According to Skai’s Q2 2024 Digital Marketing Quarterly Trends Report, spending on retail media, paid search, and paid social have all climbed, despite increasing costs across these channels.
Retail media led the way with a 21% year-over-year growth, the report found. Paid search and paid social also saw increases, with YoY spending up by 6% and 13%, respectively.
However, these gains have been accompanied by higher ad costs. The cost-per-click (CPC) for retail media and paid search, as well as the cost-per-thousand impressions (CPM) for paid social, have all risen consistently over the past year. This increase in costs has slowed the growth of clicks and impressions as marketers adapt to the higher expenses.
Retail media has demonstrated resilience, with a 12% YoY rise in conversion rates that closely aligns with the increase in CPC. Despite the higher costs, conversion volumes surged 18%, highlighting the ongoing effectiveness of retail media campaigns.
Nevertheless, the decreasing return on ad spend (ROAS) across all ad types on Amazon indicates that marketers need to refine their campaigns, focusing on audience targeting and efficient budget management to sustain profitability, eMarketer says.
A forecast from eMarketer predicts U.S. retail media ad spending will rise 26% this year to $54.28 billion, with projections reaching $128.87 billion by 2028.
Says eMarketer: “Rising costs in digital advertising costs reflect a broader trend of higher prices across all major channels, posing challenges for marketers who must balance increasing ad expenses with maintaining effective campaign performance… The consistent growth in retail media, despite these cost pressures, highlights its importance as a core channel to drive conversions and revenues.”
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