Study: Advertisers/retailers partnering to reach consumers
December 13, 2022
IAB Europe, the European-level industry association for the digital and marketing ecosystem, has revealed the results of a new industry survey on retail media advertising. Currently, retail media is one of the fastest growing sectors within the digital advertising industry and IAB Europe forecasts retail media ad spend will reach €25 billion in Europe by 2026.
To understand the retail media opportunity further, IAB Europe and its member company Xandr, now part of Microsoft, surveyed over 800 buy-side stakeholders on their current use and experience leveraging retail media. The study also looked at their strategic focus for the sector over the next 12 months.
Retail Media is No Longer an Emerging Channel
The results demonstrate that retail media is a key part of advertising strategies with 92 per cent of advertisers and 74 per cent of agencies already partnering with retailers to reach consumers. Of the small amount that are not engaged with retail media as an advertising channel, 88 per cent of advertisers and 77 per cent of agencies plan to do so in the next 12 months.
First-Party Data Strategy is a Key Opportunity
Data, in particular first-party data, is a key opportunity within retail media, largely driven by the deprecation of the third-party cookie. More than a third of buyers cite this as one of the key drivers of retail media adoption and the majority are already working on their first-party data strategy. Whilst 91 per cent of buyers have a first-party data strategy in place, 49 per cent are still working towards scaling their first-party data strategy.
Scale and Ad Tech Key Challenges to Overcome
As with any new advertising channel, retail media is not without its challenges. A third of respondents cited ‘scale’ and ‘integration with other advertising technologies’ as their top two barriers. Buyers want to be able to purchase their advertising via one or a few technology partners and the lack of retail media ad tech integration remains a stumbling block.
“Retail Media in Europe is already an €8 billion market and growing double-digit despite economic headwinds,” notes Daniel Knapp, Chief Economist, IAB Europe. “The pandemic-induced rise of e-commerce, paired with retailers’ first party data in a world of signal loss, and the ability to combine ad exposure and conversion into a single platform are key market drivers. We see further potential for off-site retail media to integrate retailer’s role more widely in the upper marketing funnel.”
“Our research with IAB Europe shows how third-party cookie deprecation has accelerated the adoption of this channel since it offers the benefits of first-party data with closed loop attribution,” adds Paul Longo, Global Head of Retail Media Sales, Microsoft Advertising. “However, there are still pain points related to scale and technology that are creating challenges for retailers and brands. We are passionate about working with both retailers and brands to deliver solutions that drive meaningful business outcomes; solutions that offer retailers the tools and platforms they need to drive scale, efficiency, and performance for brands, and that enable brands to capitalise on this opportunity to reach high value audiences.”
“The new study from IAB Europe and Microsoft confirms what we have witnessed in the last 12-18 months – the shaping of retail media as a key element in the strategic channel mix,” says Laura Badea, Commerce Partner, Wavemaker. “Retail media is no longer seen as bottom-funnel activation; the development of site-serve capabilities and tech solutions which allow advertisers to deploy audience segments built with retailers’ first-party data across the entire web has enabled the conversation to shift from brand-led to commercial-led outcome. The work of the new retail media working group – launched by IAB Europe in October – is therefore critical in helping to define a unified vision and standards to underpin the fast growth that moves at different levels of speed across sectors and markets.”
“The results from the IAB Europe and Microsoft study show that retail media presents a real opportunity for brands to reach consumers effectively,” comments Amir Rasekh, Director of Nectar360. “We have been building our data-driven Retail Media capability across Sainsbury’s and Argos for many years, with the aim of driving enhanced levels of personalisation for our customers and strong returns for clients.”
IAB Europe has launched a new Retail Media Working Group to enable collaborative conversations, provide education and insights, and create recommendations to shape and define this exciting advertising space. The new working group is open to all IAB Europe members and will provide education on the retail media landscape, the benefits, and use cases as well as insights and standards to enable the market to continue to grow.