The rise of retail media is transforming the buyer-supplier relationship. To make sense of this rapidly shifting market, we summarized the strategies brands need to navigate the retail media revolution from our recent podcast episode.
In the fast-paced world of retail media, staying ahead of the curve is essential for brands. As we approach 2025, it's crucial to understand the evolving landscape and harness its potential. Following our interview with Colin Lewis on The Digital Shelf Cast, we delve into key insights and uncover the strategies and trends that will shape the retail media landscape in the coming year.
Before we deep dive, let’s first understand the basics.
Retail media is a dynamic and evolving facet of digital advertising. At its core, it involves using digital advertising within an ecommerce environment. Whether you’re scrolling through Amazon’s product listings or exploring your favorite grocery store’s mobile app, you’re likely to encounter retail media in action. It’s the advertising that seamlessly integrates with your online shopping experience.
Retail media isn’t just about advertising on an ecommerce website; it’s a concept that’s constantly evolving. Initially, it focused on onsite digital advertising, such as sponsored product listings. When you search for a product on an ecommerce site and see sponsored results at the top, that’s retail media at work.However, retail media is now extending its reach offsite. This means that the data and insights gathered from a retailer’s website are used to target customers when they’re browsing the broader web. Imagine searching for a product on a retailer’s site and then seeing ads for the same product on social media or other websites you visit. That’s the offsite dimension of retail media.But the evolution doesn’t stop there. Retailers are increasingly incorporating digital advertising within their physical stores. This innovation is shaping the way brands engage with customers both online and offline, utilizing various retail media ad formats to capitalize on high traffic volumes and first-party data for targeted advertising.
You might wonder why retail media has generated so much excitement in the marketing world. Let's delve into some of the reasons behind this buzz. Colin Lewis sees three key drivers.
The pandemic accelerated the shift toward online shopping. Ecommerce witnessed exponential growth over the past few years, with more consumers turning to digital platforms for their shopping needs. As a result, the traffic on retailers’ websites and apps has surged. This growth in ecommerce has expanded the retail media inventory available for brands to utilize.
Amazon, often viewed as the poster child of retail media, has played a pivotal role in popularizing this advertising channel. Sponsored product ads are a key format within Amazon's advertising offerings. Amazon’s advertising arm, Amazon Advertising, has been a significant revenue generator, with advertisers flocking to leverage its vast user base.
In the world of digital advertising, the impending “death of the cookie” is a hot topic. With increasing privacy concerns and regulations, tracking users through cookies is becoming less viable. This has made first-party data collected by retailers more valuable than ever.
The retail media model leverages this first-party data to enable personalized advertising strategies.
Colin Lewis emphasizes that the rise of retail media is transforming the relationship between buyers (brands) and suppliers (retailers). Traditionally, trade marketing agreements were the norm, with brands providing funds to retailers for joint marketing efforts. Retail media is often seen as a reinvention of trade marketing, but it comes with a significant shift in dynamics.
The new era of retail media brings transparency and accountability. Both brands and retailers now have access to data and metrics that allow them to measure the return on investment (ROI) more precisely. Brands can no longer accept vague responses like, “I don't know the ROI of your marketing spend.” This shift forces brands and retailers to collaborate more closely and share insights and data, leading to a more transparent and data-driven relationship.
In the past, supplier negotiations were often based on personal relationships and trust. However, retail media introduces a new level of transparency and data-driven decision-making. Brands are now demanding more accountability and measurable results from their suppliers. Retail media solutions enhance advertising strategies by allowing brands to display personalized ads across various digital platforms based on consumers' shopping behaviors, thus improving the effectiveness of negotiations.
Retailers possess a goldmine of data about their customers. This first-party data, combined with the demise of third-party cookies, has shifted the power balance. Suppliers are increasingly reliant on retailers for access to valuable audience insights.
Retail media technology plays a crucial role in leveraging this data to develop successful retail media strategies, providing personalized experiences, robust data analytics, and seamless integration of multichannel campaigns.
In a symbolic twist, the question of who's buying lunch is becoming a reflection of the changing dynamics between retailers and suppliers. In the past, it was common for suppliers to host retailer lunches as a show of goodwill. Now, the tables are turning, and retailers are demanding more value from their suppliers.
While Retail Media presents exciting opportunities, brands often face challenges when navigating this space. Here are some common hurdles and strategies to overcome them: Having the right retail media technology can help overcome these challenges by enabling personalized and relevant experiences, effective data aggregation, campaign measurement, and real-time analytics.
Challenge: Brands may lack the necessary in-house skills to navigate the complexities of retail media.
Solution: Invest in building internal capabilities. Recruit team members with a strong foundation in performance marketing (that means you won’t be looking nor finding someone with 10+ years in TikTok advertising), as the principles align closely with retail media strategies. Managing a retail media platform requires specific skills to integrate data, manage campaigns across multiple networks, and enhance the advertiser experience.
Challenge: Different departments within a brand, such as marketing, trade marketing, and ecommerce, may have conflicting interests when it comes to retail media.
