My learnings to date: An overview of the retail media sector

After six years in media agencies, spanning roles from social media to martech, I’ve recently embarked on an exhilarating journey into the world of retail media. In my first two months, I’ve learnt invaluable insights from knowledgeable colleagues and attended premier industry events like Retail Media X and Mad Fest. Here’s some of what I’ve retained:  

The digital advertising landscape is evolving rapidly, with cookie tracking becoming increasingly obsolete. Despite delays in Google’s cookie deprecation, the shift away from third-party cookies is inevitable, paving the way for a new advertising medium that has the industry buzzing: Retail Media Networks (RMNs).

You may soon see the acronym RMNs everywhere. Retail Media Networks leverage first-party consumer data to offer targeted digital advertising. With the decline of third-party cookies, first-party data has become paramount. As a result, every retailer, publisher, and marketplace with a substantial audience is eyeing this new revenue source, leading to an explosion of RMNs. 

The sector has witnessed a meteoric rise in recent years, driven by marketers’ increasing demand for measurable return on ad spend (ROAS). According to the most recent retail media sector report, “retail media ad spend surged from $42 billion in 2018 to $125 billion by 2023.” This growth shows no signs of slowing, as more brands recognise RMNs as a crucial component of their marketing strategy.

Retailers

They provide essential first-party customer data backed by real transactions. Loyalty programs like Nectar can deliver data points from 22M active card users who swipe their card in-store or online, enabling detailed marketing strategies and insights for brands. 

Agencies

Acting as intermediaries, agencies connect brands with retailers, managing the complexities of advertising campaigns across platforms. They enhance the effectiveness of retail media campaigns by leveraging their expertise, technology, and industry relationships. 

Brands

Brands drive demand for advertising inventory offered by retailers. They are responsible for content creation, performance evaluation, and defining success metrics, often reallocating budgets from traditional advertising channels to RMNs. 

Tech Partners

These partners provide the technological infrastructure needed for sophisticated, data-driven ad campaigns. They offer tools and expertise in data management, analytics, personalization, security, and compliance. 

Although RMNs have existed for decades, they have gained significant prominence in the past 3-5 years. While spending in this sector is growing rapidly, it still lags behind other key channels like social media, search, and TV. Over 52% of retailers worldwide are adopting or in the process of adopting RMNs. Amazon currently commands over 75% of the retail media market share, but other major players like Walmart, Sainsbury’s, and Tesco are emerging.

Several challenges need to be addressed before RMNs can capture a larger share of marketing budgets. Key concerns include fragmentation and inconsistency in measurement. With new networks emerging daily, brands and agencies face the challenge of deciding where to invest their limited budgets. 

Unstandardised measurement and ad formats also hinder adoption. Brands with limited budgets or agencies working with brands often choose familiar networks, which isn’t ideal for newcomers. Additionally, inconsistency in measurements makes it difficult to evaluate success uniformly. Marketers expect detailed measurement frameworks due to the higher costs associated with retail media campaigns.

The retail media sector is set for continued expansion, presenting a significant revenue stream for retailers and publishers. Investment is expected to accelerate, with standard measurement frameworks being established. IAB Europe recently released a comprehensive European Retail Media measurement guide to address the lack of standardisation. 

Personalised, targeted content and experiences will become the norm, with AI playing a crucial role in content creation, audience segmentation, reporting, and operational efficiency. Effective use of data clean rooms will also be key, providing secure environments for advertisers and publishers to collaborate without sharing sensitive information directly. 

For retailers, unifying off-site, on-site, and in-store solutions will be crucial to compete, ensuring seamless customer experiences across all touchpoints. 

Retail media is no longer just a potential future opportunity—it is here now. Marketers must adapt quickly or risk being left behind. Early adopters will shape the future of RMNs, while RMNs themselves must invest in technology, skilled staff, and collaboration with tech providers, agencies, and brands to thrive. 

If you are an agency representing a client that is currently selling through Sainsburys and Argos and are open to learning more about the opportunities retail media represents, let’s connect and discuss further. We are on hand to assist with any briefs from any of our agency partners. Using our wealth of insights from our customers’ transactions both in-store and online, we offer strategic, data-led planning to all brands looking for optimum performance in the ever-growing retail media space. Please reach out to me for any further details – ahmed.shide@nectar360.co.uk