Outlook – The $3 Billion Question: What’s Next for Retail Media?

AdNews year-end outlook, looking back to 2024 and beyond.

Marc Lomas, GroupM MD of Commerce

2024 marked the year in which the retail press consolidated its presence. 2025 will propel him to formidable strength

Commerce has moved in recent years from something on the periphery for marketers and agencies to the fore, almost rivaling artificial intelligence as the year’s most used buzzword. 2024 will mark the year that retail media has solidified its presence, moving from an emerging trend to a formidable force. This evolution is evident in packed retail media events, an increase in the iconic Friday meme popularity, and most importantly, the numbers. GroupM saw retail media reach $1.46 billion in 2024. We anticipate 28% growth in 2025 and estimate it will top $3 billion in 2028, accounting for 11% of total media spend. These figures align with global trends, with global media retail investment expected to reach $153.3 billion – an increase of nearly $18 billion from 2023, according to WARC’s latest forecast.

How did we pass a billion dollars? Two main factors stand out. First, retail media networks give brands prominence at the point of purchase, where research shows most consumers still make purchasing decisions. Second, retail media provides accountability through precise targeting with primary data and closed-loop reporting—timely amid the cookie saga and economic consolidation.

In 2024, retail media networks have been working hard to provide advertisers with more diverse options, pursuing growth and addressing the scale limitations of owned assets. This often meant partnering with or acquiring off-network entities such as Google, Meta, BVOD and OOH networks.

This tremendous expansion introduced powerful and scalable advertising capabilities, but also added complexity. The new ad formats created overlap with brand investments, have drawn resources from brand marketing and challenged commercial marketing teams, which are typically inexperienced with omnichannel advertising strategy. This created disconnections and inefficiencies; for example, a brand’s collective marketing team could buy the same inventory through multiple channels without knowing each other’s strategies.

This triggered an essential change. Brands are now looking for improved integration between sales, commerce and brand teams to drive coordination and ensure holistic media planning.

As stewards of brand marketing budgets, agencies are increasingly involved in this convergence. They play a crucial role in maximizing media investment results by helping brands align commerce and brand investment within consistent and time-tested measurement frameworks. Additionally, they enhance retailers by enabling them to compete effectively with traditional media partners for both branded and non-endemic investments.

As we head towards 2025, the landscape remains fluid. There are several areas that will define why commerce will dominate the conversation – and budgets – for years to come.

A wave of new entrants into media retail is anticipated, along with an increase in brand-owned media networks. Retailers will push further upstream to become ‘full funnel’, capturing brand investment while expanding beyond endemic brands to engage non-endemic sectors, reflecting Amazon’s successful diversification. We may see some interesting M&A activity like what’s happening in the US with Walmart, Vizio and Disney as they tap into the content-to-commerce trend. Traditional media partners don’t just sit back; during the 2025 information season, retail media was mentioned on a par with AI, often in combination. This trend will spark head-to-head competition between retailers and established media publishers, spurring innovation – a boon for the emerging industry.

As retailers expand and new entrants emerge, brands must adopt a “just media” approach, putting the consumer at the center of attention and managing retail media alongside traditional media. We expect the “retail” label to begin to fade to just search, display, OOH and video. This will further break down internal silos. Brands will push for seamless integration of commerce and brand investment that provides consumers with enhanced connectivity, reach and efficiency.

As retail media evolves into simply “the media,” there will be a push to redefine what constitutes commercial vs. non-commercial spending. Commerce will become more clearly defined in its traditional sense, while recent additions will be classified as advertising, aligning with broader investment in advertising. Amazon changed its approach years ago, now positive moves are being made by retailers such as Mixing by Endeavor Drinks, who prefer the traditional advertising sales model over the commercial approach. We see this shift further amplifying innovation and increasing overall investment for bold retailers, while also driving results and profitability for advertisers.

As retail media matures, brands expect it to adhere to the same standards of transparency, reporting and accountability as traditional media. More brands are developing models to evaluate retail partners based on effectiveness, sophistication and collaboration. In 2025, we expect to see these models begin to direct investment to high-profile partners. Retailers that invest in capacity and collaboration will win.

With increasing investment across the funnel and concerns about retail media accountability, improved measurement is essential. In 2025, we anticipate further collaboration between brands, retailers and technology providers to develop transparent, actionable measurement solutions focused on incrementality and customer lifetime value.

We see this collaboration giving more brands the ability to integrate commerce alongside their brand investments into market mix and attribution models, reinforcing these models with tools like Digital Shelf Analytics to add competitive pricing data and enabling actionable sales for to evaluate traditional environments. such as TV and OOH. These powerful models will reveal the interplay between brand, trade and pricing, providing insights too valuable to overlook.

The fragmented retail media landscape adds layers of complexity, compounded by numerous competing technology platforms. By 2025, we anticipate consolidation into one or two dominant platforms that will manage multiple leading retail media networks side by side. This promises advertisers and agencies the efficiency and consistency they need. We also expect to see more activity around the business model to aggregate several smaller retail media networks into large ones that can compete with the big players.

The average Australian retail lags behind global peers in terms of self-service capabilities. Mature partners offer a mix of managed and self-service options, while early-stage players rely on managed services. There is a flurry of activity in this space, especially as agencies take on more responsibility for executing full media strategies. We see and expect most large retailers to increase their volume of self-serve shoppable advertising. Some may struggle to transition from the high-margin managed services model, but ad networks, big tech players and even agencies have all navigated the shift, and so have retailers.

In-store media is making a comeback, requiring retailers to invest in digital infrastructure and create engaging experiences powered by retail media and/or brand-owned media. The store is the future canvas for innovation. We like what we’re seeing from the likes of David Jones and expect these immersive store-led brand experiences to expand in 2025 as we move closer to the connection between experiences and commerce.

And finally, e-commerce fundamentals are more critical than ever. Despite the slowdown in retail growth, e-commerce is still growing, though not without its challenges. This shift requires a stronger focus on loyalty programs, CRM, email marketing and customer service. Metrics like lifetime value (LTV) and incremental return on ad spend (iROAS) are set to replace short-term metrics like return on ad spend. Amazon leads the way with its prowess in measuring incremental and new brand profitability, along with other advanced metrics. By 2025, these capabilities will become standard for advanced retail media networks. As the landscape evolves, companies must adapt by prioritizing long-term customer relationships and strategic measurement practices to thrive in this competitive environment.

2025 promises to be a pivotal year for retail trade and media and the role agencies play in this space. This powerful channel gives brands direct sales attribution, accountability and the ability to connect up-channel category insights with market share growth. Significant rewards await those who invest strategically, but risks remain for those who fail to navigate this landscape effectively.

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