## Key Growth Drivers for Retail Media
### Brand and Retailer Survey Insights
Bottom-up data reveals that brands already invested in retail media expect to increase spending by high single digits annually. When considering new market entrants, this category appears to support double-digit growth in retail media, aligning with forecasts. This is further supported by brands, retailers, agencies and advertisers.
### Trade Spending Evolution
Traditional brick-and-mortar retailers dedicate significant budgets for in-store promotion, premium shelf placement, and related activities. As these budgets shift online, they transition from trade budgets to digital media advertising, substantially expanding the overall advertising pie.
Current estimates suggest that approximately 1/3 of growth in retail media is driven by shifts in trade budgets, which is conservative in the analysts’ view. Criteo and IAB Europe both expect shifts from trade and shopper marketing to drive 30-40% of growth.
## Figure 9: Where Is Retail Media Spend Coming From?
The research shows retail media spending sources across different time periods:
**2023 Distribution:**
– Retail Media: 105,824
– Onsite growth shift: 32,811
– Shift from other digital channels: 16,776
– Shift from trade: 11,642
– Shift from offsite: 29,358
– **2026 Retail Media Total: 196,610**
*Source: Barclays Research, Criteo, IAB Europe*
## Regional Market Dynamics
### China Market Analysis
China accounts for approximately 41% of the global retail media market, with Amazon representing ~35% while the remaining retail media market outside of China and Amazon is US$33bn in 2023 (24%). Retail media ex-Amazon and ex-China is expected to grow at a CAGR of 21.2% between 2023 and 2026, compared to 13.1% for the whole retail media market.
### Outside CPG Verticals
There are numerous verticals beyond CPG that are under-penetrated despite having favorable characteristics for success in retail media:
– High traffic levels
– High commercial intent
– Strong first-party data
These verticals are expected to converge to higher penetration levels, continuing to support overall category growth.
### Cookie Deprecation and Offsite Opportunity
Third-party cookies on Chrome will be phased out by Google early next year. This signal loss on the open web should increase the impact of moving ad budgets towards retail media and particularly towards offsite solutions (targeting consumers on the open web).
Surveys indicate that ~20% of offsite dollars will be incremental, implying that retail media can continue to outgrow e-commerce and total digital advertising by adding incremental dollars.
## Measurement and Transparency Challenges
Retail media has experienced remarkable growth despite significant pain points in measurement and transparency. Each retailer maintains its own measurement data and methodology, creating a lack of standardization that complicates campaign performance assessment across different retailers.
There are numerous initiatives addressing these issues that should unlock further growth potential in the retail media sector.
*Date: 7 May 2024*
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Retail Media Growth 