Retail media outgrows its shell: ‘Structure and collaboration are essential’
Retail media is coming into its own, with financial services, tech companies and everyone in between getting involved. But a new report from IAB warns that the sector needs standardisation and transparency in order to grow.
According to the IAB State of the Nation Report, released on Wednesday morning, 33% of agencies and 39% of brand advertisers now include retail media as a significant part of their marketing mix.
70% of advertisers and agencies that use retail media have increased their investment in the space, with 77% now working across three or more retail media networks. Agency planning and strategy teams are restructuring in order to integrate retail media, the report noted.
For 35% of advertisers, this retail media budget comes from reallocating spend from other advertising sectors, while 19% have increased budgets to allow for it. Brands are moving budget from traditional and trade media advertising, with agencies taking money out of their social and digital display spend.
However, the technology behind the retail media boom is not keeping up, the report warned.
Advertisers “continue to express frustrations with lack of clear, standardised performance metrics across networks”.
A lack of clear return on ad spend is seen as a barrier to entry for 38% of brand advertisers, while 30% cite measurement and reporting limitations as stopping them from advertising in retail media.
Other barriers of entry into retail media for brands and agencies include the cost of partnering; a disconnect between teams at the manufacturer and retailer levels; a lack of standardisation in metrics and reporting; and retail media not being integrated with other technology.
Retailers plan to catch up over the next twelve months, with 85% seeking to enhance their measurement offering, and 77% looking to expand the ad products and channels offered.
There are also planned efforts to expand formats and channels, adapt third-party technology, hire more staff dedicated to retail media, develop in-house technologies, and — perhaps most importantly, but at the bottom of retailers’ priorities list — to move to adapt industry measurement standards.
Gai Le Roy, CEO of IAB Australia, said retail media is “now at a pivotal stage where structure and collaboration are essential”. She said the industry requires “shared frameworks, clear measurement principles and greater transparency across networks”.
“As we’ve seen in other maturing digital channels, establishing consistency is what allows innovation to scale. That’s where the IAB and its members can play a critical role.”
The report surveyed 161 senior advertising decision makers, across retailers, media agencies, agency trading desks, creative agencies and advertiser brands. 66% of buyers were from advertising agencies and 34% from brands, while 19 retailers with a retail media offering in place were also surveyed.
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Nathan Jolly is the Features Editor at Mumbrella. He joined the team in July, 2023.
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