What’s Next for Retail Media? The five trends to plan for in 2024 and beyond.

Listen to article

By Chelsea Monaco, Vice President at Merkle

By Chelsea Monaco, Vice President at Merkle

Retail media has been one of the most dynamic advertising arenas over the last few years – and for good reason. It’s set to be a $55B industry next year as retailers jump on the opportunity to capture more revenue and brands invest to connect with their customers in new ways.

We’ll continue to see shifts in the landscape in 2024, driven by new innovations, expansion beyond retail, and the increasing value of first-party data. We explored these topics and more with brands and retailers alike as part of our 2023 Retail Media Research Report. The result was a deeper understanding of where companies stand now, layered with our recommendations for where the industry is headed so you can have a strategic approach to your 2024 retail media plans and beyond.

Here are the five retail media considerations you shouldn’t ignore next year:

1. Identity and data: Recent growth in retail media has largely come from the opportunity for brands to access retailers’ first-party data. It helps them better understand their shopper at that retailer and informs strategic business, media, and brand decisioning.

Recent developments in technology offerings and heightened expectations from brands mean that identity is at the core of RMNs’ offerings and will be even more critical in 2024. The rise and adoption of clean rooms allow for the co-mingling of data, whether that’s across brands and retailers, multiple brands, multiple retailers, or retailers and tech partners. Seventy-two percent of the brands in our survey that have invested in their own first-party data have used a clean room environment to combine it with an RMN’s – creating a more robust shopper profile for both parties.

In 2024 the RMNs and brands that win will be those who can combine this data with identity solutions to strategically plan how to spend their next dollar based on customer insights.

2. Artificial intelligence: The topic of AI is everywhere. That’s because generative AI is poised to transform most industries – and retail media is no exception. A generative AI strategy built upon relevant, custom-trained models may create large advantages for retailers to connect more closely with their shoppers. Our research showed that fitting AI into RMN strategy isn’t a top concern for retailers yet, so those who jump on it now can lead the pack in innovation.

From campaign efficiency to smarter targeting, generative AI has several applications that can boost retail media outcomes. We see three key uses for retailers to focus on in 2024:

- Enhance existing workflows to maximize efficiency.

- Streamline operations to unlock scaled revenue.

- Accelerate time-to-market for strategic initiatives.

3. Growth of non-endemic brands: Surprisingly, most RMNs do not have a non-endemic brand offering. Non-endemic refers to brands who engage with an RMN but do not sell their product(s) through that retailer. One of the primary examples for a non-endemic engagement today is a brand that buys a retailer’s first-party data to create qualified audience segments in media activations that drive back to their own domain.

Fifty-eight percent of brands say they often take advantage of the non-endemic data and media offering if available, yet the majority of RMNs do not focus on non-endemic. This creates a massive opportunity for retailers to be first movers and capitalize on this need that brands are seeking.

4. Expansion beyond retail: While the retail media network landscape has become extremely competitive, there is still room for expansion – especially in industries beyond retail. Retail proved out the media network model and built the foundation for it; now, companies in travel, automotive, quick-serve restaurants, and more are applying the same principles to open new revenue opportunities for their companies.

In 2024, brands should consider these partnership opportunities as they would a non-endemic relationship with a retailer: find companies with first-party customer data that aligns to your own target audience and, if desired, seek out media opportunities that engage customers in a moment that’s relevant for your brand.

5. New revenue streams for brands: Historically, data monetization in the retail media space has always been on the retailer side, whether that was through creating an RMN or selling insights via clean rooms and/or strategic partnerships.

We see untapped potential for brands to monetize their own first-party data. They could approach this in several ways, including:

- Using their owned-and-operated properties as an ad network, with targeting informed by their data.

- Contracting a retailer to build an RMN in exchange for the brand’s first-party data.

- Selling their first-party data, similar to how retailers do it now.

As the RMN space gets increasingly crowded, brands and retailers need to work harder to differentiate themselves and create more value for customers. By focusing innovation in these key areas and forging strategic partnerships with one another, both parties can rise to the top and stand out among a growing sea of competitors.

To see our full 2023 Retail Media Research Report, which covers key insights on what matters most for brands and retailers now, please visit our website.