Retail Media: The Dynamic Landscape in the UK

In the digital age, where every click is an opportunity and every scroll is a potential sale, Retail Media emerges as the hero for brand-consumer engagement. With the United Kingdom leading the charge in Europe's digital revolution, Retail Media presents an enticing landscape for both advertisers and retailers.

There is a significant potential for Retail Media in the UK, which is one of the world’s most advanced e-commerce markets. 

In 2023, a staggering 84.9% of the UK's population embraced the convenience of e-commerce shopping, a figure projected to soar to 87.2% by 2027. This underlines the UK's position as a global powerhouse in online shopping habits, with platforms like Amazon UK, as of April 2023, appearing as the most popular online marketplace in Europe, registering approximately 1.3 billion monthly visits. And, eBay ranked second, with more than 474 million visits. It's no wonder then that brands are vying for a slice of this digital pie, seeking innovative avenues to reach target customers and drive sales.

Bridging Brands and Consumers

Not only does Retail Media offer brands the opportunity for stronger collaborations with retailers but it also provides a platform to engage and convert consumers at the digital point of sale. That’s why Retail Media has rapidly become big business on the European side, with Retail Media sales forecasted to surpass £22 billion by 2026, as per IAB Europe .

A Glimpse into the UK's Advertising Market

Retail Media is an emerging medium with its roots in the US but with significant opportunities, as displayed above, in the UK. Total UK digital ad spend in 2022 grew 11% year-on-year and reached £26.1bn, according to the IAB ’s latest report on the market that mentions Retail Media for the first time. In the first six months of 2023, the UK’s digital ad market attracted £13.8 billion of spend, according to IAB UK and PwC’s half-year Digital Adspend update. 

The UK retains its title as Europe's largest advertising market, with ad revenue expected to grow by 4.6% this year. And, digital plays a particularly large role in the UK advertising market versus others, boasting a digital revenue share of 82.5% in 2024.

UK’s Top Retail Media Networks 

At the forefront of Europe's digital Retail Media market stands Amazon. In 2023, Amazon held a staggering share of 54% of the digital Retail Media market in Europe, based on its advertising revenue. Amazon's unrivalled dominance in this space is a testament to its pioneering role in revolutionising advertising within the e-commerce sphere. With advertising revenue reaching US$3.6 billion in 2023, marking a 5% annual growth, Amazon's Retail Media network remains unparalleled in Europe.

While Amazon reigns supreme, other retailers are also making significant strides to establish their presence in the Retail Media landscape. eBay secures the second position among the top networks in the UK, leveraging innovative ad types, enhanced measurement capabilities, and expanded third-party ads to drive remarkable revenue growth of 35% year-over-year, amounting to $367 million in Q2 2023. eBay UK 's success extends beyond its impressive revenue figures, with its Retail Media platform demonstrating efficacy across various product categories. From accessories to fashion, home, garden, and electronics, eBay Ads has emerged as a lucrative avenue for advertisers seeking to engage with a diverse and engaged audience base.

It should be noted that beyond Amazon, there are many other retailers that are investing in RMNs, and within this growth of new players, the UK Retail Media market continues to grow. Numerous retailers in the UK have launched their own networks or built successful Retail Media partnerships in recent months to sell their advertising spaces to suppliers and other brands and generate revenue.

Why the Surge in Retail Media Networks?

The allure of Retail Media lies in its numerous value propositions. From enhancing brand visibility and increasing marketplace sales (and GMV) to collecting valuable first-party data on consumer behaviour, RMNs offer a myriad of benefits for retailers and brands. 

Recent research from IAB Europe and Microsoft underscores this, revealing that an overwhelming 92% of advertisers and 74% of agencies are partnering with retailers to tap into this treasure trove of opportunities. Retail Media will become a key driver of digital's overall market growth as advertisers increasingly harness retailers' first-party data and try to find secure solutions that comply with GDPR (The European Data Protection Regulation).

It has emerged as a significant solution for European retailers and brands in the face of GDPR regulations and other advertising hindrances related to data protection laws in Europe. With GDPR regulations becoming stricter regarding third-party data usage, retailers and brands are becoming increasingly reliant on first-party data. Retail Media provides a privacy-centric advertising platform where retailers can leverage their own customer data to target ads effectively without relying on third-party cookies. 

Retail Media networks leverage data clean rooms to enable secure data collaboration between retailers and advertisers, using anonymised and aggregated shopper data. This secure data collaboration, in return, further improves audience targeting and performance measurement. For instance, by analyzing and segmenting encrypted shopper purchase history and browsing habits, Retail Media helps retailers and brands gain deeper customer insights, enabling them to create custom audience segments for targeted advertising. At the same time, by securely sharing transaction data, RMNs facilitate a closed-loop measurement, whereby retailers and brands can attribute the impact of their ad campaigns to conversions, sales performance or ROAS. 

Thanks to Retail Media platforms, retailers and brands have greater control over the customer data. And the best part is that they can manage the data in accordance with GDPR regulations, reducing the risk of data breaches or misuse.

Looking Ahead: Seizing the Retail Media Momentum

As Retail Media platforms continue to gain traction, it's imperative for companies to navigate this evolving landscape with finesse. Transparency, leveraging cutting-edge technology, and prioritising consumer engagement are pivotal in ensuring the success of Retail Media networks. By embracing innovation and collaboration, brands and retailers can unlock the full potential of Retail Media Advertising, aligned with GDPR principles, all while heralding a new era of seamless brand-consumer interactions.

With the UK at the helm of Europe's digital revolution, the stage is set for Retail Media to flourish, offering brands unparalleled avenues for consumer engagement and growth. As we embrace the dawn of this new era, it's essential for businesses to seize the Retail Media momentum, harnessing its transformative power to forge lasting connections with consumers in the digital age.

Sources:

Carroll, Niamh. “UK Ad Growth Forecast.” Marketing Week, 4 Dec. 2023, www.marketingweek.com/uk-ad-retail-footfall-5-interesting-stats-to-start-your-week/. Accessed 13 Mar. 2024.

“Digital Ad Spend Resilient in Face of Challenging 2022 as Market Grows 11% to £26.1bn | IAB UK.” Www.iabuk.com, 25 Apr. 2023, www.iabuk.com/news-article/digital-ad-spend-resilient-face-challenging-2022-market-grows-11-ps261bn.

“Digital Retail Media Advertising in the UK.” Statista, www.statista.com/topics/10889/digital-retail-media-advertising-in-the-uk/.

Dillon, Hannah. “The Current Retail Media Landscape - ExchangeWire.com.” Www.exchangewire.com, 11 May 2023, www.exchangewire.com/blog/2023/05/11/the-current-retail-media-landscape/. Accessed 13 Mar. 2024.

Fisher, Bill . “France, Germany, and the UK Retail Media Ad Spending Forecasts 2024.” EMARKETER, 13 Feb. 2024, www.insiderintelligence.com/content/france-germany-uk-retail-media-ad-spending-forecasts-2024. Accessed 13 Mar. 2024.

Hill, Eloise. Retail Media: How Retailers Are Becoming Advertising Giants - Retail Gazette. 5 Sept. 2023, www.retailgazette.co.uk/blog/2023/09/retail-media-platforms/. Accessed 13 Mar. 2024.