Retail Media: US, UK and Europe ecosystem, market size and definitions

Retail media is on the radars of anyone in the ad space as the “third big wave” of advertising. As a relatively new niche, retail media’s terminology and principles still lack a common understanding. Local and global organizations are working toward creating a common language around retail media and retail media networks and standardizing the terminology, measurement, and understanding of the ecosystem.

Here is Verve’s take on the “What, Why and How” of retail media in the US and Europe.

What is retail media and/or a retail media network (RMN)?

In a nutshell, retail media is a set of advertising options owned by and made available through a retailer. In this context, retailer is a broad term that simply means any company selling goods or services to consumers either offline or online.

A retail media network is, therefore, a platform within an online store that allows brands to advertise their products to the retailer’s audience, while generating additional revenue streams for the retailer. Examples of RMNs include: 

  • US: Amazon, Walmart, Wayfair, Target
  • UK: Boots, Tesco, and eBay
  • European Union: Bol.com, Zalando, Ahold Delhaize, and Klarna

What are the advantages and main qualities of RMNs?

RMNs’ biggest advantage is customer data. RMNs operate as (almost) fully authenticated environments, because (either in an app or on the website) the customer is providing her email ID and often more PII data. On top of that, most retailers have a loyalty system that keeps their customers locked into their ecosystem.

In an increasingly cookieless/identity constrained advertising space, RMNs having this data becomes a critical value proposition, as it allows retailers an ability to target more precisely.

How big is the retail media market?

The online market share is growing at a steady pace globally. Retail media networks have two levers of growth – one being higher adoption rate and the other organic lever is the online/ecommerce market growth. The growth of RMNs is also powered by retailers moving up the funnel and expanding into video and CTV.

Retail media will be a $45 billion business in the U.S. by the end of this year, and it’ll grow by just over $10 billion next year (Source: eMarketer).

IAB expects retail media spending in Europe to grow 33.9% in 2023.

Retail media ad spending worldwide
eMarketer: Retail media ad spending is expected to surpass traditional TV ad spending. At $45.05 billion, retail media is appreciably larger than the $26.92 billion CTV ad market but smaller than traditional TV’s $62.42 billion market. However, even if retail media’s growth slows to 12% in 2025, it will leapfrog TV at that point.

Who are the players in the retail media ecosystem?

In simple words, the ecosystem includes advertisers on one side, retailers on the other, and tech/data in-between and around it.

The advertiser side of the ecosystem contains two types of brands:

  • Endemic brands are those already selling their products on the retailer platform and using marketing options provided by the retailer to increase their visibility within the platform. Examples for endemic brands would be T-fal advertising on Amazon, or Nike having a highlighted spot on Zalando.
  • Non-endemic brands do not sell their products/services through the retailer, but they still use the retailer’s data and ad capabilities to target their audience. Examples of non-endemic brands would be H&M ads within the Klarna (finance) app or travel deals within a real estate app.

On the retailer/publisher side of the retail media landscape, we find two major categories: traditional and digital natives.

  • Traditional retailers have brick-and-mortar storefronts as well as media capabilities. Examples include Walmart, Target, Macy’s, Tesco, Boots, M&S and Douglas.
  • Digital native retailers are businesses that have only existed online. Examples are extremely diverse in this category, inclusive of e-commerce/marketplaces (e.g., Amazon, Zalando, Bol.com, eBay, Marktplaats), finance apps (e.g., Klarna or Revolut) and those focused on on-demand services (e.g., Walt, Gorillas, Uber, Doordash, Lyft).

It is worth mentioning that one of the tasks for retail media networks is to acquire users for their platform and/or therefore for advertisers. This is where DSPs (including Verve DSP) set their foot into the door, and where social media is also coming into play.

What does the retail media mix look like, and which ad formats, channels etc. are included?

In the RMN world, we talk about on-site vs off-site advertising. 

On-site is anything that is advertised on the retailer’s owned inventory, be it website/app or any in-store inventory. The on-site ad formats include sponsored listings, display banners, videos, email and push notifications, as well as (D)OOH in, usually in the format of in-store screens. 

Off-site are ads running on third-party inventory by the retailer (usually on behalf of their advertiser). The formats include search/shopping ads on platforms like Google, display banner ads and video ads on third-party sites, social media and CTV, as well as emails and push notifications. For example, Walmart would run Twitter ads for a brand sold through their website.

Next, we’ll talk about online vs offline ads. 

Online includes sponsored product ads, display (banner) ads and video ads. In apps, we see that the advertisers and retailers are not limiting themselves to specific formats. Although the sponsored product ads are more widely used, retailers are also experimenting with video and high-impact units.

Offline is basically anything that is not online. This is usually digital out-of-home (DOOH) advertising in stores. Offline is also sometimes referred to as in-store retail media. According to eMarketer, in-store retail media is on the precipice of major growth. For retailers with brick-and-mortar presences, their in-store audiences are a major advantage over digital-only retailers. 

For example, the vast majority of Walmart’s roughly 139 million weekly customers still shop in-store. In an interview with CNBC, Walmart Connect’s head of retail media sales, put it this way: “When you think about our store footprint and the percentage of Americans that we reach through our stores, we can deliver Super Bowl-sized audiences every week.”

What role do data clean rooms play in retail media, and who is already using them?

Data clean rooms are increasingly used by large retail media networks. They offer a great opportunity to combine retailer first-party data with publisher first-party data or even with third-party data sets in order to drive lower acquisition costs and higher LTVs. All this without the risk of the data being resold or recaptured outside of the RMN.

A US example of data clean room usage in retail media networks is Amazon. Pinterest + grocer Albatros + LiveRamp showcased the use of data clean rooms during CES in Las Vegas in 2023. In UK there also some notable partnerships:  ITV + Boots +Tesco  and Channel 4 + Sainsbury’s Nectar.

What is the future of retail media beyond 2023?

The future looks bright and exciting. The retail media networks market is steadily growing. Margins are exceptionally high, retailers are excited about adding and enhancing a new revenue stream to their business with relatively low investment costs. Brands and advertisers are enthusiastic about the opportunity to access their target audience in a trackable, authenticated environment. 

Retail media is likely to see more standardization in the coming months, with industry authorities partnering with large networks and tech providers to add accountability and transparency to this innovative digital channel.

What retail media capabilities are currently offered by Verve?

As an end-to-end advertising business, Verve is capable of servicing the rising needs of the retail media industry. We have offerings for different players of the retail media ecosystem, on the Demand, Supply, Monetization, Creative, and Consultancy sides.

One of the strongest propositions currently lies in our DOOH capabilities, which is a big part of retail media business.

To learn more about Verve’s capabilities in the retail media field, reach out to us.

Want to subscribe to our newsletter?