The State of Retail Media in Europe

Retail media has emerged as a vital component of modern advertising. As third-party cookies are being phased out, Retail Media Networks (RMNs) capitalise on retailers’ first-party data and exclusive customer insights to effectively target audiences. These platforms connect advertisers with consumers during crucial moments in their customer journey, both online and offline, creating impactful engagement opportunities.

Key Retail Media Offerings

Currently, the most significant retail media inventories include onsite sponsored product ads (SPAs), banners, brand shops, couponing, as well as in-store digital signage, video walls, and in-store radio.

More innovative solutions are expected to follow as the industry evolves (e.g. higher impact video formats, data collaborations with agencies & publishers).

Rapid Growth and Commercial Potential

Europe’s retail media market is projected to quintuple in size, with ad sales growing from ~€6 billion in 2020 to over €30 billion by 2028. Several factors drive this growth:

Shift Toward First-Party Data: The phase-out of third-party cookies has directed advertisers’ attention to first-party data, where retailers have a competitive edge.

Precise Targeting Capabilities: Retail media leverages direct customer insights to deliver targeted advertising.

Performance Marketing Focus: Media spending is increasingly shifting from brand-centric campaigns to performance-driven channels.

Professionalising Supply side: More and more retailers offering inventory on their website or in their physical spaces

Stages of Maturity in Retail Media

Despite its growth potential, most European retailers are in the early stages of retail media development, generating far less than 1% of their sales/GMV from retail media (typically single-digit millions of euros). Amazon is the notable exception, capturing 60-70% of Europe’s retail media ad spend and achieving 4-6%+ of GMV through retail media.

We currently see three maturity levels of retail media:

Level 1: On-Site Excellence 

• Focus on endemic partners (suppliers) and rather basic onsite products such as SPAs, brand shops, and banners.
• This stage can result in retail media contributing up to 1% of GMV / sales.

Level 2: Expanding Performance Media 

• Diversify the customer portfolio by targeting near- and non-endemic advertisers.
• Scale offerings with diversified formats, including (amongst others) video and offsite products.
• Retail media contributions can grow to 2-4% of GMV / sales.

Level 3: Advanced Optimization 

• Build professionalized ecosystems using personalized, high-impact formats, extensive partnerships, and data-driven strategies.
• Retail media contributions can reach 4-6% of sales.
• Retailers must prioritize core opportunities with endemic customers and foundational onsite products before exploring adjacent or non-core opportunities that could detract from primary business objectives.