Retail media has exploded into the retail mainstream in 2024, dominating headlines and balance sheets alike. With retailers looking to generate extra revenues, it makes sense to leverage all that rich first party data that they have. And boy, have they.
Conservative estimates value retail media at $125bn to $150bn in 2023, however it is likely higher still in 2024, not least because many of the world’s largest retailers who are running retail media networks aren’t publicly listed so we don’t see their figures. What we do know from our own RetailX Retail Media report is that 20% of all digital ad spend in 2024 was pushed through retail media and that 52% of retailers worldwide have adopted it to some degree.
Of course, retail media has been around for many years, yet 2024 has proved pivotal to both its growth and awareness among marketers, retailers and consumers – and what better way to chart the rise in that awareness than through key stories from the year’s timeline?
The Retail Media Almanac
To help frame the growth in retail media, Internet Retailing and Retail MediaX editor-in-chief Colin Lewis has distilled the retail-media-year-that-was into seven key stories that chart not only the key issues that have shaped the sector in 2024, but offer an insight into where we are heading in 2025.
These have been compiled into the Retail Media Almanac 2024 – a compilation of the year’s most impactful columns and thought leadership from the Retail Media section of Internet Retailing.
So what does it tell us?
#1 Retail media changes marketing
Many think of retail media as targeting users at the online – and increasingly offline – point of sale and, while this is of course one of its strength, it is increasingly being used to build brand, change trade terms and shape consumer behaviour. This has forced marketing teams to restructure to accommodate retail media. Now trade, shopper, digital media and brand marketing teams work with different objectives, different KPIs, different datasets and are segregated as a result.
What is the best way to do this? No one size fits all – the key is to try different structures and approaches. The basic starting point is to just get the teams together in one room. Because silos exist, no one talks to each other and, in many cases, don’t even know what the others are doing – or were even in the same building. Get people together and see what happens.
#2 Think you know your ROAS from your ROI, your ROPES from your ROPO?
Advertising has always been based around metrics: you have to measure what impact your ad spending is actually having. The rise of digital media and now retail media has fragmented this measurement dashboard.
Everyone talks about measurement, measurement frameworks, data, incrementality, ROI, ROAS, iROAS, or standardisation as though they are talking about the same thing. However, no-one is ever talking about the same thing. Instead, they are talking about the different marketing goals require varied metrics – instore is different to online; alcohol sales are different to fashion and so on.
Traditionally, marketers are using ROI and ROAS as their main KPIs to measure how impactful their ads are. And that works up to a point, but what about the more hybrid nature of how consumers shop? Perhaps it is better to look to measure ROPO – research online, purchase offline – to take into account how ads impact all sales too? Or even ROPES (Research On-site, Purchase Elsewhere Share) – the ratio of off-site buyers to on-site researchers within a category; or adding in Amplifier Ratio (AR): – a proxy for amplifying ROAS by comparing on-site purchases to off-site purchases within the same category?
Only by being creative with these things can you truly start to get a handle on the impact of retail media both as a retailer and an advertiser or agency.
#3 The retail media ‘Cambrian Explosion’
Retail media in 2024 has seen an explosion of ‘life’ akin to the ‘Cambrian Explosion’ seen 540 million years ago – and much like the boom in technology a decade ago. 2024 has been the year where retail media tech as similarly gone from being a ‘simple sponge like organism’ to complex life.
And this is having a profound impact on marketing. Retail Media is similarly eating away at earlier ‘structures’ such as trade marketing, shopper marketing, Google and Meta. The use of widely available tools and technologies that can be used as building blocks for new Retail Media capabilities is just starting.
The core retail media technology landscape has been dominated by Criteo and Citrus Ads (now Epsilon). However, there are a new generation of built-for purpose RM technologies that are either seeking to replace these incumbents or to unbundle valuable component parts.
As new technologies and startups rise to meet the challenges, they’re laying the groundwork for the future of retail and advertising and innovations in retail media won’t slow down as the industry is so ‘early’ in its development. If anything, it is poised to rapidly accelerate in 2025. For example, AI video tools are the perfect match for retail media as they are perfect for brand building, product discovery and conversion.
