State of the Union: 2025 Commerce Trends

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Hello, world. I'm excited to be talking to you about what is going on in the world in 2025. I'm Rachel Tipograph, the Founder and CEO of MikMak, and this is our State of the Union. We're more than halfway through the year, and there's been a whole lot that's gone on in this world. And also a whole lot for me personally.

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Excited to share with you all that. My wife and I are 37 weeks pregnant, which is another reason why I am doing this State of the Union. I want to share with you what I'm seeing, where I think the industry is going to head. As you know, MikMak works with over 2,500 of the biggest brands in the world.

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We were pended last year to $2.5 billion of global ad spend. 1.5 billion shoppers went through our system. I share this because our data is truly, statistically significant and it is consistently predicted where the world is heading. So without further ado, let's get into it. 2025 I think for all of us has not gone as planned. When I look across our customer base, which we are working with food, bev, alcohol, beauty, personal care, consumer electronics, toys, pet garden, home improvement, automotive parts, literally every major type of consumer product.

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And no matter what you're selling, no matter where you are selling it, everyone is dealing with the same three pain points. Your first asking yourself how do you generate profit in today's environment? It's more expensive than ever to bring a physical product to market, to keep it on the shelves, to get consumers to be aware that you exist in the world, let alone choose you.

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You then add the additional pressure that's probably coming from your board of directors, which is you got to do more with less because of the advent of AI, and you're really throwing your hands up in the air. How do we do this? The second is very near and dear to my heart. When I look across all major consumer product companies, there is a consistent thread in all of their earnings, which is that volume sales are down.

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That's interesting because retail media spend meaning onsite retail media spend where you're writing retailer check is up. What's happened in this industry is that this industry has become way too lopsided. We've all become way too focused on ROAs and last click attribution, because we think that's what's going to make your boss happy. But you know what's going to make your boss happy?

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Meeting Wall Street’s outcomes, moving volume sales. How do you move volume sales? By investing in upper funnel media. You have to bring new consumers into the funnel, not reach the same person at Walmart or Tesco who was going to buy your product anyway. And then finally, because of all these compounding pressures, how do you ensure that the consumers that you're acquiring will become lifetime consumers?

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And the reality is the consumer is a rational today. What's valuable to them has nothing to do with price. In fact, what we see in our data at MikMak is that the consumer's willing to spend boats loads of money on luxury goods and then not feed themselves. It makes literally no sense. And the way that you're going to gain customers for life is by being able to stay on top of these real time market trends.

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So when we look across what's happening in the market, as you know, MikMak sits at the intersection of media and commerce. And when you're appended to something like $2.5 billion of global ad spend, man, do you know what's happening in the industry? And just to put that in a frame of reference for you, if MikMak was actually a standalone media platform, we'd be the 15th largest in the world.

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We actually be bigger than someone like Spotify or Reddit. So when we look across where brands are investing their dollars, here are the most popular channels by the size of the investment that brands are making. And what you can see here is that on any given day, matter really represents 50% of our traffic, which means 50% of our brand's media budget.

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And while it might seem like Meta's gone through a dip, you're really talking about it hovering around 48% on average, the last three quarters of a brand's total traffic, where we've seen consistent growth is in Google search. And this is coming off right of the announcement of Alphabet's Q2 earnings. That literally happened a week ago. And what happened?

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Alphabet reported strong earnings. Why? Because Google search is actually resilient. Google search also includes Gemini. Gemini is the second most popular LLM search on this planet. And you can see consistent growth in Google search within advertisers. TikTok has gone through a bit of a challenging year because of the TikTok ban. Brands have been a little bit skittish around that platform, but we've seen it go from essentially nearly 14% of a brand's total advertising traffic to now closer to 10%.

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Brands still see it as a very powerful channel where you can build brand and drive conversion all at once. But what trumps essentially ROAs is brand safety. And where have we seen dollars move out of TikTok? We've seen them move in to Alphabet and Pinterest, which is why you're seeing a net positive growth for Pinterest. And then finally Trade Desk.

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They recently entered the Fortune 50, which is a huge milestone for any founder on the planet. And the trade Desk isn't just open web programmatic. They've become the biggest aggregator of CTV and offsite retail media. Snap. Modest growth. I mean, really, we're talking about going from 0.75 to really 1.1. So I wouldn't call it a home run. It's really representing 1% of a brand's total traffic.

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And then Reddit is now starting to represent around half a percent of a brand's total traffic. And as we're all aware, one of the things that the LLMs are scraping for is Reddit. So if you're not thinking about this channel, you need to start thinking about this channel, not just because consumers are there. Because also it's how generative search results are appearing within these LLMs.

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The EU, on the other hand, it's been way more stable. You can see there's been like percentage basis points, but nothing like the US where you might see like four percentage points change. By and large, when you look at EU media plans are essentially a third Meta, a quarter Google which is Google search here and then 20% TikTok.

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That really represents nearly 80% of a brand's total media investment. When we take a further step back and we look at brands globally where brands investing their advertising dollars, the majority is going to paid social follow by paid video that's online video, streaming video and CTV followed by display, which is essentially open web programmatic and then search. That is what a brand's media plan looks like today.

