Retail media ad revenue hit $43.7 billion in 2023, surging 16.3%

Here’s the thing: 

Despite concerns about privacy laws, attribution loss and economic instability, advertisers keep investing heavily in online ads — with retail media standing out as a fast-growing medium. 

Advertisers spent a record $225 billion on digital advertising in the U.S. last year, a 7.3% increase year over year, according to the Internet Advertising Revenue Report published last week by the Interactive Advertising Bureau (IAB) and PwC.

In addition to retail media, other top channels include connected TV (CTV) and audio, which both saw double-digit ad spend growth in 2023. 

Data debrief: 

Retail media was a key driver of growth in the U.S., with revenue up 16.3% year over year, reaching $43.7 billion in 2023, according to the report. The IAB report notes that “key e-commerce players are all expanding their retail media platforms to enable future growth.”

Video, including CTV and over-the-top (OTT), also experienced double-digit growth with 10.6% year over year growth, bringing in $52.1 billion in 2023. For the first time, IAB broke out the CTV and OTT components from overall video advertising, finding that 42% of that revenue was generated from CTV and OTT, declaring that together they expect the combination to be “the fastest growing channel in 2024.”

Meanwhile, social advertising grew 8.7%, to $64.9 billion; audio advertising grew 18.9%, reaching nearly $7 billion; and search and display advertising grew 5.2% and 4%, respectively, to $88.8 billion and $66 billion, though the report notes that their growth is slowing.   

Why it matters: 

Retail media’s impressive growth highlights its appeal and effectiveness in capturing consumer attention and driving results for marketers. Retail media connects brands to customers when they are in a shopping mindset; furthermore, it’s measurable, so that spend can be attributed to sales.

Retail data can also power ad campaigns on channels such as CTV, audio and social media, which allows advertisers the ability to reach consumers at any point on their digital journeys.

For marketers, retail media has undergone a transformation “from boring to brilliant,” to quote Forbes magazine. As a channel, it’s powering the growth of the whole digital advertising ecosystem.

“Despite inflation fears, interest rates at record highs and continuing global unrest, the U.S. digital advertising industry continued its growth trajectory in 2023,” said IAB CEO David Cohen in the report. “With significant industry transformation unfolding right before our eyes, we believe that those channels with a portfolio of privacy-by-design solutions will continue to outpace the market. For 2023, the winners were retail media, CTV and audio, which saw the highest growth.”