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The transatlantic rise of retail media

If you’ve been to any advertising, marketing or data conference recently, I can bet one of the hot topics of discussion was ‘Retail Media’.

WARC have reported that retail media is already the fourth largest advertising media and that it will soon overtake linear TV ad spend come 2025. Insider Intelligence are equally excited, announcing that Retail Media is the third and biggest wave of digital advertising following the search and social boom in the 2000s.

And it’s not surprising everyone is talking about this ‘new’ industry when you look at the scale of advertising budgets flowing into Retail Media Networks.

Advertising spend on retail media in the UK grew by 26 per cent in 2022 to more than £3.4 billion according to the IAB with projections by the trade body estimating that the UK market will grow to £7.9 billion by 2026.

Over in the US, in 2022, digital retail media advertising spend was estimated at 41 billion US dollars and this is projected to double by 2026.

But crucially, this is not a ‘new’ industry. Retail Media has been about for decades on both side of the pond.

From coupons to mail inserts to cardboard in-store POS, CPGs and retailers have been targeting us shoppers to get us to pick up their product and put it in our basket. So why the sudden craze by marketeers?

The answer is in part the eCommerce boom.

Even before the pandemic, the US and UK were respectively the second and third largest eCommerce markets in 2020. This offered retailers and CPGs a significant, targeted advertising opportunity. As a result, the US has led the way in monetizing 1st party retail data.

Maximizing the asset of retail loyalty cards, the US has led an advertising digital revolution utilizing this 1st party data to refine the targeting of search & digital ads both on their own retail eCommerce platforms as well as off-site to increase traffic into stores and onsite.

By linking loyalty cards with promotional activity, retailers like Kroger have been able to link 96% of transactions to a loyalty card. The wealth of data now at Kroger’s fingertips means it can offer CPGs a targeted and closed loop approach to advertising, empowering RMNs to overtake the capabilities of more traditional forms of targeting via mediums like linear TV.

The UK is undoubtably playing catch up in this digital space.

Tesco, Sainsbury’s, Boots and Co-op have all recently implemented loyalty card exclusive pricing in an effort to build their addressable audience data base and scale to advertisers. New digital media toolkits for advertisers that can compete with wider traditional offerings have also been a priority. We’ve seen the UK follow the US, with a number of retailers having now launched connected TV partnerships with the likes of ITVX and Channel4.

Whilst the US has led the way in monetizing 1st party data, the UK has led the way in a privacy first approach.

With no GDPR rules in the US (bar California), the US has not had to build its RMNs with a privacy in mind. All the signs however point to the US increasingly having state by state GDPR equivalents, and so, we can expect the US to be looking to the UK soon for insight into privacy compliant RMNs.

But the biggest challenge of this eCommerce boom is that marketers forget the store. And this is where the US can take a leaf out of UK Retail Media Networks.

In both markets 75-80% of all transactions are still happening in a store according to the NRF and Statista. Whilst the US has been focused on a digital 1st approach, the UK has arguably focused on the instore shelf back approach.

Digitalization of the store has been a huge focus for retailers in the UK as they look to tap into the high percentage of sales going through a store. Everything from digital screens to programmatic audio, complemented by more traditional instore elements like POS has created a truly omnichannel approach for advertisers to tap into. These digital instore elements are increasingly too being powered by 1st party data.

What’s more, the wealth of media touch points in and around stores have empowered UK advertisers to be much more creative in their marketing than their counterparts in the US. UK Retail Media campaigns are more than product pack shots and price messaging. CPG brand campaigns that were previously reserved for traditional mediums like TV and OOH are now regular fixtures coming to life instore, maximizing the total shopper path to purchase to win over UK shoppers and get that product into their baskets.

By combining the US expertise in digital & 1st party data with the UK’s expertise in omnichannel, privacy compliant store back campaigns, we can create a win win for retailers, brands and shoppers on both sides of the Atlantic.


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