Originally Posted on MarTech Series by Gil Sadeh
Advertising Perceptions forecasts that retail media advertising will grow to $64.8B in the US this year, accounting for 23.5% of all digital ad spending. This eclipses linear TV advertising’s forecast of $60.5 billion and rivals other major digital channels at a similar point in their development.
This boom has triggered a surge of innovation by providers of retail media networks (RMNs) looking to maintain and grow their market share. These include new ad placements in display and streaming TV, new inventory outside of their owned properties, the digitization of in-store media, and partnerships with other walled gardens, such as Amazon’s deal with Meta.
New entrants are also emerging on a seemingly daily basis, with even non-retailers, like J.P. Morgan Chase, starting RMNs to take advantage of the opportunity. Companies that don’t traditionally sell physical products are lining up to leverage retailer data to reach key audiences.
With this bustle of activity, growing pains are inevitable for retail media networks and advertisers alike. However, both new technologies and strategies can be enlisted to help ensure objectives are met.
How will this new wave impact the original retail media players?
Amazon Ads, the category leader, captured 75.2% of the US retail media market in 2023. It has the most ad formats, the biggest inventory, and the most mature offering among retail media networks. Other early movers — Walmart Connect, Target’s Roundel, and Instacart Ads — are also in prime position to continue reaping retail media’s benefits.
Meanwhile, the next generation of RMNs (100+ and growing) is exploring how to be competitive, relevant, and attractive to advertisers. They’re insourcing their media operations, building their own systems, and enlisting technology vendors to help. But thanks to decision fatigue and analysis paralysis, marketers may be inclined to focus on the leading RMNs they are already familiar with. The newer RMNs must consider standardizing their approach to transparency and measurement and establishing a clear mechanism for proving value over their more seasoned competitors.
Embracing an integrated approach will enable RMNs to effectively manage their growing datasets and diverse advertising channels in one cohesive platform, simplifying the complexities of today’s digital and physical marketing efforts.
This adoption of a more connected and insight-driven framework signifies the next step in the evolution of retail media, giving RMNs of all sizes an opportunity to thrive in this dynamic advertising ecosystem.
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How a shift to in-store may impact retail media overall
Another noteworthy trend in retail media is the digitization of in-store media – 51% of marketers already manage in-store media as part of their holistic program.
In-store media isn’t new — coupons, end caps, checkout displays, etc., have been around for decades. What is evolving is the use of technology and data in-store. Logistically, this is still a challenge for many retailers, as loyalty data is traditionally required to connect the dots between online and offline consumers. However, the RMNs who are able to do so successfully will attract advertisers who have longed for holistic clarity and synergy.
An additional byproduct of the increased digitization of in-store media is that it will effectively unify the offline (shopper marketing) and online (retail media) silos. This convergence will streamline the relationship between brands and retailers, further accelerating growth in the channel.
This is not a trivial task. Breaking commerce silos, connecting walled gardens, and offering advertisers the transparency and control they require to invest will take new partners to accomplish – but if done successfully, it will be the differentiating factor between digitally native first movers.
Measurement: shifting from ad metrics to retail metrics
Rising budgets in retail media require marketers to justify and protect those investments, but with so many new networks, ad placements, and cross-channel inventory, measurement becomes exponentially more difficult.
In the first era of retail media, the most frequently utilized metrics were in line with traditional advertising and media performance KPIs, such as CPC, ROAS, CTR, CPA, ACoS, and Viewability. However, in Skai and the Path to Purchase Institute’s 2024 State of Retail Media report, we saw a deliberate shift from traditional advertising metrics like CPC and ROAS to more retail-centric KPIs like Share of Voice and Organic Sales.
| Metric | Usage in 2023 | Usage in 2024 |
| Inventory Health | 19% | 48% |
| Share Metric i.e. SOV | 19% | 69% |
| Detail Page Views | 20% | 61% |
| Organic Sales | 29% | 67% |
| Add to Carts | 29% | 55% |
| Category Share | 31% | 77% |
This retail intelligence provides valuable insights into sales, traffic, trends, consumer behaviors, and competitive insights, enabling brands to position themselves strategically in the market.
But while recognizing the importance of measuring the direct impact of their ads on sales, only 48% of marketers are utilizing incrementality. At the same time, 43% express a desire to adopt it in the future, pointing to a market for a solution that allows advertisers to easily configure, track, and analyze all incrementality indicators of their choosing.
Strategy Fueled by Technology
Whether new entrants or original players, given these trends and increased competition, providers of retail media networks know the road to success is an operational strategy fueled by technological innovation.
Connecting their offerings in an integrated, holistic package increasingly becomes not just an option but a strategic necessity for RMNs looking to capture significant ad spend. This evolution will enable them to offer unparalleled efficiency, targeting capabilities, control, and cross-channel synergy, meeting the sophisticated demands of advertisers and providing a seamless experience for consumers.
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