IAB Europe, the leading European-level industry association for the digital and marketing ecosystem has today (December 13th, 2022) announced 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 €25bn (~£21.4bn) in Europe by 2026. 

To further understand the retail media opportunity, 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% of advertisers and 74% 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% of advertisers and 77% 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% of buyers have a first-party data strategy in place, 49% 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 has 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. 

Daniel Knapp, chief economist, IAB Europe comments on the factors driving the growth of retail media in Europe: “Retail Media in Europe is already an €8bn (£6.8bn)  market and growing double-digit despite economic headwinds. 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 the 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. However, there are still pain points related to scale and technology that are creating challenges for retailers and brands,” comments Paul Longo, global head of retail media sales, Microsoft Advertising. “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.”

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.