The strategic significance of retail media is undeniable, but while 80% of agency executives say that they view retail media as an exciting opportunity to stand out in a crowded marketplace, only 41% currently consider it a core part of their media strategy, according to a new survey by Infillion. Indeed, retail media networks (RMNs) still account for only 5% of media budgets among the executives surveyed.
The hang-up seems primarily to be a lack of infrastructure, with measurement capabilities and scalable cross-channel execution topping the list of barriers — not unusual for a still nascent media offering.
“I was surprised by just how ‘in progress’ so many aspects of retail media are,” said Jeremy Woodlee, General Manager of Enterprise at composable advertising platform Infillion in an interview with Retail TouchPoints. “The report validates its importance — as we’ve heard in industry news and at every event, RMNs are a very strategic and valuable part of so many brands’ advertising. However, it’s still a media type going through incredibly rapid change and evolution, such as the growth of CTV, the need for measurement standardization and the importance of offsite. It’s rare for something to become this important, this fast, with so much willingness across the industry to navigate the early stages. It’s a clear validation of just how valuable RMNs have become.”
Retail Media: ‘A Medium in Flux’
Infillion surveyed 58 agency professionals directly responsible for buying retail media to understand how current dynamics such as planning mindsets, budget structures and organizational silos are shaping retail media investments.
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RMNs’ promise of precision targeting, closed-loop measurement and contextual relevance are, without a doubt, appealing to advertising executives, but technical barriers and silos (both internal and external) are currently stifling investment — so much so that “one of the most surprising findings in this research was just how difficult it was to conduct the survey,” reads the report’s introduction. “Ask five different agencies about their retail media strategy, and you’ll get five different answers, reflecting a space with no one-size-fits-all approach.”
Indeed, the current challenges hindering retail media spend aren’t relegated to the ranks of the medium’s operators. Agencies’ internal dynamics also are lagging, which Infillion saw as evidence “of a channel evolving faster than traditional team structures can keep up.”
Retail Media Ambition Currently Outpaces Adoption
The findings are a testament to retail media’s rapid growth and potential, as well as the pain points that will need to be solved in order for it to become a dedicated part of the full-funnel advertising mix. Lest we forget, retail media is still young — while Amazon launched its ad business in 2012, it was another decade before it became a business model that other retailers seriously considered.
Now that it’s here, agencies and brands are champing at the bit to take full advantage of the retail media opportunity — and often being met with frustration: “The appetite for full-funnel retail media is already here, but the infrastructure to support it is lagging,” said Liz Weinsten, VP of Marketing at Infillion in the report. “Until RMNs close these gaps, ambition will continue to outpace adoption.”
Entrance of Commerce Media May Help to Break Down Silos
But just as retail media’s rise has been swift, Woodlee foresees quick maturation: “Most of the major trends in RMNs will drive fixing those issues in time,” he said. “Moving beyond trade marketing budgets to brand budgets for endemic brands; becoming more relevant to more brands, either through new media networks with new endemics or by offering solutions for non-endemic brands; growing offsite media buying with audiences in places like CTV.
“In each case, things like standardized measurement will become more and more important,” he added. “The RMNs have their hands busy launching the foundational elements and activating brands, but they are quickly turning to making that experience very smooth for brands, and that will make things better, quickly.”
The picture becomes even more muddled as companies adjacent to retail — in sectors like travel, services and payments, such as PayPal, Re/Max, Uber and United Airlines — launch their own media networks and expand the ecosystem from retail media to commerce media.
But Woodlee said that the impact of these newer entrants still remains to be seen: “If anything, they should accelerate the breakdown of silos,” he said. “Even more media environments relevant to even more brands — it’s becoming harder and harder for media buyers to silo RMNs/CMNs into specific teams and use cases. It’s more than trade marketing, more than pure performance marketing and more than search marketing. It’s kind of everything — full funnel, in other words.”
CTV, In-Store Diverge in Agency Uptake
When it comes to full-funnel, three areas have been of particular interest in recent years: CTV, in-store and offsite. But while CTV has emerged as a breakout format, adoption of the much-lauded in-store retail media remains slow, at just 2% (compared to 23% for CTV).
“So many of the brands (CPGs especially) driving the adoption of retail media are also very big TV buyers,” explained Woodlee. “I think it’s natural for them to see the value of CTV in terms of driving brand awareness and other upper-funnel goals. RMNs allow them to easily, organically connect upper-funnel advertising to real lower-funnel goals. I’m surprised it’s not growing faster.”
The same cannot be said for in-store retail media, but it’s quite likely that that is related to the familiarity of the channel: “RMNs are prioritizing in-store because these media surfaces are incredibly unique and special — it’s natural that they’d lead with something that was differentiated,” said Woodlee. “But it takes time for brands and agencies to test, adopt and scale new formats. Plus, I bet there is some real friction from how similar in-store retail media is to traditional trade marketing placements (e.g. endcap promotions).”
In fact, the report found that while in-store media ranks high in strategic planning because it sits closest to the point of purchase, many buyers have found that in-store currently lacks the scale, measurement and tools needed to justify significant spend today. Buyers aren’t dismissing in-store — they’re simply waiting for it to catch up.
Area to Watch: Shoppable Ads
As advertising technology advances, a new ad type is emerging that will be particularly beneficial to retail media — shoppable ads across CTV, display and video. While this segment currently represents just 5% of RMN investment, it’s projected to grow to 18% by 2026. “The opportunity lies in making the path from inspiration to purchase seamless within the ad experience itself,” the Infillion report declares. “As creative capabilities expand, shoppability is becoming a feature, not a format, unlocking new value across the entire funnel.”
Check out the full report — Getting Real About Retail Media: Unfiltered Perspectives on Advertising’s Next Big Opportunity — for a raft of additional insights into agency buyers’ attitudes and actions, including:
- Opinions on retail media’s full-funnel performance;
- Current challenges keeping retail media from fully capturing offsite spend;
- The budget tug-of-war underway at many brands; and
- What’s behind the current gap between agencies’ strategic prioritization of retail media and real-world spend.
