Global retail media ad-spend will surge to €153bn by 2027. Learn about the opportunities that exist for retailers and how the affiliate channel, and Awin, can support.

Retail media has undergone significant evolution since Amazon pioneered its retail media network in 2012. Over the years, a diverse array of retailers, spanning from Walmart and Tesco to Boots and Instacart, have established their own retail media networks. 

This proliferation has fueled substantial growth, with projections from eMarketer’s Insider Intelligence indicating that global retail media ad spending will surge to €153bn by 2027.

What is retail media?

At Awin, we define retail media as an advertisement strategically placed on a retailer’s e-commerce site to positively influence customers precisely at the point of sale. This form of advertising empowers brands to enhance their visibility within the online shopping environment.

Traditionally, retail media placements were primarily acquired by advertisers already selling products on the retailer’s e-commerce platform. These placements served various purposes, from driving awareness and consideration to, notably, boosting the sales of their products on the retailer’s site. An approach commonly known as endemic retail media.

More recently, a trend has emerged in non-endemic retail media, where advertising placements are secured by advertisers seeking to target specific consumer segments. In this context, retail media placements are bought by advertisers in the exact same way as they would with other paid-media outlets. According to research from Merkle, 63% of retailers have non-endemic advertisers actively leveraging their retail media networks.

Retail media networks are the dedicated advertising platforms crafted by retailers to provide advertisers with access to promotional inventory across their various channels. These platforms enable advertisers to leverage the retailer’s first-party data, tailoring advertisements to target shoppers with precision and relevance. 

The growth of retail media

After a sustained period of explosive growth, the enthusiasm surrounding retail media is unlikely to wane anytime soon. McKinsey research indicates that 73% of advertisers anticipate increased spending on retail media networks in the next 12 months, with 70% reporting superior performance compared to other marketing channels.

The remarkable growth in retail media is propelled by a concentration of three key drivers:

1. Revenue pressue on retailers

The pressure on retailers to identify new revenue streams and enhance margins is a primary driver. Rising inflation, weak customer demand, and intensified competition from low-margin retailers have forced retailers to seek new avenues for revenue generation. According to BCG, retail media networks can achieve robust profits ranging from 70% to 90%, a significant appeal for those operating on slim margins.

2. Cost effective acquisition for advertisers

The ‘dash to digital’ shift triggered by the pandemic has made online e-commerce more challenging, intensifying the need for advertisers to explore new avenues for driving sales. With increased digital adoption comes heightened competition. A study from IAB Europe and Microsoft found that 92% of advertisers are currently partnering with retailers to reach new customers.

3. Third-party demise

The diminishing value and use of third-party cookies in customer targeting and advertising serve as a catalyst for retail media growth. While third-party data is on the decline, the importance of first-party data collected by retailers is rising. The ability to leverage first-party transactional and behavioral data offers advertisers a significant opportunity to target potential customers effectively. 

As third-party cookies fade away, 91% of advertisers foresee retail media playing a key role in their advertising strategy.

Retail media opportunities

Retail giants like Walmart leverage endemic retail media placements to offer their brands a targeted approach to reach in-market audiences throughout the customer journey. This could involve sponsored search listings, prominent product features, or other strategies to enhance visibility and drive conversions.

More retail media networks are embracing innovative approaches, such as shoppable TV. A noteworthy 57% of marketers anticipate shoppable video content to be the next frontier in retail media. For instance, Coca-Cola collaborated with Roku to introduce a holiday-themed screensaver on users’ devices. Users could then purchase Coca-Cola products straight to their home via DoorDash.

Non-endemic retail media opportunities present an underexplored landscape within the retail media space. Strikingly, 58% of advertisers express their interest in leveraging non-endemic data to target qualified audience segments.

At Awin, we have supported brands like The Hut Group and Currys to establish their own retail media networks, enabling them to promote complementary advertiser offers during the checkout process. The concept of checkout marketing is powerful, as it not only creates a sellable ad-placement for retailers but also enhances the shopping journey. Numerous case studies demonstrate that retailers can improve their conversion rates by offering customers value-added rewards at checkout.

Beyond checkout marketing strategies, we have also assisted retailers in launching digital reward platforms. To foster customer loyalty and sustained engagement, personalized rewards are key. Notably, we have observed diverse industries, including network operators, banks, and utility providers, embedding third-party advertiser offers into their reward programs. 

Overcoming the challenges of retail media

Despite the continued growth of retail media, it is not without its challenges. The lack of standardization in measurement and the walled garden environments of retail media networks, pose obstacles for advertisers looking to increase their ad spend. According to a report by Epsilon, 42% of advertisers do not plan to change their retail media ad spend through to 2026. The hesitation is largely attributed to the difficulties associated with measuring performance.

Here is where the affiliate marketing channel can play a crucial role in supporting retail media. The affiliate marketing industry is founded on the foundations of robust and transparent tracking, providing advertisers and partners with real-time reporting insights.

Given the expansive nature of the retail media landscape, advertisers also face the challenge of selecting the right retailer to align with their objectives. Awin has developed a carefully curated discovery matrix that offers key information about each retail media network and the opportunities they provide. This resource aids advertisers in making informed decisions about which retailer to partner with.

Whether you’re looking to create your own retail media network or promote your products through retail media, Awin provides the tools and support needed.

Visit Awin to find out more.

By Lee Metters, client partner, Awin