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And it's really analogous of where consumers are spending their time. Now, I told you earlier, consumers are irrational these days. They'll spend boatloads of money and premium and then nothing. Until now with all of the headlines around tariffs. You can read the headlines and you can certainly get scared. But what I'm telling you is don't read the headlines, read your real time data.

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And when we look at MikMak’s real time data, it's pretty clear consumers are willing to shop. Liberation day was April 2nd. The first week of April. That's when President Trump announced all of these pending tariffs, which of course have gone back and forth now over the last few months. But when we just look at the first week of every month, so April, May, June, July, what you can see is that conversion rates have essentially hovered anywhere between 7.9% and 9.9% across our entire global customer base.

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And so what you can see is that after the announcements in April, we did see a dip in May to 7.9. But now in July it's come back what, nearly 10% conversion rates the consumer is willing to spend. This is not the time to pull back. If you pull back, you will lose market share. This is the time to gain market share.

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And then where are consumers buying their products? Well, no matter where you are in the world, something has continued. Big box retailers are winning. The consumer is looking to go to a single retailer to buy their beauty, their consumer electronics, their grocery, their alcohol. Specialty retail continues to suffer. So of course, in the US you can see Walmart is that juggernaut.

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And then when we look globally, you can start to put in someone like Superdrug and Boots and DM in Germany. But all of these are major big box players. And then of course, we can't talk about 2025 without talking about AI. I've been in this industry for pretty much 20 years. My entire life I've only done one thing.

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I sat at the intersection of media and commerce, and I've never seen change like this move so quickly before the amount of change that we're experiencing in the ecosystem in 2025. I relate that to social. Between the years of 2007 and 2019. So we are experiencing 12 years of change now compressed into essentially 7 or 8 months. There's been two major announcements that I truly believe will fundamentally reshape commerce and marketing as we know it.

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One was in Zuckerberg's Q1 earnings, he came out with a very bold statement, which is that he believes by the end of 2026 that the majority of human intervention will be removed from advertising, that essentially bots, aka agents, will be doing the majority of work when it comes to advertising that really has scared marketers because of course, it puts into question job security.

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The second major trend that's happening is the consumer beginning to move to an environment like ChatGPT for product discovery. And then the latest announcement is potentially also conversion as well. Now, do I think that human intervention and human AI in commerce and marketing as we know it is going to go to zero? No, I don't. But do I think that there are certain parts of our everyday life in commerce and marketing that are going to become autonomous?

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Absolutely. And so let's dive a little into what we're seeing. So the first is when we look at real time data, we are seeing consumers begin to shift to generative search. When we just isolate ChatGPT as a traffic source in our data, we've seen a 250% increase in referral traffic from ChatGPT over the last six months. The only way MikMak sees this referral source is if our customers, meaning the brand advertisers, the brand manufacturers appear in these generative search results.

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So if you ask a question like what Japanese whiskey should I pair with my barbecue tonight? And then a MikMak customer appears. That's how we're seeing that referral source traffic. So a 250% increase in the last six months absolutely shows that the consumer is beginning to move into this environment when it comes to how AI is going to disrupt commerce and marketing as we know it.

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I want to take a step back and go higher level and listen. I'm going to make some generalizations just for the purpose of conversation today. If we're to boil down marketing, marketing is in the spirit of helping generate demand for a business or service or idea and then get someone to transact that transaction could be many things. It could be buying a product, it'd be signing up for an email.

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It could be signing up for a demo, whatever it might be. And to get someone to consider you, there's really two modes. There's discovery, meaning you're out in the world and you weren't necessarily looking for this business or service. And then there's recall. You're actually aware that it exists in the world. So the last hundred years we have all been playing in what I would describe as the human commerce marketing world.

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Meaning, every day we wake up as marketers and we are trying to engage with humans, whether it's a business to consumer or a B2B service in this new world that we're now living in in 2025 and beyond. We will continue to care about the human commerce world, but we are also going to have to care about the agenda, commerce, marketing world.

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And within this agenda, commerce marketing world, there is going to be two monumental disruptions and one we're living through faster than the other. The first is on the advertising side. When Zuckerberg made this bold statement that the majority of human intervention is going to be removed from advertising by the end of 2026, I, Rachel Tipograph actually believe him, because think about how much grunt work is currently involved in advertising.

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We have humans planning, media and writing beat briefs. We have humans logging into different ad managers to buy media. We have humans analyzing data to then make optimizations in these ad managers. And then we have humans helping us generate reports and glean insights. The reality is machines, robots, computers, agents, whatever you want to call them, they can do a lot of that work.

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Of course, we can create systems where humans can intervene, but 80% of that is probably going to be taken care of by the agent. The second aspect of disruption, which I actually think there's going to be less disruption. So my big bet is that there's going to be more disruption on the advertising side. There will be some disruption on the commerce side.

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We're already starting to see some of it, which is the consumer turning to an environment like in a lab, like a ChatGPT or perplexity to discover or recall products. The thing about the LLM is that discovery and recall are going to become one in the same, and they're going to generate just a handful of results, not infinite results.

