The phenomenon

Retail media has taken the world of marketing by storm in recent years. Its growth numbers are sometimes hard to comprehend, but the consensus will set the market size to reach 100 billion dollars very soon. One fact we often cite to describe the size is that in the US the dollars spent on retail media are now already surpassing those spent on linear TV.

Retail media in short means that retailers monetize their valuable customer insight by offering their target group reach to advertisers. Retail media profoundly changes the way advertisers reach audiences. The advertisers get seen just where the shopping decisions are made, and the ads are well targeted to reach the wanted people as retailers know their customers inside out. When you add the fact that effects on sales can be easily reported, it's easy to see its success factors.

Retail media happens both online and in-store. it is also already breaking out of traditional retail: it is on gas stations and EV charging stations, fast food restaurants and pharmacies just to name a few industries. To put it short, it is soon everywhere.

The retail media threat

How then does this megatrend affect media companies? How will it affect the decisions of advertising customers and how does it change the media sales itself?

Retail media is such an appealing way to advertise for so many brands, that it will have profound implications on where advertisers allocate their budgets. Morgan Stanley just published a study in which it estimates that the proportion transferred from brand budgets to retailers was five per cent in 2022 and it will grow to about 40 per cent already by 2027.

Where does the money for retail media come from?

These figures directly indicate the dramatic shift in media choices in the online world, but as the just-started hyper-growth of in-store retail media gains momentum, it will surely be in line also in the physical store environments.

While not all marketing needs to be as near as possible to purchasing decisions and targeted with precision, a very large part of it will. Especially when resources are scarce, the decisions tend to steer towards the most practical marketing solutions where results in sales can easily be measured. What is certain, is that the media landscape will look very different in years to come.

The in-store opportunity for media

What then can media companies do? Is this once again a megatrend that shakes the industry and the media copes the best way it can?

For many the development surely promises hard times. But for the agile and innovative media companies willing to make bold moves things do not look that bad. The situation may prove to be a lucrative new business opportunity for those willing to act now.

You see, until now retail media has been mainly a game for the biggest retail players. This is especially true in online retail media, where gigantic retail chains tend to dominate, starting from Amazon. However, the urge of smaller retailers to get into the retail media business is huge. They usually just don’t think they have the resources needed to run the business.

As retail media now enters the in-store sphere in scale, a new market is born. In an in-store environment, customers are far more loyal and of course more local than online. Retail media in the physical world is not a winner-take-all -game as it often seems to be in online-driven markets. There will be demand for various types of audiences scattered around various chains.

By combining the small & medium retailers, other audience-heavy industries that interest advertisers and possibly even existing DOOH -networks under one umbrella it is possible to create a multi-retailer retail media network that can compete in the market on advertiser budgets. Advertisers can then buy various types of audiences from this new network: from just a single chain or from several chains at the same time, or for example a certain type of audience across all chains in the network based on customer insight from members.

The revenue in this type of network will be shared between members and the network operator. The most obvious operator for this kind of network is a media company with its media sales know-how and resources. Media companies have a profound understanding of advertisers’ needs and an omnichannel view to serve them in the best way possible to reach the desired outcome with the preferred audiences.

The ability to serve the whole marketing funnel is the key to understanding why an in-store retail media network would be a perfect match for many media companies’ offerings. The leakage of media money from traditional channels to retail media will now be in control – the money just changes the channel. In addition, a new family of media products can combine the upper funnel in creating awareness with the lower funnel for creating conversion and steering the purchase of actual products. This will add major new revenue streams for the media companies acting in the retail media space.

How can a media company get into in-store retail media?

The in-store retail media is just starting to find its form in different markets. The biggest retailers are already building their networks and organizing their own sales teams. A progressive media player can take still its place in the market by making the needed strategic decisions on entering the retail media game as an active participant, not a bystander.

As the decision to enter the market has been made, it is time to plan the concept of a network that suits your current business in the best way possible. While planning, you can already negotiate with the first eager members to join your network, run a pilot of the key operating processes, and find the best practices. From the platform point-of-view: choose a platform that has end-to-end capabilities for creating audiences from data, provides media sales tools for various channels and can distribute targeted campaigns on a screen level to reach the wanted target groups. And most importantly, choose a platform partner that can truly advise and support you in your journey to this potentially very substantial new business.