As the noise around a US recession grows louder, advertiser demand is expected to take a hit, and retailers banking on ad revenue from retail media might need to look elsewhere for spare change. Retail media, growing at roughly 20% YoY, has become a core component of planning between brands and retailers, making it less susceptible to media market volatility. However, since it’s a relatively new marketing channel and hasn’t been through a significant recession yet, it’s hard to say definitively, experts told Retail Brew. Separately, advertising research firm World Advertising Research Center (WARC) has cut its global advertising forecast by $19.8 billion, citing overall macroeconomic uncertainty. As advertisers face intense scrutiny to justify ad spend, three experts told Retail Brew that while retail media isn’t immune from a recession, it may be more resilient compared to other advertising channels. The throughline is advertisers tend to rely on performance-based ad channels with measurable ROI during economic downturns. Cautiously optimistic: “I don’t think it’s recession-proof, but retail media is more recession resistant than other channels,” Andrew Lipsman, independent analyst at Media, Ads + Commerce, told Retail Brew. “The primary reason for that is that in recessionary times, there tends to be a flight to certainty—in this case, a flight to performance advertising—where CFOs are demanding higher accountability for media spend. So, retail media, by virtue of being very measurable and also tying directly to brand sales, is one that’s least likely to feel the effects.” Neil Saunders, managing director at consulting firm GlobalData Retail, agreed that retail media might have a better chance to attract ad dollars given its ability to provide performance results. “A recession will cause all companies to review marketing spend and this will put some pressure on retail media,” Saunders told Retail Brew in an email. “However, what firms will look for is the effectiveness of their marketing spend and they will try to consolidate it into channels that drive the best results.” “On this front, I think retail media may be more recession-proof than other media,” Saunders added. Continue reading on Retail Brew.—VC |