Cracking the code: Unlocking the power of retail media in 2025
The advertising landscape is rapidly changing and retail media is at the epicentre. Forget what you thought you knew about traditional advertising: we’re entering a new era where retailers aren’t just selling products, they’re selling data and ad space. As we at Caretta Research delve into the heart of this transformation, it’s clear that understanding and harnessing the power of retail media is no longer optional. It’s essential.
What exactly is retail media?
Simply put, retail media is the digital advertising arm of retailers and e-commerce platforms. This encompasses everything from on-site ads on retailer websites to leveraging customer data for targeted advertising across the broader ecosystem. Amazon, a true pioneer in this space, already generates a significant portion of its revenue from advertising alone.
Here’s what’s driving this explosive growth:
- E-commerce as advertising’s new frontier: Online platforms are becoming the new battleground for brands, offering unprecedented opportunities to engage consumers directly where they shop. On-site advertising, including display and search ads, are creating new touchpoints for customer interaction.
- Data-driven precision: Retail media’s true power lies in its data. Purchase history, browsing behaviour, loyalty programme data – this treasure trove allows for incredibly precise targeting and closed-loop attribution. In a post-cookie world, this deterministic data is gold dust.
- Performance TV’s transformation: The convergence of Connected TV (CTV) and retail media is blurring the lines between traditional TV advertising and digital performance marketing. Expect to see more action-oriented campaigns on the big screen, fuelled by retailer data.
The retail media data goldrush
The advantages of retailer data are undeniable:
- Deterministic data: Real purchase data provides highly accurate user identification.
- Closed-loop attribution: Direct matching of ad exposure to purchase, both online and offline, offers unparalleled insight.
- Value for non-endemic brands: Unique targeting opportunities abound, even for brands that don’t directly sell through the retailer. As the saying goes, “Half the money I spend on advertising is wasted, and the trouble is I don’t know which half.” Retailer data aims to fix that.
The question of who will ultimately capture the retailer data margin is at the heart of the evolving retail media landscape. Demand-Side Platforms (DSPs) are striving to build off-site retail media ad networks by integrating DSP and DMP functionalities using this data. However, they’re facing significant hurdles in accessing quality inventory.
Meanwhile, ad agency holding groups are aggressively strengthening their data capabilities through acquisitions and focusing intently on retail media, leading to direct competition with DSPs in some cases. Retailers themselves are caught in a dilemma; partnering with DSPs offers a quick entry point into the retail media arena, but risks commoditizing their precious data. Building their own infrastructure, on the other hand, requires substantial investment.
The future is dynamic
The retail media landscape is still evolving. Here are some key trends to watch:
- Fragmentation and consolidation: The rapid retail media network spread will lead to market fragmentation and increased complexity in ad buying, which will hinder the ability of brands to fully harness the benefits of retailer data. This will drive the rise of aggregators. The market will likely fragment initially, followed by consolidation.
- Evolving value chain: It’s still an open question how much retail media value will ultimately be retained by retailers and how much will be absorbed by intermediaries. However, critical success factors are clear: scale, access to premium inventory and data prowess.
- Alliances and partnerships: Retailer alliances, cross-media partnerships and strong relationships with ad tech vendors will define success. More retailers will seek to acquire or partner CTV and streaming platforms to create “walled gardens.”
The revolution of retail media
Retail media is more than just a trend, it’s a revolution. As consumers continue to embrace e-commerce and digital platforms, retailers must adapt and seize the opportunity. At Caretta Research, we’re committed to helping professionals navigate this dynamic landscape and unlock the true power of retail media. For more insights, contact Caretta Research at info@carettaresearch.com.