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Charting the Course: The Future of Retail Media Spend

blogJuly 1, 2024 By Damien Lemaitre, Global Commerce Director

Retail Media is expected to show the fastest growing ad spend in 2024, with a 32% year on year increase and a 3-year CAGR of 17.7% to 2026, according to the latest dentsu Global Ad Spend Forecasts. This upsurge not only reflects a financial adjustment but also heralds broader shifts reshaping the media industry as more brands, retailers, media owners, tech companies, and consumers are shifting resources to retail media. In 2024, WARC predicts that 18% of total media investments will be dedicated to retail media.  

The Rise of Retail Media 

Retail media is defined today as “the digital advertising space, retail data assets and in-store opportunities a retailer or marketplace owns, which is then made available to brands for the execution of advertising campaigns” by the IAB.  Retailers and marketplaces include the digital pure players like Amazon or Alibaba, the legacy retailers offering digital solutions such as Walmart, Tesco, Carrefour, but also other transactional platforms like booking and delivery apps, and even advertising targeted using data from those domains.   

Its rise was initially driven by the growth in ecommerce during the pandemic, where platforms grew in popularity and realized they could further monetize through advertising business models. The continued growth is partly due to many benefits brands are seeing in this channel, such as the closed loop measurement tools retail media offers, highly targeted solutions based on shoppers’ data, and access to scaled reach at efficient cost.  

However, data is definitely the main driver due to the lack of reliance on third-party cookies, a technology that was seen as essential for measurement and targeting in digital campaigns, but is now under threat due to privacy regulations and the actions of tech companies like Apple. Unlike more traditional platforms such as newspapers and content sites, retail media platforms have signed-in users, so are able to collect huge amounts of first-party (1P) data from their shoppers, which is proving an essential alternative to advertisers needing to move away from more traditional approaches. 

Now, new initiatives by tech giants like Amazon and Alibaba are further fuelling the growth of retail media by developing new formats, tools and technologies, giving brands new ways to reach and connect with audiences, leveraging extensive data resources, and expanding audience insights. 

In addition to the big platforms, retail media networks (RMNs) like The Trade Desk and Criteo have capitalized on the trend by integrating retailer 1P data from multiple smaller, often local, players into their solutions to allow advertisers to craft more targeted and effective advertising campaigns.  

To take full advantage of the opportunities within retail media, brands must transform their operations to make their ecommerce much more integrated with their media practice, and invest in the skills, partnerships, technologies, and infrastructure to support this. By breaking down silos and adopting a holistic approach to retail media, brands can unlock new opportunities for growth and success in an ever-changing digital marketplace. 

Growth through Strategic Partnerships 

The rapidly evolving retail media landscape is being shaped by acquisitions and strategic partnerships, exemplified by Walmart’s recent purchase of video technology platform Vizio, which will integrate Walmart’s data into video ad technology, and by Disney’s partnership with Kroger, which allows its US TV network Hulu to target based on the retailer’s data.  

This also highlights the shift to video, and the trend towards full-funnel retail media marketing also seen on platforms like Amazon Prime, where advertisers can advertise on connected TV using data from elsewhere in Amazon’s platforms, signalling a move from purely performance-based advertising to a more balanced approach, where branding gains more prominence. 

Sophisticated identity and data solutions enabled by partnerships are also rapidly evolving, with the rise of data lakes and cloud marketing technologies, allowing brands and retailers to merge their data, unlocking richer insights about shoppers journeys and delivering media efficiencies through clear vision of performances across all media.  

Global and Local Approaches 

Another important trend is the growing importance of local and regional players, and the need to better manage retail media investments across multiple markets and partners. Global giants like Amazon and Alibaba collectively capture a significant share of retail media investments globally but are by no means the only options for advertisers. Retailers like Tesco and Carrefour, coupled with the new super apps like Grab and Rappi that cover messaging, commerce and payments, are building a robust presence, presenting both opportunities and obstacles for brands operating on a global scale.   

For global brands, the challenge lies in achieving consistency and scalability across diverse markets with varying levels of retail maturity. Sixty-one percent of CMOs estimate that the lack of processes was the biggest barrier to scale retail media in 2023 according to dentsu research. This necessitates the establishment of new and streamlined operations and processes that enable seamless collaboration and adaptation to local market dynamics while keeping global standards in areas like targeting and measurement. 

Crucially, success in navigating this landscape hinges on fostering collaboration across markets, understanding localized consumer behaviors and preferences, and implementing flexible strategies that accommodate the unique characteristics of each region. 

Future Trends in Retail Media 

Retail media works because it delivers targeted advertising to consumers at the right moments, based on high quality data and trusted platforms. Looking ahead, retail media will evolve to meet changing trends in consumer behavior, particularly how consumers spend their time online. 

Convergence and synergies are two main industry focus areas today as we see shopping and ecommerce being embedded everywhere, driven by social commerce and shoppable media (the capacity of any media to seamlessly drive consumers to transaction interfaces). Retailers now offer more social commerce integration (see Amazon and Meta / Snap partnership, Walmart Shoppable Video Series, Grab and other food apps creating livestreaming shows). Today, brands need to holistically plan their marketing investments and strategies across all platforms and touchpoints to deliver the most efficient returns. This holistic approach accelerates the rise of new planning tools and solutions that integrate more retail media and shoppers’ data, and the rise of new measurement solutions able to connect all the touchpoints to have a full vision of the consumers.  

This integration is also reflected in the development of omnichannel media solutions across digital and in-store to offer a more comprehensive set of measurable media tactics to brands, made possible by the digitalization of in-store media (e.g., digital screens, digital windows, digital payment screens, digital radios). We’ll see more media being connected to retailers’ data coming in 2024 and beyond. 

Another accelerating trend is the rise of virtual shopping experiences, connected with immersive environments of games and the metaverse. One example of this is KFC’s virtual world within QQ in China, where they created a virtual store and let customers experience a virtual restaurant, order virtual items within the game, and even order real food for immediate delivery in the real world.   

As retail media continues to evolve, it has the potential to become more effective through the integration of measurement and analytics to better evaluate campaign effectiveness and optimize marketing strategies. 

Retail media is not the only fast-growing channel in 2024. Download the new dentsu Global Ad Spend Forecasts to stay on top of what is happening in a very dynamic year.