GUEST COMMENT Why the biggest challenge for retailers will be deciding if they are media owners

Retail media is increasingly becoming both distinct advertising propositions in their own right and hubs that enhance other media and ad streams – working out where yours sits is one of the biggest challenges for 2025, says Lee LeFeuvre, Chief Commercial Officer, SMG

There are two emerging schools of thought about the future of retail media. The first is that retail media networks (RMNs) will become significant advertising propositions in the form that we have traditionally understood media – a tangible advertising estate wrapped around an experience. Ultimately the ‘retail’ will drop out of the name and Tesco, Co-op, Boots, Sainsbury’s, Asda, The Very Group et al will run full-blown media operations.

If you look at the trajectory of investment that’s been suggested from various sources over the last 12 months or so, and at the level of capex investment from RMNs, you can see that some retail media players in the UK, and certainly the big retailers in the USA, believe they can stake a claim to be fully fledged media operations.

Then there is a second school of thought – that retail media is in effect a hub operating between other media and enhancing TV, OOH etc. with sales and loyalty data that will enhance full funnel performance and, ultimately, will enable brands to increase performance in terms of hard metrics like marketing cost per conversion (CPC), ROAS, market share etc. In this way retail media becomes an integrated layer touching all media planning.

Being in the ‘thick of it’ in the sense that I work directly with brands but also help retailers develop their RMNs I can see that there is truth in both arguments. Some RMNs will break through as strong branded media investment destinations. Others, particularly non-store retail media verticals such as financial services, travel and leisure brands, will create a more fluid but no less important business models.

The rise of RM brand differentiation

The reasons why retail media will not just attract a significant share of media investment, in effect re-wire media as a whole, are manifold.

However, for retailers, tech providers, agencies and brands, there is no straight run at the opportunity and no guaranteed arrival at retail media nirvana for everyone. There are huge challenges to overcome and right at the top of the list is differentiation of proposition and market understanding through B2B marketing. 

Think about ITV and Channel 4. Both entities have had decades to develop distinct B2B brands –advertising propositions based on content and audience delivery coupled with effective merchandising, sales team creativity, tech innovation and plain old personality. 

And, if you think about some of the best launches in UK media history such as the launch of Metro with its ‘Metro Moment’ and its ‘urbanite’ audience, to the arrival of Google’s and Facebook’s algorithms, all have carved out distinctly different propositions and worked to enhance them and embed them in advertiser and agency thinking.

RMNs must do exactly this. A big part of achieving media brand success will be down to carving distinct territory based on audience experience and then repeating the message of differentiation relentlessly and with imagination.  Although we are at an early stage there is huge potential to do this. For example, Co-op Media Group is already owning convenience and has begun to explain the distinct role it plays as a convenience retailer, how that translates into a media experience and the impact this has on brand performance in its stores and beyond.

Just as a TV channel will leverage people’s relationship with TV shows, retailers will explain the unique relationships and insights they have into how people relate to and consume products, how they find them, consider them, and how and when they buy them, and in what volume. They’ll be able to share shopper behaviour insights across the funnel including the intersection with external media partners and how these journeys flow to a digital point of purchase or into and around a physical store where the vast majority of shopping occurs across all categories.

Branding your information capability

Data is a critical part of retail media for brands with physical estates but also those without. For pure play digital operations, for example Very Media Group, expressing their deep understanding of customers through creative frameworks that can help brands get the most out of the network is a highly innovative route forward. 

For vertical retail media brands such as Expedia, Revolut and Deliveroo, promoting the capability and distinctiveness of customer data will be critical to success, not just for these brands as networks to spend money with, but for the way in which that data can influence performance across third party media.

Branding retail media is just one part of the challenge. Nascent media teams within retailers will also face a fight for resources and talent to create media offerings that can deliver results and grow.

While some retailers have clearly embraced the media opportunity at an early stage – others have been slower to launch or invest in growing their offering. Retail C-suites will need to understand the need to go all in in terms of investment to build out a media business or to leave the opportunity to others.

In a fight for market share with the likes of Amazon, Meta and Google, not to mention the new wave of RMNs that have a head start, half measures won’t do it. If investment is forthcoming a clear strategy covering data capability, RMN infrastructure, brand and media eco-system integration, including transparency and measurement aligned with where the industry is landing on these issues, is essential.

Media income margins could be transformative for many retailers, but unrealistic C-suite expectations based on a failure to understand how RMNs and brand investment results develop over time, based on performance learnings, could be death to some fledgling operations.

Working out where your network sits in the media ecosystem, which is itself in a state of transition, is difficult. But the RMNs that succeed will be those that agencies and brands instantly understand and that understanding will breed commitment.

Author

Lee LeFeuvre is Chief Commercial Officer, SMG