‘The big guys are winning’: Digital media budgets prioritize Walmart, Amazon despite a glut of retail media inventory

“If you had asked me six months ago if I think the commerce space was overbuilt, I would have said ‘no,’” said Elizabeth Marsten, senior director of marketplace strategic services at Tinuti. “But now it seems bloated.”

The channels already established in this space, namely Walmart and Amazon, which began offering digital ad inventory in the late 2000s, are winning that business.

As a result of growing site traffic and new ad inventory, Walmart’s digital ad impressions (onsite, offsite, and sponsored search) increased 50% year over year from 2019 to 2020, according to a Walmart spokesperson.

Likewise, Amazon has made more placements available than ever before. “Looking at the CPC buying model on Amazon, I would say we have seen 3x the impressions in the past three years,” said one media executive at a major agency.

Amazon ad revenue jumped 52% from $14 billion in 2019 to $21.5 billion in 2020. In a statement, Walmart said digital ad revenue had doubled in the last fiscal year but declined to give exact numbers.

“It gives the rest of us heartburn because we want to think there is an open ad economy, but the big guys are winning,” said Katherine Cartwright, principal at Criterion Global, an international media buying agency.

While brands are interested in new opportunities with new retailers, said another e-commerce executive at a second digital agency, they have to justify diverting a portion of their current budget away from those big players. And many remain reluctant to invest in unfamiliar platforms.

“Brands can’t budget for what they don’t know,” said Marsten. “Spend often comes down to retailer relationships.”

Even with Amazon and Walmart taking up most of the attention, brands and media buyers are trying to keep an eye on offerings from new platforms. Home Depot, CVS, Walgreens, Kroger have all expanded their inventory in the last year.

Even though some of these platforms have been around since 2019, they are becoming more competitive for retail media ad budgets.

The top up-and-comer is Instacart. “I don’t think it’s a flash in the pan, especially as they continue to add partners,” said David Hutchinson, co-head of commerce media at Dentsu Media. “More partners means unlocking new inventory.”

Instacart introduced more advertising placements after seeing a surge in new customers. Its most popular placements, Featured Products, saw fill-rates triple in 2020, according to a spokesperson. The company said that the number of advertisers on the platform grew by 5x in the last year. Instacart declined to share specific figures.

Most recently, Instacart partnered with Walgreens to offer same-day delivery. Other Instacart partners include Best Buy and Sephora.

But not all brands are ready to put ad dollars toward these platforms.

“I have some clients that are happy for the other platforms and want to take advantage of it as a show of partnership or to grow revenue,” said Marsten. “But I also have some clients that think they’re being pushed into something where the resources could have been used elsewhere — to better site search, external customer acquisition, or product suggestions.”

Hutchinson said it’s difficult for brands to increase their budgets if they also want to experiment with new platforms. Keeping up with all the platform offerings can be a logistical challenge for buyers, especially when platforms don’t always have consistent reporting on aspects like attribution windows.

Finding the budget for those new retail media channels could get harder as the year wears on. Consumers’ new e-commerce habits are expected to decline as more people get vaccinated and return to in-store shopping. Andrea Leigh, vp of strategy at Ideoclick, an e-commerce optimization platform, questioned if brand ad budgets will be able to sustain their digital advertising spend, as well as a return to in-store or print advertising. 

“As we get vaccinated and leave our houses, there will be more foot traffic, and probably a return to out of home advertising,” she said. “But where does that money for out of home come from then, if brands still need a strong e-commerce presence?”