Solution: Foster alignment by creating a dedicated team that oversees retail media strategies. Allocate budget for testing and learning to mitigate internal conflicts. A comprehensive retail media solution can further enhance alignment by providing a user-friendly platform that integrates advertising solutions across departments, ensuring cohesive strategies and compliance with data regulations.
Challenge: Determining the right budget allocation for retail media can be challenging, especially when ROI isn't immediately apparent.
Solution: Set aside a portion of your budget specifically for testing and experimentation. Consider it an investment in learning and adapting to this evolving landscape.
Retail media isn’t just about outsourcing tasks to agencies. Brands should focus on developing internal expertise to drive strategy and innovation. Here are some critical skills Colin Lewis likes brands to consider building in-house. Building expertise in retail media ads is crucial for effectively targeting consumers and measuring ad performance across various formats.
A solid foundation in performance marketing is invaluable when venturing into retail media. Individuals with experience in managing Google AdWords or Facebook advertising can adapt their skills to this new domain.
Creative plays a significant role in the success of retail media campaigns. Brands should invest in creative talent capable of producing compelling and effective content.
Data-driven decision-making is essential in retail media. Brands should have analysts who can derive insights from the wealth of data generated by these campaigns.
So, what's then left to outsource? Brands are advised to outsource executional tasks, such as the day-to-day management of campaigns, including ad placements and bid management. These can safely be outsourced to agencies.
Aligning different departments and fostering collaboration is essential for successful retail media implementation. As with any ecommerce and cross-functional initiative. Here’s how brands can achieve this for retail media specifically. Off-site retail media also requires cross-functional collaboration to effectively utilize first-party data and reach potential customers through ads on third-party platforms.
Initiating change often starts at the top. Ensure that senior leadership understands the value of retail media and is committed to supporting its integration.
Create cross-functional teams that bring together representatives from marketing, ecommerce, and data analysis. This ensures a holistic approach to retail media strategy.
Break down data silos and promote sharing of insights across departments. A unified view of digital shelf data is crucial for effective retail media campaigns.
Several brands have excelled in the retail media space, showcasing the potential and effectiveness of this advertising channel. Let’s take a look at L’Oréal as the standout example Colin Lewis mentioned.
L’Oréal’s approach to retail media is a testament to its commitment to brand visibility and consumer engagement. Recognizing the intimate and personal nature of health and beauty products, L’Oréal invests significantly in understanding how their brands are portrayed and perceived across various online channels.This dedicated approach enables them to craft compelling and impactful creative strategies that resonate with consumers, further solidifying their brand’s position. Beyond their creative prowess, L’Oréal also demonstrates the importance of collaboration and alignment within their organization, ensuring that all teams are working toward a unified goal.Brands like L’Oréal, along with others such as Unilever and Procter & Gamble, serve as beacons of excellence in the retail media landscape, showcasing the immense potential and possibilities this platform holds for brands willing to invest in strategy, creativity, and alignment. The Walgreens Advertising Group is another example of a successful retail media network, leveraging extensive customer interaction data to provide valuable audience targeting capabilities for brand advertisers.
The retail media landscape is continually evolving. Here are three trends, or what Colin Lewis calls ‘inevitables’, that are likely to shape the retail media space in 2025 and beyond:
One significant trend is the evolution of ad formats, which now offer diverse options for engaging audiences both in physical retail environments and online, highlighting their varied applications across multiple platforms and retailer partnerships.
As first-party data becomes increasingly valuable, retailers and brands will focus on hyper-personalization. Advertisers will leverage customer data to deliver highly targeted and relevant ads.
The line between physical and digital retail will continue to blur. Brands will explore innovative ways to integrate Retail Media into the in-store shopping experience, creating a seamless omnichannel approach.
With advertisers demanding greater transparency and ROI, there will be a surge in tools and technologies that provide enhanced measurement and attribution capabilities. This will enable brands to track the impact of retail media campaigns more accurately.
Colin Lewis is also quick to point out that, in the tech world, we encounter typical cycles of hype followed by disillusionment before rationality prevails. Expect no less for retail media, he argues. Claims of its demise will emerge, echoing past declarations about the end of email, Facebook, and other digital stalwarts. Yet, this is a signal of maturity, not decline. Rather than heeding these declarations, savvy brands will recognize them as harbingers of progress. Embracing maturing technologies will be the key to staying ahead of the curve.
As we prepare to step into 2025, it's clear that retail media is here to stay and will play a pivotal role in digital marketing strategies. To thrive in this evolving landscape, keep these key takeaways in mind:
With these strategies and insights discussed in our latest podcast episode, you'll be well-prepared to navigate the retail media revolution and make the most of its exciting opportunities in 2025 and beyond.
Resources
Discover the latest trends in Consumer Packaged Goods
1450+
retailers
100+
mobile apps
59
countries
250+
engineers and
data scientists
Try CommerceIQ
CommerceIQ is the only sales-focused, unified platform built specifically for ecommerce—combining sales, media and shelf data with role-specific AI teammates that deliver actionable, commerce-ready insights.