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And it's going to remove consideration as we know it. And then there's the opportunity of course, to have bots once again byproducts for us. I, Rachel Tipograph have a bet. And my bet is that we'll see more disruption in commerce around the discovery side and the recall side, and a little bit on the purchase side. We're already seeing it, right.

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This behavior has existed. You can go to an environment like Amazon and have your vitamins, subscribe and save an auto buy for you. That's no different than a checkout agent. But the reality is we'll probably do that for highly commoditized products. Not all of it, but for some of it. But I don't think we're going to do it for high consideration purchases like buying a television or a vacation.

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So my big bet is over the next decade, we all need to say to ourselves 10% of our total GMV will come from a general checkout, but 90% will still come from humans. But 10% is absolutely meaningful. 10% is going to cause you to stand up teams around this and invest in software and services. And this is really going to cause us all to ask ourselves new questions, which is of my total marketing budget.

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How much should go towards human marketing versus a genetic marketing? What's the lifetime value of a human shopper versus an agenda shopper? What should my audience segmentation strategy be for human shoppers versus a genetic shoppers? The list goes on and on of new existential questions that we're all going to have to answer together. But my biggest takeaway for you is that I see AI as an at, not an or a verse.

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You're going to have Human Marketing and Agentic Marketing. You're going to have Human Commerce and a Agentic Commerce. We are going to have to operate in a world and become comfortable with both. So what are our big bets for at least the back half of this year? And then going into 2026, as you're all doing strategic planning? Well, the first is if you want to drive growth, you have to invest in full funnel marketing.

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If your marketing budget has become overly lopsided towards lower funnel marketing retail media, you got to take a step back. I truly believe, and I've seen this across most customers, that if you want to drive volume sales, you need 70% of that budget. But when an upper funnel marketing and no more than 30% go in, a lower, subtle upper funnel is how you bring new consumers into the fold.

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Lower funnel is allowing you to drive competitive conversion, but you got to watch out and make sure that you're not cannibalizing your organic sales opportunity. Who does this really well, you should all go check out Church & Dwight And why is beating the market for a reason. It's beating the market in terms of growth, and it's trading at a premium when it comes to Wall Street.

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This company invests in full funnel marketing, and it makes sure that every single media impression can also be a moment for conversion. Prediction number two we are living in hyper volatile times politically. From a business standpoint, from a media landscape, from a cultural standpoint. And the way to win is you got to have real time data at your fingertips to make real time optimizations.

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You cannot just set it and forget it. You're seeing this every single day in the news. If you don't have real time data at your fingertips to understand when TikTok is going dark on January 19th, or how target or how consumers are boycotting target on February 28th, you are going to be at a complete loss. You got to be able to move your dollars in real time.

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A company that's doing this phenomenally well is BIC. This is a case study from BIC in the UK, where they made real time optimizations and were able to increase their return on ad spend by 12%. And then of course, prediction number three, you knew this was coming, which is that AI is going to fundamentally reshape the world as we know it.

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It's not going to eat the world. It's going to reshape the world. And we have now entered a new era of commerce and brand growth, and the billion dollar brands that are going to be built in 2025 and beyond will continue to be built on top of real time commerce intelligence, which at minimum, we identify as media data, meaning the places where consumers spend time layered with commerce data skew level inventory basket level data, and then you enhance that with psychographic and demographic data context.

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But to win in today's environment, you're going to need to take all of those real time signals and then operationalize it across the stack. And that's where a genetic orchestration comes at. And that's how the billion dollar brands will be built. And of course we at MikMak are here to help you do that. Now when it comes to winning in generative search, which I'm sure is all on your minds, we have been studying this at MikMak across our 2,500 customers.

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The first thing that the LLMs scrape for is brand relevance. So if you're a big brand with a rich history and you've been investing in your brand for the last 100 years, you're in a great position. You're on the offense. But for emerging brands or small businesses, like it's going to be tougher times because the first thing that it searches for is brand relevance.

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The second thing that it searches for is product availability. Where are these products available in stock, out of stock price. Reviews. Shipping time. So if you don't have that data brought to all of your consumer touchpoints that the LLMs can scrape, like your websites or social or Reddit, you're also going to be at a disadvantage. So obviously when I started MikMak 11 years ago, I didn't know that that's what yellow I'm going to be scraping for.

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But here I am today with that data that we're providing to 2,500 brands. We are the universal product availability. Those are the two things you really have to focus on to ensure that you're appearing within these labs. So to wrap it up all with a bow. You've got to be platform agnostic. You need to invest in full funnel marketing, and you have to put yourself in a position to own your data to operationalize it across the stack.

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I'm wishing you the best of luck in the second half of 2025 and going into 2026. I will be going on parent leave for a few weeks, but you've got the entire MikMak team here to help you. If you ever need anyone's help. All you got to do is email hola@mikmak.com. And if you want to keep engaging with us on this journey, go check out my podcast, BRAVE COMMERCE that Adweek distributes.

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Go to our website to check out more thought leadership, and we will be going to events this fall around the world. GroceryShop, Digital Shelf Summit Data and Analytics Summit, Digital Grocery Summit. We hope to see you there. Thank you.