Retail media has emerged as the fastest-growing digital advertising channel, poised to capture nearly 25% of total media spending by 2027. This meteoric rise has led industry experts to dub retail media and connected commerce as the "third wave" of digital advertising's evolution, after search and social media.
Retail – and more broadly – commerce media exists at a pivotal point in its evolution. That evolution was clearly on display recently at the IAB’s Connected Commerce Summit in New York, as industry leaders gathered to discuss an array of hot topics related to standardization, emerging technologies and incorporating retail media within the in-store experience.
The maturity of retail media as an advertising channel is evident in the confidence of marketers. A survey found that 89% of marketers rated their retail media programs as average, above average or excellent in maturity. This confidence is reflected in spending projections, with offsite programmatic retail media expected to hit $20 billion this year, a significant leap from the $7.5 billion spent in 2023.
Data download
At the heart of retail media's success is its ability to leverage first-party data for highly personalized advertising. As Ali Miller, VP of ads product at Instacart, notes, "It is a real expansion, I think, of the value proposition that retail media can provide.” Leveraging first-party data allows for maximized ROAS through unique, highly personalized ads using privacy-compliant customer data. Jenny Holleran, Group Director at Kroger Precision Marketing, and I recently recorded a podcast with the Path to Purchase Institute, where she described first-party data as the “layer” - or maybe more aptly, “layering” - that RMNs provide into the larger media ecosystem outside of their walls.
Consumer privacy is paramount, and while technologies like data clean rooms are not exactly a “silver bullet” solution, they do move the industry in the right direction toward protecting consumers and complying with growing privacy legislation in states across the US, according to Andrew Tobel, Privacy Counsel for Albertsons Media Collective, during a discussion at IAB Connected Commerce.
Retail media is evolving beyond traditional transactions, focusing on enhancing the overall customer experience. This expansion is evident in the integration of retail data with other media formats. Disney's partnership with Kroger, for instance, allows Hulu to target based on the retailer's data. By now, those of us on the circuit are more than familiar with the partnerships between RMNs and premium publishers. These growing partnerships form as the industry realizes it needs such partnerships to compete with retail media giants Amazon and Walmart, which are consistently pouring money into building and optimizing their content flywheels.
Despite its rapid growth, retail media faces challenges. Andrew Lipsman, independent analyst and founder of Media, Ads + Commerce, notes, "Getting into the ad-selling space is not a core competency [for retailers] and not all of them have enough talent to support some of these opportunities.” This highlights the need for retailers to invest in talent and technology to fully capitalize on the potential of retail media. Building the right expert teams, both internally and externally with parters like Threefold, is paramount to enhancing your organization’s core competencies.
Looking ahead
Retail media is set to integrate more deeply with emerging technologies and consumer behaviors. The shift towards omnichannel, connected commerce media solutions across digital and in-store environments is expected to accelerate in 2024 and beyond. Retailers now see the store as an opportunity to build experiential shopping for consumers as they leverage their brick-and-mortar assets to stand apart.
The industry’s ability to leverage first-party data, coupled with the expansion into offsite advertising and new technologies, positions it as a formidable force in the digital advertising landscape. However, the industry must address challenges related to talent, standardization and transparency to fully unlock its potential. As retail media continues to mature, it has an abundance of opportunities to reshape the advertising ecosystem, offering new revenue streams for retailers and more targeted, effective advertising solutions for brands.
Want to chat about how Threefold’s retail media consultancy or white-label in-house service can revolutionize your commerce media strategy? Send Justin a message at justin.sparks@threefold.team.
About Justin Sparks
Justin Sparks is the VP of Business Development, focused on new retailer and ad/mar tech partnerships.
Justin has nearly two decades of experience in the industry, and before joining Threefold, he built and led the east coast commerce teams at Mediavest (now Spark) and was a board member for Hooklogic and was Criteo’s first US hire after their acquisition. Most recently he led the InMobi Americas Strategic Sales team. He is based in New York and spends his free time with his family, traveling, watching the Premier League and cycling.
About Threefold
Founded in 2008, Threefold is the world's leading Retail Media Network (RMN) specialist, headquartered in both New York and London. As part of the SMG agency network, which employs 400 retail media experts, Threefold's primary mission is to unlock incremental brand and supplier budgets, curate media campaigns that supercharge sales and elevate its retail partners into top-tier omnichannel media owners, spanning in-store, off-site and online.
Threefold's services include the leading Retail Media Operating System Plan-Apps, consultancy and a white-label in-house solution that has seen the agency build, run and operate over 10 Retail Media Networks to date. In the UK, Threefold runs and operates Walgreens' Boots Media Group, ASDA’s LS Eleven Media Services, Co-op Media Network, Morrisons Media Group and Very Media Group.
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