‘Retail media is still evolving, and fragmentation will get worse before it gets better’

In what seems like no time, retail media has become big business. According to eMarketer, UK retail media spend was expected to total $4.9bn (£3.9bn) in 2024, equating to 10% of the UK’s total media spend and putting the UK third behind the US and China.

There are three key drivers behind this explosion: firstly, retailers have accurate, granular and transactional data coupled with consumer consent. The second factor is understanding customer intent, as they see shoppers browse and search, enhanced by that historic transactional data. They understand what people buy, what they used to buy but don’t anymore, and where they buy in-category. This is marketing gold dust. The third factor is measurement – the ability to gauge how shoppers’ buying habits are changing and potentially predict when they might change products or brands.

But retail media is still evolving, and fragmentation will get worse before it gets better. Different approaches to measurement; disparate buying models, and missing basic capabilities such as viewability and brand safety will be solved over time, but the industry needs to address these issues. Leading retailers are helping shape them to win a bigger share of bigger budgets – competing with the media owners in TV, audio, out-of-home, search and social.

For the retailers falling behind, there are some big decisions to be made. Can they afford to miss out on the millions of pounds’ worth of incremental revenue? Is there an existential risk when competitors are reinvesting it into lower prices or more marketing? How do they compete in a market where scale matters - do they do it alone or become part of an established retail media network?

So what can we expect from retail media in 2025?

Well, continued growth as offerings mature, and allowing brands and agencies to leverage the power of retailer networks and data are two things. But there are five additional themes:

• On-site retail media has been dominated by sponsored products in search, favourites and browsing. In 2025, we will see more sophisticated display and video formats as well as more relevant targeted ads based on shopper profiles.
• We will also see investment and growth in digital in-store retail media, particularly in the grocery and beauty sectors where over 80% of consumer spend is in-store. Digital screens, apps, and scan-as-you-shop devices all increase ways for brands to reach shoppers based on previous purchases, in-store location and external factors such as the weather.
• Adoption of off-site retail media – where retailers package their consented shopper data in a privacy-safe way with media owners such as ITV, C4, Facebook and Pinterest will increase as brands realise the opportunity for more granular targeting and retailers evolve their capabilities. For example, Cadbury can reach chocolate buyers with the right brand messages outside of retailers, in turn driving shoppers to the retailer’s physical and digital stores. In more mature markets this has already reached 19% of retail media spend according to eMarketer.
• Non-endemic retail media (where shoppers see advertising for products that the retailer does not sell, such as cars or financial services) will be explored by more brands as new routes to reach their audience. These can be a real value-add for the consumer but, as ever, the watchword is relevance. Tesco is one of the leaders we have worked with for our brands, including Vauxhall sponsoring electric vehicle charging points and Samsung Wallet in-store.
• Lastly, changes in the way people shop and the adoption of AI will drive disruption. Next time you fire up the Amazon app, check out Rufus, Amazon’s AI-powered experience, created to help people shop.

Imagine being able to tell your grocery app to create a weekly meal plan for four people, including one vegan, with a budget of £150, and the co-branded possibilities there. You won’t have to imagine for much longer.