Retail media is much discussed and easily misunderstood, but most predictions put it at the heart of the evolving media landscape. So what are we dealing with? 

What is retail media?

Retail media is a fast-growing advertising and marketing opportunity built around the media assets and first-party data of large retail chains.

Working with brands, retailers use their physical platforms (such as in-store screens and shelf-edge displays), their digital platforms (websites, apps and email) and their data to build and target full-funnel campaigns in-store, online and in the broader digital space.

 

Retail media allows advertisers to engage consumers across various touchpoints through the shopping journey and potentially “close the loop” - ie. connect advertising spend directly to customer purchases.

What are the numbers?

The sector is booming. According to IAB UK's Futurescape Barometer, digital retail media is expected to reach £8.6bn in 2030, up from £4.4bn this year. Data from the National Retail Federation puts worldwide retail media ad spend on track to surpass £80bn ($100bn) this year, making it “bigger than TV”, according to a widely reported claim made last year by Tesco.

Retail media’s growth is actually slowing, in relative terms, but it will still outpace all other digital formats for some time to come. The 30.8% surge of 2023 was an unrepeatable boom, but annual growth will remain in the teens - usually ahead of digital video, display and search - for the next few years, according to eMarketer forecasts.

Why is retail media growing so fast?

In challenging economic conditions, marketers are prioritising platforms that drive measurable outcomes. That means ad spend is drawn away from the top of the funnel - say, CTV or online branding campaigns - and instead flows into channels with very evident returns, including retail media.

For retailers, retail media networks represent a valuable way to monetise customer data and site traffic. For brands, retail media networks offer something even the major tech platforms lack the capability to do: robustly track offline sales against online and multichannel marketing.

By connecting ad exposure directly to sales outcomes using retailers’ first-party data, retail media creates a full-funnel attribution model, from awareness to conversion, allowing brands to clearly measure return on their ad spend.

Who is driving it?

Most significant retailers are well into the process of building a retail media network (RMN) of their own. And though consolidation will surely come, for now it’s every man for himself. According to estimates, there are around 275 RMNs and counting. The top RMNs include US giants such as Amazon, Walmart and Target, while in the UK, retailers such as Sainsbury’s Nectar360, Tesco, Asda, Ocado and Boots lead the line.

What’s also changing is the depth and breadth of brands’ engagement with the retail media opportunity. Brands on average engage with six RMNs today, according to Skai’s State of Retail Media study, but they expect to have added a couple more by the end of this year, and to be doing business with eleven by the end of 2026. 82% say retail media delivers good or excellent results.

On a global level, the UK and US are leaders in the space, but with different strengths. The US’s leading retailers bring vast scale, and are heavily sophisticated in digital, while the UK is highly evolved in in-store retail media and using insights to integrate campaigns across in-store, onsite and offsite.

What does the future hold?

“All media will have become retail media by 2030,” according to IAB UK. That means that more and more media platforms, including TV and other channels, will incorporate shoppable formats and use retail data for targeting and measurement. And meanwhile, the distinction between "traditional" media and retail media will diminish as retail media networks expand and integrate with various media platforms.

CTV represents an obvious partner for transactional retail media data. At the same time, e-commerce is expanding in a parallel direction. TikTok Shop sales in the US were recently reported to have increased 120% year-on-year. Amazon is the biggest retail media titan of all, and its Amazon Retail Ad Service lets other retailers use its ad tech to manage contextually relevant campaigns on their own sites.

For the physical retailers, measurement around incrementality and ROI is the nut to crack, and RMNs that can prove their value will be the ones that make it to the next round.