How retail media is revolutionizing the advertising market

by Julia Pott

Originally emerging from the area of advertising cost subsidies, retail media has developed into an independent media category separate from the merchandise business. The potential is huge; IAB Europe expects sales of 25 billion euros in Europe by 2026.

What factors are driving the growth of retail media in Germany? Digital advertising is becoming more important than print advertising, investments in online advertising, retailer apps and data management are increasing. Retail companies' first-party data enables personalized advertising close to the customer and the shopping process.

In the EHI study, the inventory of retailers is referred to as onsite media and the inventory of third parties as offsite media. Various channels are used, taking into account the first-party data of the marketing retail companies.

Advertising space in stores enables customers to be addressed directly at the point of sale, where purchasing decisions are made. Advertising impact can be measured by evaluating checkout data using A/B tests, for example. Retailer apps offer personalized advertising formats and are becoming increasingly important. Retail companies currently invest an average of one fifth of their digital budget in apps, and this is expected to increase to over 30 percent by 2026.

Although search has tended to lose budget shares in recent years, it remains the leading form of digital advertising at almost 38%. In addition to advertising in search engines, social media is one of the most heavily used offsite channels and has a forecast budget increase of almost three percentage points compared to 2023.

A central component of the retail media concept is the use of customer data. Retail companies can not only use the first-party data they obtain to market their own range but can also build up an additional revenue model by making it available to third parties.

Brands benefit from precise targeting, better consumer insights and measurable advertising success. Customers receive more relevant, personalized advertising that facilitates the purchasing process.

The targeted targeting of media content on DOOH, in-store screens and in apps is expected to offer great potential. In addition, tracking methods for measuring changes in sales are constantly improving.

The EHI study shows retail media as a new component in the marketing mix with great growth potential. The key lies in the intelligent use of data and technology to create personalized shopping experiences. The Retail Media study addresses many other questions and topics, including: What are the goals from a retail and brand perspective? How does retail media differ from WKZ? What are the hurdles and potentials with regard to retail media?

Methodology: The EHI Retail Institute conducted a qualitative survey in February and March 2024, in which experts from a total of eleven retail companies and eight brands were interviewed.