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Instacart’s revenues and profits spiked in 2022, helped by its growing ad business: That could speed up the timeline for the grocery delivery company’s long-awaited IPO.

Retail and brand sites (including mobile apps) collectively drive greater awareness, according to our proprietary survey of 1,447 consumer goods shoppers. But stores are still highly relevant in most product categories, even those with high ecommerce sales rates. Stores are most likely to drive immediate purchases.

On today's episode, we discuss how we should feel about Amazon's online sales being flat, how its ad business was able to have such a good quarter, and why the company has yet to find a mass grocery format worth expanding. "In Other News," we talk about how Pinterest has been doing and just how popular self-checkout is. Tune in to the discussion with our analyst Blake Droesch.

Starbucks has not been doing well for a long time, and even though they've tried to do quote, unquote, innovation, their ex-CEO came in from a CPG background and they thought maybe that would help at least with a different sort of sense of products maybe at the grocery store, and even that hasn't really worked in their favor.

US CPG Industry Ad Spending 2024(Ä¢¹½AV subscription required). Methodology: Data is from the Placer.ai report titled "Quarterly Retail Review: Q4 2024." Placer.ai analyzes 1.5+ billion monthly visitors across 20 million devices, 13+ million venues, thousands of segments, and 500+ mobile apps. Placer.ai is a location analytics and foot traffic data company.

Physical retail is the leading channel for product discovery, while digital channels complement it by influencing decisions after discovery. To convert shoppers, prices must be competitive, but reviews also heavily influence purchases, especially in apparel and shoes.

The retail industry spends the most on advertising by far. More than a quarter (25.7%) of all media ad dollars spent this year will come from retailers. This far exceeds the next biggest spender, consumer packaged goods (CPG), with a 16.0% share.

Some signal from cookies is better than no signal from cookies, and advertisers can use that signal to inform their cookieless tactics. But cookies will not have enough scale to support entire marketing strategies. Read the full report, Chrome’s New Path for Privacy.

And as of last November, 90% of consumer packaged goods (CPG) advertisers in Europe planned to increase their spending on retail media in the next 12 months, per McKinsey. Omnichannel retailers will have the advantage. Online grocery sales are growing, but brick-and-mortar still dominates in both countries.

An advanced ecommerce market in the UK means retail’s digital ad outlays are comparatively outsize. Retail will spend £1.89 billion ($2.33 billion) more on digital ads this year than the next largest industry, consumer packaged goods (CPG), will. Travel is still bouncing back hard from its pandemic crater.

Retailers in France will plough more into digital ads than any other industry, by some distance. This sector will spend nearly twice as much on digital ads this year ($1.82 billion) than the second-biggest spender, CPG ($0.98 billion). The automotive industry will invest the least in digital ads in 2023. Big-ticket purchases like cars always face scrutiny by consumers during a downturn.

Physical stores matter most for driving awareness. But online, social media platforms outrank multibrand retailers’ digital channels in driving product discovery, with the most pronounced impact among Gen Z shoppers.

After surging during the pandemic, growth in digital ad spend is set to slow over the next four years, particularly for consumer packaged goods (CPGs). But the squeeze on marketing budgets could actually play into the hands of retail media programs, which can often provide a direct link between marketing spend and sales, according to Dunnhumby.

The big takeaway: Consumers’ frustrations over higher costs of living are fueling their dissatisfaction with CPG brands and the broader state of the economy—despite the fact that inflation is easing and real wages are rising. Inflation fell to 3% in June, helped by falling gas prices, per the Labor Department.

Travel will spend more than $1 billion on digital ads by 2025. Total digital ad spending will continue to grow at a healthy rate through the rest of our forecast. The CPG industry is a small digital ad spender. CPG firms in Germany underindex on digital ad spending compared with their closest neighbors. Consumers in Germany are price sensitive, meaning the CPG industry faces a tough task.

Retailers can optimize CX and generate more ad revenues. Ecommerce optimization draws on traffic data to landing pages, ad experiences, product detail pages, and checkout flows to create a detailed purchase funnel.