Marc Lomas.
The AdNews end of year Perspectives, looking back at 2024 and forward to next year.
Marc Lomas, GroupM MD of Commerce
2024 marked the year retail media solidified its presence. 2025 will propel it forward to a formidable force
Commerce has in the past few years moved from something on the periphery for marketers and agencies to the forefront, almost rivalling AI as the most used buzzword of the year. 2024 will mark the year retail media solidified its presence, transitioning from an emerging trend to a formidable force. This evolution is evident in the packed retail media events, a surge in the iconic Friday meme popularity, and most importantly, the numbers. GroupM saw retail media hit $1.46bn in 2024. We’re anticipating 28% growth in 2025, and projecting it will surpass $3 billion in 2028, accounting for 11% of total media spend. These figures align with global trends, with worldwide retail media ad investment expected to reach $153.3 billion—a nearly $18 billion increase from 2023, according to WARC's latest forecast.
How did we surpass a billion dollars? Two main factors stand out. First, retail media networks offer brands saliency at the point of purchase, where research shows most consumers are still making purchase decisions. Second, retail media provides accountability through precise targeting with first-party data and closed-loop reporting—timely amid the cookie saga and economic tightening.
In 2024, retail media networks worked hard to offer advertisers more diverse options, aiming for growth and addressing the scale limitations of their owned assets. This often meant partnering with or acquiring off-network entities like Google, Meta, BVOD, and OOH networks.
This great expansion introduced powerful & scalable advertising capabilities but also added complexity. The new ad formats created overlap with brand investment, drew resources from brand marketing and challenged trade marketing teams, who typically do not have experience with omni-channel advertising strategy. This created disconnects and inefficiencies; for example, a brand's collective marketing team could be purchasing the same inventory through multiple avenues without knowledge of each other's strategies.
This sparked a pivotal shift. Brands are now seeking enhanced integration between sales, trade, and brand teams to boost 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 maximising media investment outcomes by helping brands align trade and brand investments under consistent, time-tested measurement frameworks. Additionally, they are upskilling retailers, enabling them to compete effectively with traditional media partners for both brand and non-endemic investments.
As we head into 2025, the landscape remains fluid. There are several areas that will define why commerce will dominate the conversation – and budgets – in the years ahead.
A wave of new retail media entrants is anticipated, alongside a rise 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, mirroring Amazon's successful diversification. We might see exciting 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 aren't just sitting back; during the 2025 briefing season, retail media was mentioned on par with AI, often in combination. This trend will spark direct competition between retailers and established media publishers, fuelling innovation—a boon for the developing industry.
As retailers expand and new entrants emerge, brands must adopt a "just media" approach, putting the consumer at the heart and managing retail media alongside traditional media. We expect the "retail" label will begin to fade, becoming just search, display, OOH, and video. This will further collapse internal silos. Brands will push towards seamless integration of trade and brand investments that deliver enhanced consumer connectivity, improved reach, and effectiveness.
As retail media evolves into simply "media," there will be a push to redefine what constitutes trade versus non-trade spend. Trade will become more clearly defined in its traditional sense, while recent additions will be classified as advertising, aligning with broader advertising investments. Amazon shifted approach years ago, now positive moves are being made by retailers like Mixing by Endeavour Drinks, who favour the traditional advertising sales model over the trade approach. We see this shift further amplifying innovation and increasing overall investment for bold retailers whilst also driving advertiser outcomes and returns.
As retail media matures, brands expect it to adhere to the same transparency, reporting, and accountability standards 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 towards high-ranking partners. Retailers investing in capability and collaboration will win.
With growing 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 trade alongside their brand investments into market-mix and attribution models, strengthening these models with tools like Digital Shelf Analytics to add competitive pricing data and enabling brick-and-mortar sales to evaluate traditional media like 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 several leading retail media networks side by side. This promises advertisers and agencies the much-needed efficiency and consistency they crave. We also expect to see more activity around the business model to aggregate multiple smaller retail media networks into large ones, that can compete with the big players.
Australian retail media lags global counterparts in 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 hotbed of activity happening in this space, especially as agencies assume greater responsibility for executing full-funnel media strategies. We are seeing, and expect, most major retailers to increase the amount of their advertising that is buyable via self-service. Some may struggle to transition from the high-margin managed service model, but ad-networks, big-tech players, and even agencies have all navigated this change, and so will retailers.
In-store media is resurging, requiring retailers to invest in digital infrastructure and create engaging experiences, fuelled by retail media and/or brand-owned media. The store is the future canvas for innovation. We love what we see from the likes of David Jones and expect these engaging store-led brand experiences to expand into 2025, as we move further in connecting experiences to commerce.
And finally, e-commerce fundamentals are more critical than ever. Despite a slowdown in retail growth, e-commerce is still on the rise, though not without its challenges. This shift demands a sharper focus on loyalty programs, CRM, email marketing, and customer service. Metrics like lifetime value (LTV) and incremental ROAS (iROAS) are set to replace short-term metrics such as ROAS. Amazon leads the charge with its prowess in measuring incremental and new-to-brand ROAS alongside other advanced metrics. By 2025, these capabilities will become standard for advanced retail media networks. As the landscape evolves, businesses must adapt by prioritising long-term customer relationships and strategic measurement practices to thrive in this competitive environment.
2025 promises to be a pivotal year for commerce and retail media, and for the role that agencies play in this space. This powerful channel offers brands direct sales attribution, accountability, and the ability to connect upper-funnel 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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