- Retail media will make $130 billion globally by 2025, according to a new Morgan Stanley report.
- Adtech firms that help retailers build retail media businesses will grab $26 billion from that market.
- Criteo and The Trade Desk stand to benefit the most, according to the report.
By 2025, retail advertising will be $130 billion industry with retailers pocketing $104 billion and the adtech firms that work with those retailers grabbing $26 billion, according to a new note from Morgan Stanley.
In a note published on April 4, Morgan Stanley analysts laid out how retailers like Amazon, Walmart, and Target will give the ad industry a significant bump over the next couple of years. The analysts wrote that retail advertising made $80 billion last year, excluding China, and will make up 25% of online ad spend by 2015. Retail media will also drive 45% of new online spend by 2025.
Morgan Stanley’s analysts singled out adtech firms Criteo and The Trade Desk as two of the biggest winners in the growth of retail advertising, outside of Amazon. They have opportunity to grab the most share of the retail media market, compared to other indie adtech players.
Both firms help retailers sell ad space and manage data that advertisers use to target ads. Criteo works with retailers to power both ads on and off of retailers’ e-commerce sites, and Morgan Stanley expects for it to capture 15% of the market for ads on e-commerce sites by 2025.
The Trade Desk works with retailers to power programmatic ads off of retailers’ e-commerce sites and is expected to have a 5% share of that market by 2025, per the analysts.
However, this push to expand offsite is a big challenge, and there’s no guarantee The Trade Desk can seize this market.
“The technical and data security challenges are much more significant than for onsite,” the analysts wrote in the note about offsite ads. “With that in mind, we will be closely monitoring advertiser feedback and any data points on The Trade Desk’s ability to continue scaling offsite retail media.”
To be sure, neither Criteo nor The Trade Desk are positioned to be the dominant player in retail media. Amazon still controls 47% of the total retail advertising market, and has its own adtech and data tools, so it will remain the biggest player in the space according to Morgan Stanley.
While Morgan Stanley does not expect either Criteo or The Trade Desk to work with Amazon, retailers like Walmart, Best Buy, and Target will lean on them to quickly build their own ad businesses that can compete with Amazon’s.
“For most retailers, working with a partner like The Trade Desk or Criteo is a more economically feasible and attractive option, particularly because many retailers are more comfortable sharing their highly sensitive customer data with these smaller/independent platforms,” Morgan Stanley analysts wrote.
Other winners include data firms LiveRamp and Snowflake, because retailers and advertisers will need to exchange first-party data to measure ad performance. Both LiveRamp and Snowflake provide advertisers with data clean room tools used to mesh first-party data in privacy-safe environments. LiveRamp also has its own ID product that it pitches as a way to build audiences for advertisers without using personally identifiable information.
“Keeping data safe and secure is critical to the success of retailers and their brand partners,” wrote the analysts.
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