Retail media is seeing a surge this year

There may be no bigger scramble in business right now than the race to dominate retail media. What was a relatively new concept just a few years ago has now been brought to the forefront of the digital advertising world, and looks primed to become one of the main sources of revenue for major brands. 

Perhaps nowhere is this more evident than at Cannes Lions, a global advertising festival held in France just weeks after the prestigious Cannes Film Festival. Cannes Lions attracts advertisers from around the world, and this year, retail media dominated the event; this comes as major retailers' "online businesses continue to intersect with the marketing world," said Marketing Brew. But how does retail media work, and why is it primed to dominate the advertising industry? 

What is retail media? 

At its most basic, retail media is "when a retailer offers advertising capabilities and services, similar to what media outlets such as publishers and television networks have done for years," said Retail TouchPoints. These advertisements can play out in a variety of ways. 

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This can include "'on-site' advertising opportunities — such as ads and videos on [a retailer's] own website, app or even in its physical stores," said Retail TouchPoints. The flipside of this is "off-site" advertising, when a retailer "lets advertisers leverage its first party data to reach customers on third-party channels like social media." These two forms make up the majority of the retail media network, though "off-site retail media is typically more complex than on-site."

How big is the retail media industry? 

Massive — to a level the average consumer may not realize. Global retail media spend will reach $140 billion this year, according to eMarketer. This will account for more than a fifth of all digital ad spending in 2024 and marks a 21% increase year-to-year from retail media spending in 2023. 

When looking at individual companies, the scale of their retail media revenues is staggering; one notable example is Amazon, which earned $46.9 billion from retail ads. This figure "exceeds the annual global revenue of Coca-Cola and makes Amazon the third-largest advertising platform in the United States, behind only Google and Facebook," said the Harvard Business Review (HBR). 

What comes next for retail media? 

The industry isn't slowing down anytime soon: Another report from eMarketer found that U.S. retail media spend alone will reach $129 billion by 2028, up from $54 billion this year. Global retail media spend will likely balloon accordingly as well. The industry is "becoming vital to ad channels outside of retail media networks as the first-party data it gathers from retailers allows for better targeting across social, search, and the open web," said eMarketer. 

This buzz around retail marketing reached a peak at the aforementioned Cannes Lions, where a slew of "dealmaking talk over potential partnerships between retailers, content providers and ad tech took place," said Axios. It is now shoppers themselves that are the "new product being sold in-store and online," said Mark Boidman, the head of global media at Solomon Partners, to Axios. Competing within the retail media space "might mean changing what you stand for as a business. It might mean I am no longer a retailer; I am instead a category owner," said Donna Sharp, a managing director at MediaLink. 

This marks a noted changed in the landscape over the past decade. Few brands "anticipated 10 years ago that advertising would become a huge growth driver for them, but Amazon's success has goaded them into action," said HBR. Companies "as varied as Dick's Sporting Goods, Home Depot, Instacart, Lowe's, Macy's, Ulta, and Walmart now all own and operate retail media platforms." Many of these companies are entering the space because they are "recognizing that it's a growth opportunity not to be missed," and that it is a "high-growth, high-margin advertising business, one that contrasts favorably with retailers' low-growth, low-margin core businesses."

But there are still challenges surrounding retail media; this is especially true for brands "within retail media networks where the retail media teams operate separately from their sales or merchandizing teams," said Adweek. And trying to compare trends across retail media networks is still "apples and oranges," General Mills Head of Experience Sarah Leinberger said to Adweek. "Sometimes they're not even fruit," added Clorox Senior Vice President and Chief Marketing Officer Eric Schwartz.