What's driving the rise and rise of retail media

CMO explores what's driving rapidly rising interest in retail media and how both retailers and brands view this marketing strategy

In the digital era, it is not uncommon to see the lines between industries blurred. In the case of retail media however, those lines are practically obliterated.

As its name suggests, retail media brings media capabilities into retail organisations – along with the revenue opportunities familiar to any commercial media organisation. The concept is almost as old as retailing itself, having previously encompassed formats such as catalogues, shelf-talkers, point-of-sales displays, endcaps, and more recently, digital signage and instore radio.

The introduction of digital technology into retailing – both online and on-premises – has brought incredible scale. According to Forrester Research, digital advertising sold by retailers and marketplaces in the US will amount to US$40 billion in 2022, up 39 per cent from the previous year. Forrester projects that number will rise to more than US$85 billion by 2026.

In 2021, one company, Amazon, accounted for 71 per cent of spending, or US$31.2 billion. This made its retail media business bigger than YouTube’s ad business. That percentage is actually well down on the result for 2018, when Amazon accounted for 80 per cent of spending. It’s not because its overall value is falling, but because many of the US’s largest retailers including Walmart, Kroger and Target are investing in building their own retail media offerings.

Not surprisingly, retail media has become the hottest new channel for advertising and Australian retailers are catching on rapidly. According to Forrester senior analyst for performance marketing, Nikhil Lai, rapidly growing interest in digital retail media among advertisers is fuelled by several factors, including rising global focus on protecting consumers’ privacy and subsequent clampdowns on online tracking activities.

“The looming death of cookies in 2023 has caused a demand for first-party data that is being satisfied by retails brands that have a lot of personally identifiable information they derive from their apps and websites,” Lai tells CMO.

The second key driver is the apparent effectiveness retail media demonstrates. “The closed loop measurement possibilities in retail media are valid and substantiated,” he adds.

The retailer opportunity

For retailers, Lai identified three key reasons drivers behind their investments in retail media capabilities. Not surprising, the first is revenue, thanks to the volume of dollars collected by Amazon. In other instances, he says retailers are creating media channels to drive awareness and consideration for themselves and their suppliers’ brands, while others focus on enhancing customer experience.

“The frequency with which the retailer interacts with customers is directly correlated to the part of the funnel that that media can impact,” Lai says. “Grocery, for example, has such a rich database of loyalty data and such frequent interactions with customers they are able to hold media accountable to lower funnel goals like sales, whereas other networks out there that don’t have daily or weekly interactions are being viewed as more conducive to hitting awareness or consideration goals.”

For hybrid electronics retailer, digiDirect, the advertising dollars are clearly attractive. But general manager, Haig Kayserian, says retail media also provides an opportunity for his brand to build stronger relationships with both suppliers and customers.

“We work very hard to establish an audience of people who want to come to us because of the items that we have curated and the content we have produced,” Kayserian says. “And suppliers are used to funding marketing budgets - it is just part and parcel of how you supply retailers. For a site like ours that attracts over half a million direct visitors each month, to direct some suppliers’ marketing spend to prominent real estate on our website, exactly where people are searching for product that they sell, is a win for them and the consumer.

“It’s a great opportunity for our suppliers to have targeted, measurable marketing on our own platform.”

Kayserian’s plan is for digiDirect to establish its retail media business in time for the sales season later this year, and he has commenced conversations with suppliers. However, he concedes while he knows a lot about retailing, he cannot claim the same competency in managing a media business and will be looking to engage technology partners to build out digiDirect’s capabilities.

“Now an industry has developed out of this, recognising there are retail media opportunities in Australia,” he says.

Up next: The tech smarts required, plus brands taking a bigger retail media plunge for customer engagement

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Latest Videos

More Videos

More Brand Posts

As an ex employee of 4 years during the growth of the company, I can say that the new management has benefitted the company tremendously,...


How JobAdder's CMO is bringing the human truth to B2B rebranding

Read more

So many words, so little business benefit.

Brett Iredale

How JobAdder's CMO is bringing the human truth to B2B rebranding

Read more

This article highlights Gartner’s latest digital experience platforms report and how they are influencing content operations ecosystems. ...

vikram Roy

Gartner 2022 Digital Experience Platforms reveals leading vendor players

Read more

Ms Bennett joined in 2017 yet this article states she waited until late 2020 to initiate a project to update the website. The solution t...

Munstar Cook

How Super SA put customers at the heart of its digital transformation

Read more

Its a informative post thanks for sharing

Galaxy Education

The people and process smarts needed to excel in omnichannel retailing

Read more

Blog Posts

The 15 most-common persuasion mistakes

As workers across the country slowly head back to the office, many of us might have forgotten how to deal with one another in person and the best way to persuade someone in a working environment.

Michelle Bowden

Author, consultant

5 commonly missed opportunities when marketing to multicultural customers

The latest census data shows Australia has become a majority migrant nation for the first time. According to the new national data, more than 50 per cent of residents were born overseas or have a migrant parent.

Mark Saba

Founder and CEO, Lexigo

Post-Pandemic Business Playbook: An Opportunity Unlike Ever Before

Covid-19 created a shift in the customer and economic-based reality unlike anything most of us have ever experienced. Customers have changed from routinised pre-pandemic shopping behaviours to frequently purchasing new brands and suppliers.

Ofer Mintz

Associate Professor of Marketing, UTS Business School

Sign in