#4 The ad load trap
Avoiding trapping consumers in a spiral of sign-ups, pop-ups and ads is key to a valuable retail media proposition – and the key lies in relevance.
Relevance matters. while it’s tempting to add more ad slots and push revenue higher, this will lead to trust going down. Never prioritise revenue over relevance. The long-term success of retail media for every part of the industry – retailers, advertisers, AdTech, marketers, agencies – hinges on this as relevance drives engagement and engagement drives revenue.
There are some key ways to do this – download the Almanac to find out how – that include framing all retail media strategy decisions through the lens of relevance to consumers, focussing not just on performance, but on the performance-relevance balance and A/B testing that looks at success based on relevance.
This will lead to more effective retail media networks, better use of the ad real estate available and keep consumers from being trapped by ads – and that means happy customers.
#5 Non-retail retail media networks
The allure of retail media hasn’t been lost on all other consumer-facing businesses. Welcome to the world of commerce media.
Any business with lots of good first party data and insights can aggregate that an create a retail media network. Non-retail media networks might end up having a unique winning proposition, as they are privacy-safe, deep with data and in enclosed environments that can capture attention.
Many of these non-retail media networks have loyalty programmes that skew ABC1 with audiences that are very hard to reach by any other media and so luxury brands, automotive companies, financial services firms, airlines and hoteliers are all starting to leverage their unique audiences.
Chief among the early adopters are JP Morgan Chase, which targets bespoke media at some 80 million customers, Marriott Hotels, which leverages its 164 million loyalty card users and PayPal, which handles the payments of 400 million users for 36 million retailers. These companies have reach and they are starting to use it.
#6 Shareholders take note
Back in 2021, investment bankers Goldman Sachs wrote an investor report called ‘The Merchant-Media model: A new era for retailers as ad platforms’ about Retail Media. It was the first investment bank to see the opportunity.
But how has that opportunity evolved since?
The quote from Goldman in its report that mattered was: “We [Goldman Sachs] believe retailers in the US are positioned to generate $15bn to $20 bn of e-commerce oriented retail media revenue from CPG manufacturers by 2025; the figure should be substantially larger when we contemplate the potential to tap into media streams from electronic, apparel, sporting goods and other manufacturers for some retailers. While AMZN has to date captured a disproportionate share of the income, we believe Walmart, Target and Kroger are brick-and-mortar leaders where the opportunity appears underappreciated. For Walmart specifically, we believe this new media income stream from CPG could provide a 6-7% EBIT growth tailwind”.
Walmart has grown to a be a $3bn-plus retail media business with a very high margin due to the percentage of sponsored products. Target is claiming its retail media business, Roundel, was close to $1bn in 2023, on the back of $106bn revenues.
This has an obvious impact on retailer performance and adds significantly to the micro-margins that these players generally accrue. And shareholders are taking note – driving up value in those retailers that have it nailed, those that have untapped potential and in the tech companies that are making it happen.
#7 How CTV completes the picture
TV was always the place for your ad to be seen. It was where you could tell a story, where you could build a fan-base and where you could create ‘art’ from advertising. The fragmentation of TV services and the rise of streamers, however, has made it a hard place to see how impactful your costly TV ads are.
However, that is changing. Retail media networks run by companies such as Amazon – which has its own Prime CTV platform – along with self-serve ad technology is opening up streamed TV ads to smaller and smaller advertisers and making it a key component of retail media.
The Amazon example is an interesting one. It has been experimenting with Prime TV advertising and it has the largest self-serve SMB users of its existing retail media services. These SMBs are now experimenting with advertising via TV and adding a whole new layer to their retail media strategies – and generating new ways to advertise for smaller brands. This is going to be something the explodes in 2025 across platforms, many of which are already toying with augmenting their stagnating subscriptions revenues with new ad streams.
So, there you have it: the seven key developments in retail media in 2024. Download the Almanac to dive (much) deeper into all these areas and let us know what your views are – and we look forward to seeing you at our Retail Media X events in 2025.
