Retail Media in 2024

There’s a lot of attention on retail media these days, but 2023 wasn’t all roses. Although still growing, industry experts downgraded lofty spending forecasts due to poor economic conditions.
Skai's Michelle Urwin

There’s a lot of attention on retail media these days, but 2023 wasn’t all roses. Although still growing, industry experts downgraded lofty spending forecasts due to poor economic conditions. On top of that, retail media was categorized as being in the “Trough of Disillusionment” phase in the Gartner Hype Cycle. Increased competition is driving up costs, and there are inherent complexities of having so many retailers now with media businesses.

As the channel evolves, 2024 will be a make-or-break year. While it’s still one of the hottest areas of advertising, it’s not without its challenges. Here’s what we think the next 12 months have in store:

The Evolution of Retail Media to Commerce Media

The channel has a short history, and 2024 will see more innovation and change than any previous year. Retailers are now all in and actively looking for ways to grow ad investments by offering advertisers more inventory up the funnel as well as new ad formats and placements, while inviting non-endemic brands. 

Retail media is also growing outside of its own walls. Advertisers can point their Google and Meta ad traffic to their retailer product pages. Through their DSPs, they can leverage the powerful retailer’s first-party commerce signals to buy display ad impressions across the open web. In our “State of Retail Media” survey, two-thirds of respondents even said that search shopping campaigns and social commerce are part of a retail media team’s scope.

Given all of these advances, this year’s headline is that retail media is growing beyond the confines of a channel and becoming a “layer” called “Commerce Media.” When you consider all of the components that encompass commerce media, it becomes an incredibly rich and robust new arena, including:

• Full-funnel on-site retail media across numerous ad formats;

• Off-site placements on retailer-owned properties and partners;

• Ad buying on the open web via retailer first-party commerce signals;

• Building bridges to other walled gardens, such as the Amazon and Snap partnership;

• Search shopping/social commerce campaigns; and

• Even offline shopper marketing and co-op.

Retail media is a new channel, primarily servicing endemic advertisers, and ‘commerce media’ is an existing and growing layer driven by data, measurement, and the continued convergence of content and commerce.

— Conor McKenna, LUMA Partners

Notable Takeaways From the Survey

No one-size-fits-all solution to measurement. For the third year, proving incrementality continues to be cited in our survey as a significant challenge in retail media. And, while marketers desire a “silver bullet” to solve for measurement, they are coming to realize that retail media is an imperfect environment that will require each organization to build its own incrementality approach. 

Standardization is not the real need. One of 2023’s major storylines was the industry-wide call for standardization. However, in this year’s survey, we’ve discovered that standardization in itself is not what marketers desire. Actually, standardization seems to be a proxy goal to advance what they really want from retail media networks — which is more transparency, connectivity and control. 

Brand/agency misalignment. This year’s report shows a gap between how agencies and brands evaluate retail media success. Agencies tend to rely on media metrics like reach and frequency and ROAS, while brand marketers focus on business outcomes such as new to brand, share of voice and digital shelf analytics as key performance indicators. Could this misalignment be because of how agencies are managed by brands, or the fact that agencies generally don’t have access to backend analytics to be able to manage holistically? 

There’s much more to dive into with this year’s “State of Retail Media” report. We hope you find this information useful as you navigate 2024.

About the Author: Michelle Urwin is global vice president of marketing at Skai, where she is responsible for growing brand visibility and driving market growth. With more than seven years of experience in retail media, she is a recognized industry expert and has proudly spent the last year hosting Skai’s popular “Retail Media Thursday” series.

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