In recent years, Retail Media has emerged as a new and exciting field in digital advertising, presenting a promising avenue for brands to expand their reach and drive sales. Retail Media networks, provided by retail companies to third-party brands, are rapidly gaining momentum and are considered by many to be the third wave of digital advertising. With impressive growth rates and market share, Retail Media is rapidly transforming the advertising landscape, posing a significant challenge to established players like Meta and Google.

In this context, it is increasingly important for brands to develop a robust retail media strategy to stay ahead of the competition in the digital marketplace. In this article, we will explore the definition of Retail Media, its current and projected growth in the US and Europe, the opportunities it offers to brands across all verticals, and its future prospects. Join us as we delve into this exciting and dynamic world together and discover why Retail Media is poised to be a game-changer for brands in the digital age.

The third wave in digital advertising

According to Amazon's 2022 definition, Retail Media is an advertising infrastructure comprising a collection of digital channels offered by retail companies to third-party brands for their various advertising purposes. These advertising infrastructures are called Retail Media Networks (RMNs).

Retail Media is already considered the third wave in digital advertising, owing to its rapid growth compared to other major advertising markets like Meta (social) and Google (search). While it took Retail Media just 5 years to reach $30 billion in ad revenue, Social took 11 years, and Search took 14 years to achieve the same level (eMarketer 2022).

Forecast

Retail Media is experiencing rapid and substantial growth. It is forecasted that retail media in the US will grow to become a $50 billion+ market by 2024 (Feger, 2023). Additionally, it is expected that by 2026, 25% of total digital spend will be allocated to Retail Media (BCG, 2022), with 84% of revenue in Retail Media coming from net-new budget sources (McKinsey, 2022). Amazon remains the largest RMN due to its significant market share, but many other retailers are now looking to develop their own retail media networks.

Retail Media categories (Europe)

Compared to the US, Europe is still in the early stages of Retail Media availability. However, larger grocery retail chains, pure players, and vertical marketplaces in Europe are beginning to offer Retail Media advertising solutions. Pure players, such as Amazon, Bol.com, and Allegro, act as horizontal marketplaces, offering a wide range of product categories. Examples of Grocery Retail chains include Carrefour and Albert Heijn. Vertical Marketplaces like Zalando, ManoMano, and Wayfair also have their own Retail Media Networks, focusing on specific product category niches.

Opportunities across all verticals

Retail media provides brands across all verticals with opportunities to reach more customers. We typically see two types of advertisers using Retail Media Networks to grow and expand their business: endemic and non-endemic brands.

Endemic Brands:

Endemic brands are those that sell their products on retail sites. For example, a shoe brand selling shoes on the Amazon Marketplace uses Amazon advertising to attract more customers to the product page.

Non-Endemic Brands:

Non-endemic brands do not sell products via a retailer site (e.g., car dealers, financial services, lotteries). These brands utilize Retail Media advertising to leverage first-party data and target qualified audiences to their own site.

The Future of Retail Media

Looking ahead, Retail Media will continue to experience growth, and more retail organizations are considering developing their own Retail Media ecosystems. To convince brands that are seeking relevant in-store data, RMNs will need to incorporate offline sales data into their strategies.

Whether you're an endemic or non-endemic brand, a retail media strategy will be essential to remain relevant and visible in the online marketplace where customers are shopping today. At Merkle, we assist brands in defining and implementing their Retail Media/Marketplaces strategies.

Join us in embracing the future of Retail Media and unlocking its vast potential.