Blog Article

How Marketplaces Should Approach Retail Media in 2023

December 7, 2022

As retail media networks begin to mature, how should e-commerce marketplaces approach monetization in 2023? We’ll explore the biggest trends in the space, highlight key tactics marketplaces can use to better capture ad spend, and best practices to increase profitability in the year ahead.

Winners and losers in the race for ad dollars

As industry analysts predict, advertisers will spend more budget on retail media in 2023. In the US, retail media ad spend is expected to grow by over 25% year-over-year in 2023, totaling more than $51 billion, according to eMarketer

But this growth will likely be uneven. As eMarketer also shows, retail media ad spend on Walmart grew by nearly 40% in 2022. And for Instacart, growth is about to top 44% in the year. Moreover, for Amazon, the perennial favorite in the space, ad revenue is projected to grow 20%.

However, it’s a very different story with two of the leading e-commerce marketplaces in the US. Etsy’s ad business grew just over 5% in 2022, while eBay is expected to see a 12% decline.

With over 80% of US advertisers expecting to spend more on retail media across a wide variety of categories, marketplaces are seemingly being left behind. And with more retail media ad networks launching in the near future, competition for these ad dollars will only intensify. To effectively monetize their digital channels, marketplaces need to take an intelligent, future-proofed approach.

The retail media networks that will capture the lion’s share of ad budgets are the ones that are able to provide tangible performance – not just impressions or click-throughs. Especially with a seemingly impending recession and more scrutiny on budgets, advertisers will double down on their return on ad spend (ROAS).

Methodology matters: Meta vs. Twitter

Let’s consider the current state of social media advertising, in particular, how Meta and Twitter have taken widely different approaches to their ad businesses.

Twitter’s advertising arm has long catered to large brands looking to boost awareness and reach. Since impression ad campaigns aren’t directly tied to sales, they’re often the first budget cut in economic downturns. In fact, Twitter saw a drop in both ad revenue and number of advertisers in 2022 even before its acquisition by Elon Musk.

On the other hand, Meta’s ad business is focused on performance, or enabling advertisers to achieve tangible sales. This is a big reason that, despite a boycott in 2020, advertisers stuck with Facebook. 

It’s easy to drop a platform for impression ads, but it’s much harder to drop a channel that continually provides business outcomes, Eric Seufert noted. The ability to drive the bottom line through performant advertising explains Meta’s average revenue per user (ARPU), a metric that’s 66% higher than that of Twitter, as of Q2 2022.

Performance powers retail media

Heading into 2023, acquiring and retaining merchant advertisers will be critical to the success of marketplaces aiming to launch and scale retail media. Advertising can be a key revenue stream for marketplaces, so long as platforms implement solutions that provide value to all stakeholders — preserving experience for their shoppers and ensuring that even any merchant can use advertising to boost sales and visibility.

Ready to launch a performance-driven ad business? Learn more at

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Solving the personalization-privacy paradox in retail media

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How To Help Your Merchants Boost ROAS on Retail Media

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When done right, retail media can enable any marketplace to improve both conversions and shopping experience.

Christie Zhang
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