IAB Research Reveals More than 90% of Advertisers Partner with Retailers to Reach Consumers
A recent retail media advertising industry survey by IAB Europe was released on December 13th, 2022. The study revealed that retail media is one of the many fast-growing sectors within the digital advertising industry, and IAB Europe forecasts that the retail media ad spend will reach €25bn (~£21.4bn) in Europe by 2026.
To further understand the retail media opportunity, IAB Europe and its member company Xandr now part of Microsoft, surveyed more than 800 buy-side stakeholders on their current use and experience leveraging retail media. The study also looked at their strategic focus for the sector over the next 12 months. Results show that retail media plays a key role in strategizing for advertising as 92% of advertisers and 74% of agencies already partner with retailers to reach customers. From this number, and of the small amount that is not engaged with retail media as an advertising channel, 88% of advertisers and 77% of agencies plan to do so in the next 12 months.
First-Party Data Collection – Retailers
First-party data is the data that is collected and owned directly by the website owner – in this case, retailers. It’s clean, reliable, and rich with information. And perhaps, most important of all, it’s the right kind of data that brands require from the sales point-of-view.
Many brands, especially those that rely on retailer distribution, simply don’t have enough of their own first-party data to activate. For others, their data is scattered or siloed, making it difficult to personalize effectively. That’s why retailer first-party data is so attractive.
All of this first-party data enables personalized advertising that customers will still want, even after third-party cookies go away. It also enables the measurable performance that brands are increasingly interested in: since the advertising and sales are happening within the same environment, brands can link ad spending down to the SKU level.
More Opportunity
Data, in particular first-party data, is a key opportunity within retail media, largely driven by the deprecation of third-party cookies. More than a third of buyers cite this as one of the key drivers of retail media adoption and the majority are already working on their first-party data strategy. While 91% of buyers have a first-party data strategy in place, 49% are still working towards scaling their first-party data strategy.
As with any new advertising channel, retail media has its challenges. The study suggested that a third of respondents cited ‘scale’ and ‘integration with other advertising technologies’ as their top two barriers. Buyers want to be able to purchase their advertising via one or a few technology partners and the lack of retail media ad tech integration remains a stumbling block.
Daniel Knapp, Chief Economist, IAB Europe, commented on the factors that drive growth in retail media. He said: “Retail Media in Europe is already an €8bn (£6.8bn) market and growing double-digit despite economic headwinds. The pandemic-induced rise of e-commerce, paired with retailers’ first-party data in a world of signal loss, and the ability to combine ad exposure and conversion into a single platform are key market drivers. We see further potential for off-site retail media to integrate the retailer’s role more widely in the upper marketing funnel.”
“Our research with IAB Europe shows how third-party cookie deprecation has accelerated the adoption of this channel since it offers the benefits of first-party data with closed-loop attribution. However, there are still pain points related to scale and technology that are creating challenges for retailers and brands,” comments Paul Longo, Global Head of Retail Media, Sales, Microsoft Advertising. He adds saying, “We are passionate about working with both retailers and brands to deliver solutions that drive meaningful business outcomes; solutions that offer retailers the tools and platforms they need to drive scale, efficiency, and performance for brands, and that enable brands to capitalize on this opportunity to reach high-value audiences.”
