Retail media: were we right to get so excited?
The year began with a bold forecast.
At The Media Leader‘s annual invite-only Year Ahead event in January, GroupM explained how retail media will be the fastest-growing segment in the advertising industry. WPP’s GroupM, the world’s largest media buyer, had forecast this channel to be worth $110.7bn in global revenues.
This growth, media leaders heard, was down to overseas merchants like China investing, non-endemic brands getting in on retail media and a switch from offline to online shopping habits. In the UK by 2027 it is forecast to be worth £6.5bn and had grown by 28% in the last year.
While it will take a while for international media buyers and researchers to conclude whether 2023 really was ‘the year of retail media’, it’s certainly been a busy year.
The wisest among us could see this coming. In a column in December 2022, The Media Leader columnist Nick Manning said: “Retail Media Networks will never set pulses racing, but they will be a far more important part of the advertising market than many of their higher-profile peer group.”
Since then, over the last year, retail media has been described as “the fastest-growing segment” in the advertising industry, “the third wave of digital”, “one moment after the Big Bang”, and “a wildfire across Europe”.
Our own Future of Media conference in London in October has a dedicated session for the Future of Commerce Media, and features sessions such as “Can everything be a retail media network?”. Speakers include Olya Dyachuk, data-driven media director at Heineken, and Sebastien Bourne, head of media for North-West and Central Europe at HP, with many more set to be confirmed.
What lies behind the idea of ‘can anything be retail media’ is the insight that, in terms of what’s being bought and sold, retail media is more than just a market where retailers find ways to run ads in front of customers on their own properties. In a world where data can be used without compromising people’s privacy, any large advertiser with a lot of customer data can, in theory, get in the retail media game.
For example, banks like Revolut, taxi companies like Uber, delivery companies like Deliveroo and fashion retailers like ASOS are developing ad offerings.
These media networks are not just available to brands that sell directly on that platform either. Notably, non-endemic brands like Sky and ITVX activating campaigns for their streaming services on Deliveroo.
Meanwhile, broadcasters like Channel 4 and ITV have signed respective deals with Sainsbury’s Nectar 360 and Tesco’s Dunnhumby to share first-party data and allow for cookieless contextual targeting.
Ad tech giants like Criteo have also been involved in agreements with Uber, Deliveroo, Target and Walmart.
Fast forward to June, and GroupM’s This Year, Next Year report had a new, larger number to shout about. It had upgraded its growth forecast for retail media to 9.9%, for a total $125.7bn that represents 14.4% of all advertising. By 2025, it is projected to surpass $140bn.
But it’s not just the growing numbers that are focusing minds in the media and advertising industry.
A panel at the Future of Brands in April heard how retail media can offer performance benefits, but that its full funnel brand capabilities which are also being overlooked.
Jessica Chapplow, managing partner, head of ecommerce at Reprise Digital, highlighted: “Retail media networks aren’t anything new by any means, but what is interesting is that the sophistication of them is massively taking off, especially if we think about the the last 18 months, we’re seeing a lot more refinement in terms of the data story, the propositions and also the teams that are being built out.”
“One of the common misconceptions we see is that it tends to reside more in the optimisation and just purely as an activation tactic, when actually retail media as a whole is a strategic play that sits far more upstream,” she added.
Stacy Gratz, regional managing director for media at Tesco’s Dunnhumby, which has built the supermarket giant’s Media & Insight Platform, said that while the US is still two years ahead of UK retail media, with advanced players including Amazon, Walmart, Target and Kroger.
However, Gratz added, there has been a lot of education on the UK agency and client side about what retail media can actually do, especially with the range of on-site, in-store and off-site partnerships available.
And yet there are limits. Kiesse Lamour, Wunderman Thompson’s global head of media, commerce, warned The Media Leader Podcast last month that not everyone can launch a retail media network as it involves a lot of work and requires a lot of first-party data and expertise.
On the same episode Simon Akers, founder of marketing consultancy Archmon, predicted that travel is the new frontier because of these brands’ wealth of first-party data and opportunities to contextually target consumers in the right mindset.
To make the most of retail media, Akers called for a more unified approached to strategy.
“We should be treating retail media as a contributor to the overall shopper strategy,” he said. “It’s complicated because you’ve got brands, you’ve got the shopper team, you’ve got the retailer… [but] how do we integrate the needs of the shopper team with the needs of the media team and ensure that we’re all helping each other out?”
Timing is also a big reason why the retail story of 2023 hasn’t been fully told. As the industry looks ahead to the all-important fourth quarter, with the festive period so crucial to advertisers’ and media owners’ fortunes in an otherwise difficult year, how retailers better use their data and online properties is more important than ever.
However, as The Media Leader noted in July, the space is heavily fragmented. A recent Publicis Groupe survey also warned that retailers and brands want retail media networks to have a better quality advertiser experience, range of inventory, data collaboration, measurement and targeting capabilities.
Reacting to Pubmatic’s self-serve platform launch in July, editor Omar Oakes warned: “Different large retailers have adopted very different platforms and offerings and their advertisers may have to rely on multiple technology layers. Clearly major adtech providers like PubMatic are hoping to benefit from a more simplified (or omnichannel) offering that will likely appeal to a range of international advertisers.”
Given that so much of retail media strategy seems to depend on how advertisers choose to use data with other companies, their ability to collaborate could be vital, too.
Watch this space: The Media Leader has a dedicated retail media section on its website where you can follow this publication’s news, analysis, opinion and conversations about retail media.
What are we not reporting? What does our audience need to know? What’s new in advertising and media? Contact ella.sagar@uk.adwanted.com.