YouTube Plays Second Fiddle to Retail Media for Home Goods Advertisers

MediaRadar ,  June 2, 2022

It’s not everyday that advertisers aren’t chomping at the bit to hand YouTube their ad dollars—but that’s precisely what’s happening as Home Goods advertisers opt for retail media in lieu of the video giant.

In Q1 2022, Home Goods advertisers spent $187mm on ads on retail sites like Amazon, Walmart, Target, Kroger and The Home Depot.

Meanwhile, they spent just $77mm on YouTube ads.

What does their penchant for retail media tell us about their overall digital advertising strategies? Do these advertisers see a future with YouTube—and can we predict anything about their strategies moving forward?

We dove into our data to find out.

Retail Media Has Found a Home

The mainstay tactics in most advertising strategies, like YouTube and Google, have firmly entrenched themselves into the digital advertising world thanks to their longevity and a laundry list of success stories that give advertisers the confidence they need to invest.

Retail media is ignoring that story arc.

Despite being relatively new in the grand scheme of things, retail sites have already found a home in the hearts of Home Goods advertisers, especially those promoting Laundry and Cleaning products, Mattresses, Dish Detergent and Furniture. (These top five product categories accounted for 48% of Q1’s ad spend from Home Goods advertisers.)

Since May 2021, Home Goods advertisers have invested more than $622mm in ads on major retail sites.

Unsurprisingly, much of this spending—nearly $210mm of it—came in Q4 as advertisers increased their buys leading up to the holidays. After December, which topped out at $76mm, spending on retail sites decreased following the holiday surge.

Now, with Q1 in the books, it’s clear that Home Goods advertisers are returning—February and March numbers have already neared pre-holiday levels. And over half of that is going to good ol’ Amazon; almost 1.5k companies spent more than $187mm to promote more than 2k brands, and 55 percent of that went to the e-commerce giant. (Which makes sense, given Amazon’s maturity in retail media.)

Still, Walmart got 17%, while Target, Kroger and The Home Depot got 7%, 6% and 3%, respectively.

There’s no denying Amazon’s dominance in retail media—but as other retailers enhance their data and capabilities, expect more ad dollars to go their way.

Although new retailers are entering the media game—Ulta Beauty recently introduced a revamped media network—much of the pressure on Amazon will come from Walmart.

Earlier this year, Walmart announced upcoming improvements to its media network, Walmart Connect, including ad formats that’ll help brands reach consumers when they’re watching CTV.

Facebook Meets its Match in Native Ads

YouTube isn’t the only advertising giant feeling the wrath of retail media—Facebook’s starting to feel it, too.

Case and point: When we looked at our data, including data from retail sites, we saw that Home Goods advertisers spent 40% of their dollars on Native advertising in Q1 2022 while spending 29% on Facebook.

If we remove retail media from the data set, Native advertising drops to just 3% while Facebook jumps to 48%.

The sharp decline in Facebook spending when retail media enters the fray is a talking point in and of itself. The fact that these advertisers are moving away from such a tried-and-true channel in favor of something relatively new is intriguing.

The real talking point, however, is the question: why the love for Native Ads?

Well, for one, the future of digital advertising will be all about creating the best and most seamless experience for consumers. Gone are the days when advertisers can just pop some ads online and expect their target audience to take them in stride.

GDPR and CCPA are proof of this.

All advertisers, including those in the Home Goods industry, know this.

Native ads deliver on this necessity.

Combine the inherent makeup of Native ads with the high-intent data from these retailers and Home Goods advertisers have everything they need to deliver incredibly timely and relevant ads to consumers—a strategy that is sure to attract even more ad dollars from industry advertisers moving forward.

YouTube Gets the Hand-me-down Ad Dollars (for Now)

It’s not often that we can say YouTube is getting the short end of the stick.

But when it comes to attracting the ad dollars of Home Goods advertisers, that’s exactly what it got so far in 2021.

During Q1 2022, ad spending on YouTube was over $4.4b, but Home Goods advertisers accounted for just 2% of that ($77mm).

While that’s a low amount compared to what Home Goods advertisers are spending elsewhere, especially on retail media, it appears that YouTube is growing on some of these advertisers.

In Q1 2022, we saw a 68% YoY increase from the first quarter of 2021 as YouTube’s top-spending categories increased their ad buys.

Spending from Home Improvement brands was up by nearly 400%, with top names such as Carsen Clamp (same brand name), Chervon (Ego Power+ and SKIL) and Product Bliss (Riggable) increasing their spending.

Meanwhile, Household Maintenance increased by 77% in Q1 YoY thanks to significant investments from P&G (Febreze, Gain, Microban 24, etc.), Reckitt Group ( Air Wick, Lysol, Resolve, etc.) and The Clorox Company (Clorox and Pine-Sol).

In addition to the increase in spending, the number of new advertisers on YouTube reveals their growing fondness of the platform.

In Q1, nearly $18mm (23%) of total spending on YouTube came from brands that didn’t do so in 2021.

It’s Retail Media’s Game to Lose

If the recent spending habits of Home Goods advertisers tell us anything about what their future strategies will look like, it’s that retail media will be at the heart of them—and that makes sense.

Even in its relatively nascent status, retail media’s already a powerhouse, offering an unrivaled chance to reach consumers who’ve shown true purchase intent in a way that doesn’t get them calling for more privacy regulations.

That said, the recent increase in YouTube ad buys goes to show that the video giant isn’t going to sit idly by while retailers gain even more steam.

Will YouTube continue to close the gap? Undoubtedly. Video’s too ingrained in society for them to ignore it.

But we’re still in the early stages of retail media’s evolution—and it’ll only get stronger.

As it does, expect even more ad dollars to go its way.

To learn more about the data behind this article and what MediaRadar has to offer, visit https://mediaradar.com/.