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Brand Strategy Retail Media The Media Convergence

Retail media’s experimental phase is over. So, what’s next?

By Diana Abebrese, Principal, Business Consulting

EPAM Continuum


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September 25, 2023 | 6 min read

As the test-and-learn phase of retail media shifts into a period of consolidation, how can retailers take charge in the space? For The Drum's media convergence deep dive, EPAM Continuum’s Diana Abebrese investigates.

A shopping basket, filled with plump tomatoes

Retail media's set to evolve again, says EPAM Continuum. But how? / Konstantin Evdokimov via Unsplash

You’re probably familiar with the huge figures being tossed around to underline the importance of retail media. In the US, according to Insider Intelligence (to pick just one example), digital retail media spend will grow to $61.2bn by 2024. Such figures are usually supported by phrases such as ‘paradigm shift’ or ‘the next big advertising channel’.

Perhaps you dismiss such claims because you know that growth has historically been driven by Amazon and if you strip Amazon out, the numbers suddenly look far less impressive.

Except that isn’t what’s happening. Case in point: In 2022, Walmart International’s global revenue from advertising was $2.7bn, roughly 10% of net sales. That’s Walmart. Not a tech native. We can’t all be Walmart, but even if your organization is a fraction of the size, imagine what your chief executive’s reaction would be if you told them you’d just identified a source of profit through which you could add 10% to the bottom line.

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Retail media: How we got to where we are

“For the last couple of years, retail media for us has been very much: ‘Here’s some cash, go away and see what you can do with it.’” That’s what Helen Brown, retail media acceleration lead for Kellogg’s, told EPAM in our latest white paper, ‘Building a retail media business: challenges and solutions.’

Helen’s experience is a common one. As with search and social advertising before it, retail media advertising has been in a period of experimentation as organizations have found what works, what doesn’t – and, crucially, where the ROI lies.

As Brown explained, that fledgling period is coming to an end. Retail media is becoming open to greater scrutiny. It’s being compared to other channels. The very nature of what retail media is and how it is used is evolving.

What’s next for retail media?

Retail media started out as a way for brands to boost the visibility of their ‘digital shelf’ by advertising on a retailer’s owned properties – and using that retailer’s first-party data for targeting. That’s changing. Brands are still using retailer data, but they’re now targeting customers wherever they are on the open internet or in-store. Retail media is becoming omnichannel, where targeting the customer rather than a channel or segment has become the biggest challenge.

Simultaneously, as the initial test-and-learn phase of retail media reaches its end, we’re entering a period of consolidation. Consumer packaged goods (CPG) brands may have been happy to work with several retailers up to now, but as retail media becomes more sophisticated, that approach is unsustainable. Our research suggests that as brands and agencies start to scale their activity, we’ll see fewer retailers – perhaps five per vertical – dominating the market, with smaller retailers consolidating supply into existing demand platforms.

This creates some significant challenges for retailers (we explore many of them, and their solutions, in the white paper). Yet perhaps the most immediate retailer challenge is ensuring they are well-placed for ongoing success once the industry consolidates through standardization.

3 steps to retail media market leadership

Scale is crucial. The bigger players – single retailers or networks – will have the most data, offering an advantage in delivering the most valuable insights and targeting accuracy.

First-mover advantage is critical in building that scale. In many instances, it’s likely that the brand and supplier relationships that retailers build now as the retail media market is forming will sustain once that market has crystallized. Once suppliers have spent time with retailers helping them refine their offering to better meet their needs, the likelihood is that they will stay.

That leads to the third element of market leadership: differentiation. The better a retailer can tailor its offering, the more it differentiates. A differentiated, tailored offering is more likely to deliver results that prove the value of retail media investment, which will in turn cement the retailer’s reputation among new entrant suppliers.

For those who act now, the opportunity is there to create a virtuous circle. Those who don’t may be left feeding for scraps.

Retail media is growing up. There will be growing pains, yet its coming of age might just be as impactful as the hype suggests. Retailers must be ready to adapt.

EPAM's whitepaper contains further in-depth analysis of how to build a retail media business. And for more smart thinking on media's big moment, head over to The Drum's media convergence deep dive hub.

Brand Strategy Retail Media The Media Convergence

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EPAM Continuum

Our diverse, integrated consulting teams apply a Systems Thinking mindset to get to the heart of our clients’ increasingly complex business challenges.


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