Global retail media advertising spend is expected to soar to €153 billion by 2027. Learn about the opportunities that exist for retailers and how affiliate channels and Awin can help.
Retail media has evolved significantly since Amazon pioneered its retail media network in 2012. Over the years, retailers ranging from Walmart and Tesco to Boots and Instacart have established their own retail media networks.
This adoption will drive significant growth, with eMarketer's Insider Intelligence predicting that global retail media ad spending will soar to: 153 billion euros By 2027.
What is retail media?
Awin defines retail media as advertising placed strategically on a retailer's e-commerce site to positively impact customers precisely at the point of sale. This form of advertising allows brands to increase their visibility within the online shopping environment.
Traditionally, retail media placements were primarily acquired by advertisers who were already selling products on a retailer's e-commerce platform. These placements served a variety of purposes, from driving awareness and consideration to increasing product sales, especially on retailer sites. An approach commonly known as indigenous retail media.
Recently, a trend has emerged in non-specific retail media where advertising is secured by advertisers seeking to target specific consumer segments. In this context, retail media placements are purchased by advertisers in exactly the same way as for other paid media. According to research by Markle, 63% of retailers have non-indigenous advertisers actively leveraging retail media networks.
Retail Media Networks are proprietary advertising platforms created by retailers to give advertisers access to promotional inventory across a variety of channels. These platforms allow advertisers to leverage retailers' first-party data to tailor accurate and relevant ads to target shoppers.
Growth of retail media
Even after continued explosive growth, the enthusiasm surrounding retail media doesn't seem to be slowing down anytime soon. According to McKinsey research, 73% A percentage of advertisers expect spending on retail media networks to increase over the next 12 months. 70% They report superior performance compared to other marketing channels.
The impressive growth of retail media is being driven by a convergence of three key drivers:
1. Revenue pressure on retailers
Pressure on retailers to identify new revenue streams and improve profit margins is a key driver. Rising inflation, weak customer demand, and increased competition from lower-margin retailers are forcing retailers to find new avenues to generate revenue. According to BCG, retail media networks can achieve solid profits by: 70% to 90%which is a big attraction for companies with low profits.
2. Cost-effective acquisition for advertisers
The 'dash to digital' shift caused by the pandemic has made online e-commerce even more challenging, increasing the need for advertisers to explore new avenues to drive sales. As digital adoption increases, so does competition. According to a study by IAB Europe and Microsoft: 92% of advertisers are currently partnering with retailers to acquire new customers.
3. Third Party Termination
The declining value and use of third-party cookies in customer targeting and advertising will serve as a catalyst for the growth of retail media. While third-party data is on the decline, first-party data collected by retailers is becoming more important. The ability to leverage first-party transactional and behavioral data provides advertisers with significant opportunities to effectively target potential customers.
As third-party cookies disappear; 91% of advertisers expect retail media to play a key role in their advertising strategies.
retail media opportunities
Retail giants like Walmart leverage region-specific retail media placements to give brands a targeted approach to reaching in-market audiences throughout the customer journey. This may include sponsored search listings, prominent product features, or other strategies to increase visibility and drive conversions.
More retail media networks are adopting innovative approaches such as shoppable TV.Pay attention to 57% of marketers predict that shoppable video content will be the next frontier in retail media. For example, Coca-Cola teamed up with Roku to bring holiday-themed screensavers to users' devices. Users will be able to purchase Coca-Cola products directly from their homes via DoorDash.
Non-indigenous retail media opportunities represent an untapped situation within the retail media space. Surprisingly, 58% of advertisers have expressed interest in leveraging non-specific data to target qualified audience segments.
At Awin, we have helped brands such as The Hut Group and Currys establish their own retail media networks and promote complementary advertiser offers during the checkout process. The concept of checkout marketing is powerful for retailers because it not only creates salable advertising but also improves his shopping journey. Numerous case studies have demonstrated that retailers can increase conversion rates by offering value-added benefits to customers at checkout.
Beyond checkout marketing strategies, we have also helped retailers launch digital rewards platforms. Personalized rewards are key to driving customer loyalty and sustained engagement. In particular, we have observed various industries such as network operators, banks, and utility providers incorporating third-party advertiser offers into their rewards programs.
Overcoming retail media challenges
Retail media continues to grow, but it's not without its challenges. A lack of standardization in measurement and the walled environment of retail media networks are obstacles for advertisers looking to increase their ad spend. According to a report from Epsilon, 42% of advertisers do not intend to change their retail media ad spending until 2026. The main reason for hesitation is the difficulty involved in measuring performance.
This is where affiliate marketing channels can play a key role in supporting retail media. The affiliate marketing industry is built on a foundation of robust and transparent tracking, providing advertisers and partners with real-time reporting insights.
Given the vastness of the retail media landscape, advertisers also face the challenge of selecting the right retailer for their objectives. Awin has developed a carefully curated discovery matrix that provides critical information about each retail media network and the opportunities it provides. This resource helps advertisers make informed decisions about which retailers to partner with.
Whether you want to build your own retail media network or promote your products through retail media, Awin provides the tools and support you need.
Visit Awin for more information.
Written by Lee Metters, Awin Client Partner
