become the third-biggest digital advertising company behind Google and Facebook, notching $31 billion in advertising in 2021.
It's vying for advertisers' budgets by promoting its ability to grow awareness with consumers and pitching TV and in-store ads.
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Walmart and other big-box retailers
Walmart, Sam's Club, Walgreens and other retailers are also building their own platforms to grab a slice of the ad pie.
They're taking a page from Amazon by pitching their shopper data, which could benefit small brands that often struggle to outbid big advertisers on Amazon.
But each retailer has different ways of selling and measuring ads, making it hard for advertisers to manage campaigns across all of them.
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Instacart and other grocery delivery companies
Grocery delivery companies like Instacart and Gopuff are becoming big players for advertising as they seek to offset food delivery's slim margins.
Instacart pulled in hundreds of millions of dollars in advertising last year, and revenue from the operation could top $1 billion in 2022. DoorDash is similarly trying to build an ad business while trying to stay on top of the food delivery wars.
Read more: Here's a look inside Instacart's playbook to take on Google and Facebook as it tries to build a $1 billion ads business
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Shopify, Uber, and other retail media sellers
Specialty chains like Michaels and gig companies like Uber to Shopify are also getting into the retail media business.
Shopify, which lets merchants sell products online, has plans to roll out a tool called Shopify Audiences, and let advertisers target ads on Facebook and Google, said sources familiar with its plans. Ulta Beauty is rolling out an effort to sell ads on its own platform, publisher sites, and social networks.
Read more: These key slides show how Uber plans to grow its advertising business to '$1 billion-plus' in revenue by 2024
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Retail media is driving M&A
E-commerce advertising growth has been a boon for companies that manage advertiser spending on retail platforms and for adtech firms that help retailers build ad businesses.
E-commerce M&A soared 50% between 2019 and 2020, showing the demand for companies that help merchants sell on third-party marketplaces, according to Pitchbook data via JEGI Clarity. Private equity firms like KKR and Blackstone have been pouring money into warehouses and e-commerce holding companies.
Read more: 2022 is shaping up to be a big year for advertising M&A. Here are 10 trends to expect, from a jump in e-commerce ad deals to a surge in event marketing interest.
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