In 2022, we’re expected to see a continued recovery of ad spend despite the ongoing economic uncertainty. In fact, global ad spend for 2022 is forecasted to hit US$738.5billion. And looking ahead, we expect the 2023 global advertising market to increase by 5.4%, reaching US$778.6billion followed by a further 5.1% increase in 2024[1].
But what does this mean for retail brands?
Retail is one of the key sectors of spend growth at a rate of 11.0% in 2022[2]. The sector is driven by a number of factors including the significant growth of e-commerce post-pandemic, the entry of new players, and the introduction of emerging retail platforms.
Ad spend growth aside, many retail brands are grappling with ongoing uncertainty spurred by the cost of living crisis and rising inflation. Yet, with a first ever winter World Cup on the horizon and the rise of retail media spend, there are plenty of opportunities to engage with consumers and push ahead of the competition. Here we look at what the rest of 2022 may hold for the retail sector.
The rise of Retail Media spend
Retail Media is a growing trend and one that simply can’t be ignored by retail brands. But, let’s take a step back first and define exactly what it is.
Generally speaking, Retail Media is advertising within retailer sites and apps. This form of digital advertising uses both a retailer’s omni-channel properties and data every time customers come into contact with a brand, from sofa to store.
It’s also on the increase, with the space expected to grow by 27.1% YoY in the US alone in 2022[3]. This growing trend reflects the focus of advertisers to first find where customers are online, and second to form authentic connections with them.
Following Amazon’s lead, all the largest retailers are currently launching or revamping their Retail Media capabilities, from legacy media networks like Criteo and new players in the space such as Deliveroo and Marriott to e-commerce tech platforms like Shopify and Salesforce – with no sign of slowing down in 2022.
The opportunity for retail brands
There is plenty to work with in this space for retail brands, most notably by creating deeper relationships with consumers throughout their shopping journey using both media and content. Brands can also:
Leverage first-party shopper data more effectively to reach existing and new customers.
- Measure media and business performance more accurately via closed loop sales attributions.
- Combine engaging content with e-commerce, increasing shoppable opportunities on TV.
- Transform in-store journeys with data-driven experiences.
It’s clear, the potential around Retail Media exists. But only if marketers fully integrate it into their marketing strategy – something we’re yet to fully see as many brands still operate with it in silo.
The cost of living crisis and rising inflation
With UK inflation rising above 10% for the first time in 40 years in August[1], it’s no surprise that many consumers are tightening their wallets and only spending on essentials.
UK retail sales have grown at their lowest rate since February 2021. Specifically, total like-for-like sales in June rose by 8.4% compared with 2021, with an 8.8% fall in homeware sales. This suggests that Brits are putting off making any bigger purchases as soaring inflation continues to bite. The fashion sector, on the other hand outperformed both the lifestyle and homeware sectors, recording total sales growth of 15.2%[2]. This was the 16th consecutive month of positive figures, suggesting that consumers are still spending but they’re not spending big.
And it isn’t just in consumer spending habits where inflation is having an impact for retail brands. The media marketplace is also experiencing a time of high media cost inflation.
According to the World Federation of Advertisers, this is especially true of Linear TV, with 10.2% inflation on average in 2022, and BVOD, with 5.9%. Other media are experiencing lower levels of inflation: Digital Video inflation (excluding TV content) is forecast at 5.3%, OOH at 4.3%, Radio at 3.7%, Display at 3.0% and Print (Newspapers & Magazine) inflation averaging at 1.1%, with even deflation in some markets[3].
With the impact of inflation, advertisers looking to buy media in the same way as last year will need to spend more to reach the same audiences. For retail brands, this means that some key decisions need to be made around:
- Committing earlier to long-term spending plans with media owners
- Shifting budgets to where audiences are growing within streaming platforms for example
- Considering inventory that others may have overlooked such as digital audio and podcasting
- Exploring non-traditional inventory like sponsorship or branded content
- Leveraging market mix modelling to better understand the impact of channels and buying to achieve goals rather than reach and impressions.
The first ever winter World Cup
The 2022 UEFA Women’s Championship showed us the power of what good sport can do for us as a nation. At its peak the final received 17.4million linear TV viewers, making it the most watched women’s football match to date and also the most watched programme of 2022. It’s also reported that a further 5.9million viewers watched it across BBC iPlayer and the BBC Sport website.
BBC1 also gained 84% share of voice for individuals at its 7.30pm peak and maintained an average of 71% throughout. Meanwhile, for 18-34 ads peak share of voice was a huge 90% and 84% for ABC1 ads.
These are big numbers that meant big wins for advertisers that got it right. And plenty did. But what does the first ever winter World Cup offer in terms of opportunity? First and foremost, the World Cup is predicted to have a US$2billion positive impact on ad spend. But timing is everything. With the first match kicking off on 21st November, media spend around the tournament will compete with other festive advertising around Black Friday and the lead up to Christmas, which means the usual uplift in media budgets around the tournament may be slightly diluted this year.
For media brands, creative messaging will be key to tie in the World Cup with Christmas for example – the final is just a week before Christmas Day. Creative uses of user generated content to encourage social conversations will also be crucial, considering the growing importance of digital media around sport. Specifically, while the number of digital interactions and views content around Euro 2020 reached 7.5billion, the top post from the tournament official TikTok account alone for 2024’s tournament generated more than 73million views. TikTok is set to be huge for the World Cup and could be where the real big wins in terms of ROI lie.
Despite an unpredictable landscape, there are still real opportunities for retail brands in 2022, with effective planning and well-executed media strategies. Download the updated 2022 Global Ad Spend forecast to discover more.
Read our mid-year Global Ad Spend report in full here.
[1] Dentsu Global Ad Spend, July 2022
[2] Dentsu Global Ad Spend, July 2022
[3] Dentsu Global Ad Spend, July 2022
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[6] WFA, OUTLOOK 2022, Media Cost Inflation forecasts, May 2022