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What does the future of retail media hold? Retail media has become a hot topic over the past few years, but it’s not a new concept. It is in fact a more structured approach to processes that most retailers already have—one that requires a dedicated retail media platform.
Before we start talking about retail media platforms and the challenges that most retailers who start out with retail media face, let’s quickly talk about why retail media is attractive, and even what it is.
Retail media is becoming an increasingly bigger part of the marketing ecology. In 2024 every fifth dollar spent on ads was spent on retail media, which is the result of an annual growth ranging from 10% to 30% over the past five years, and there’s no reason to expect that this growth will be slowing down.
A retail media network is an advertising platform made up of a set of digital channels (website, social media, loyalty apps etc.) that a retail company sells ad placements on to a third party (usually a brand) for various advertising purposes.
This is a very broad retail media network definition. But providing a more fixed definition of what a retail media network is, is near impossible. This is because retail media is still in its infancy, relatively speaking, which means there is a big difference between the different retail media networks. And as such, a description that fully describes one retail media platform or network will not fully describe another.
Contrary to how most retail media software providers are presenting it, retail media isn’t a revolution in how retailers operate but rather a natural evolution of the retail marketing activities they already have.
If your job is retail marketing there’s a good chance you’re already creating catalogues, digital ads, social media posts, content for a loyalty app, product displays for your stores, and managing influencer collaborations. And there’s an equally good chance that you receive marketing contributions from brands and suppliers to help fund campaigns for their products.
And that’s essentially what retail media is.
It’s just a more structured approach to this process. Where marketing contributions are (usually) smaller amounts paid by a brand to help cover promotional costs as a whole, retail media lets the brand purchase specific ad placements instead. This gives them more control over how their 'marketing contributions' are spent, and it lets the retailers increase the income from those contributions, as brands are willing to spend more.
Danish beauty retailer, Matas, is a great example of how the retail media ecology works. Matas already carried products from global brands before they branched into the retail media space. And they already promoted those products through placement in stores, exposure on their ecommerce sites, and promotions in newsletters, loyalty apps, and on social media.. But with Matas’ retail media offering, those same brands now have a greater control over how, when and to whom their products are being promoted, and Matas has increased their revenue through the retail media offering.
When we’re talking about retail media software, content production and publication is usually at the forefront of the conversation, but the truth of the matter is, that content and publication management isn’t where the real challenge lies. After all, retailers have managed to successfully produce and publish content in collaboration with a wide range of partners and stakeholders for years.
The actual challenge for retail media platforms is structuring the ‘inventory bookings’ (the term often used to describe bookings of individual retail media placements). This is essentially because structuring promotional activities across different channels have historically been managed in spreadsheets, usually with one spreadsheet covering each channel.
The problem is, that this quickly turns into a source of confusion when we're talking about retail media. Because you'll have a number of different files to consult if you need an overview of availability, placement types, prices, and which placements are already booked. And it's not just retail media placements by brands you need to consider. As you are essentially selling off placements that your own marketing and category teams also use you need a complete overview of activities that stretches across all stakeholders.
The best way, effectively the only way, to solve this challenge is to move your activities out of the spreadsheets and create a more structured booking process. And that’s why an ‘inventory booking management system’, as some have come to call it, is one of the most important pieces of retail media software to have, when you start your retail media network.
Our retail media solution helps retailers move their planning out of the spreadsheets and into a single platform that provides a clean overview of placements and campaigns, both internally and externally.
This helps minimize errors, save time, and lets you ensure a balance in your ads.
There’s no question that the future of retail media is going to be exciting.
Looking at it from a growth perspective alone, it’s looking to be a defining subject of marketing in the 2020’s, in the same sense that influencer marketing helped define the latter part of the 2010’s.
According to Forbes the global retail media ad spend is expected to reach 231 billion dollars by the year 2030. This not only highlights the explosive growth that retail media has been going through over the past years, but is also an indication of how it is transforming the way brands and retailers collaborate when it comes to marketing and promotions.
While giants like Amazon and Alibaba continues to dominate the retail media space, with the two making up more than 50% of the global retail media ad spend in 2024, we’re also seeing the contours of a new era where more product specific retailers are taking a bigger piece of the market.
Retail media networks in categories like luxury fashion, beauty, electronics, and home decor have been popping up at a frequent rate, and they offer a more precise segment targeting for brands in their dedicated spaces, because they are closer to the core customer.
This gives brands in these specific niches a better way to target their specific audiences more directly than if they were to use more general retail media networks like Amazon or Alibaba. Which is why we expect to see more category specific retail media networks as we approach 2030.
Today retail media has a big focus on on-site placements such as promotions and offers through the retailer’s own ecommerce sites and loyalty apps, but we’re seeing more and more offers include off-site placements where retailers sell ad placements on their social media and search placements or even promotions through influencers and partners the retailers already use.
The reason this type of placement is attractive to brands, is because retailers, and especially category specific retailers, can combine purchasing data with targeting on these platforms to hit the right audience with much higher precision than the brands are able to themselves.
This development means that retail media networks might even begin to rival classic digital advertising.
Banners, product recommendations, and search ads have been dominating the space of retail media in the past, which means that ad formats have been limited to 2-3 lines of text, a headline, and an image.
But in the future we expect to see brands start to experiment with new formats such as live streams, shoppable videos, as well as in-store and virtual events that help engage customers in new ways, and add an extra dimension to their marketing activities.
It’s not only retail media ad formats we expect to see change over the next few years. Right now brand retail media activities are commonly funded through ‘trade’ and ‘promotion’ budgets, but we expect to see part of the ‘brand promotion’ budget be allocated to retail media activities.
Aside from meaning that this will significantly increase the spend on retail media, this will also change the type of content matter as well as the end goal of the content being produced.
Retail media will continue to be a natural extension of the marketing activities that retailers already have, but it will require a high degree of structure to really take advantage of the increased need. With the right retail media platform, there’s a big opportunity for retailers to create an efficient and profitable retail media company.
