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Following performance measurement is the most important factor in allocating budget to retail media, according to 56% of US consumer packaged goods (CPG) manufacturers, per a December 2023 survey from Skai and Path to Purchase Institute.

Before retail media, brands would pay retailers to market their products, but weren鈥檛 necessarily involved in how they were promoted. 鈥淣ow, it鈥檚 more of a conversation,鈥� said Melanie Babcock, vice president of Retail Media+ and monetization at The Home Depot. Retail Media+ is The Home Depot鈥檚 retail media network.

Retail media networks may be working on standardization, but a universal measurement system is still a dream. Aside from a sluggish move toward standardization, here are four predictions about the future of retail media networks our analysts gave on our 鈥淏ehind the Numbers: Reimagining 搁别迟补颈濒鈥� podcast.

77% of US advertisers incorporate on-site ads as part of their retail media strategy, according to a February 2024 report by Skai and Path to Purchase Institute.

In 2024, retail media ad spend will grow 28.6%, coming to just under $60 billion, per our forecast. To reach that potential, retail media networks (RMNs) need to identify what attracts advertisers and set them up for success. Here鈥檚 how three consumer packaged goods (CPG) leaders are thinking about retail media.

Some 58% of Association of National Advertisers (ANA) marketers used retail media networks last year, according to a report from the ANA. In the next year, expect to see more movement from marketers outside of consumer packaged goods as brands look to take advantage of the recession-friendly ad space.

Retail media has transitioned from its 1.0 era, defined by on-site search and sponsored product ads, into the era of retail media 2.0, which consists of a mosaic of ads on-site, in-store, and across other media channels. 鈥淭he opportunity gets much bigger, but realizing the opportunity also gets a lot more complex,鈥� our analyst Andrew Lipsman said on 鈥淏ehind the Numbers: Reimagining 搁别迟补颈濒.鈥�

Retail media ads are an important way to boost marketplace spend, but how brands go about advertising requires strategy. When setting up your retail media approach this holiday season, consider which products sell when, what kinds of ads drive conversions, and the importance of discovery in retail media.

As retail media grows, it is changing. At the moment, search remains retail media鈥檚 bread and butter and sales ads are the best awareness drivers. In the future, in-store media and shoppable video ads may take on a bigger role. But no matter how ad formats change, one thing is for certain: Measurement will be key for retail media鈥檚 continued growth.

On today's episode, in our "Retail Me This, Retail Me That" segment, we discuss the current retail media era, the partnerships that make the most sense, and how social media plays a role in this space. Then for "Red-Hot Retail," our analysts give us four spicy predictions about the future of retail media. Join our analyst Sara Lebow as she hosts vice president and analyst Andrew Lipsman and analyst Max Willens.

Retail media spans a broad and growing merchant list, from marketplaces (Amazon) to department stores (Macy鈥檚) to ride-sharing apps (Uber).

Retail media just got even bigger. We recently updated our US retail media ad spend forecast to show higher growth than previously estimated, culminating in $109.40 billion in spend in 2027.

Retail media will be a $45 billion market this year and will continue to grow by about $10 billion in 2024, according to our forecast. Currently, the majority of retail media ad spend is driven by search. But the next phase will be driven by upper-funnel formats and in-store ad opportunities.

Which networks should brands be paying attention to as they refine their retail media strategy? From the king of them all to the ones that are just catching up, here are five retail media networks to keep an eye on this year.

Retail media complicates price talks between retailers and suppliers: Hardline tactics like pulling products from shelves can make brands reluctant to invest in RMNs, forcing concessions.

Though on-site search and display remain retail media鈥檚 bread and butter, off-site advertising鈥攑lacing ads in channels outside of a retail media network鈥檚 (RMN鈥檚) own properties鈥攚ill lead the next evolution due to its ability to expand advertisers鈥� reach and achieve upper-funnel goals like increasing brand awareness.

Retail media will stay ahead of connected TV (CTV) in US ad spending and close in on traditional TV this year, according to our forecast. Search overall, including paid search on retail media networks, will reach $108.48 billion in 2023.

Retail media partnerships are the future of TV.

US buyers鈥� most valuable metric when assessing campaign performance on retail media networks isn鈥檛 return on ad spend (ROAS) or ROI. It鈥檚 incrementality, according to May 2022 data from Criteo.

Cara Pratt, SVP of Kroger Precision Media, is right when she says that 鈥渞别迟补颈濒 media is 尘别诲颈补.鈥� While the fast-rising ad format may draw its unique power from retail鈥攕pecifically the first-party consumer purchase data used for high-octane targeting and closed-loop measurement鈥攊t鈥檚 not a physical product sold on store shelves and shouldn鈥檛 be treated as such.

Retail media is one of the fastest growing ad channels we track, due in part to the allure of closed-loop attribution powered by retailers鈥� first-party consumer data. But advertisers are starting to curb their enthusiasm given measurement challenges stemming from the lack of methodological standards across platforms. As it stands, it鈥檚 nearly impossible for advertisers to compare platforms against each other, which can lead to misallocation of budgets.

The stat: 84% of US marketers say that they are more likely to invest in retail media because of third-party cookie deprecation, per a LiveIntent survey.

A lack of standardization across platforms was cited as US marketers鈥� No. 1 challenge with retail media networks (RMNs) as of last summer, according to the Association of National Advertisers.

The impact of third-party cookie deprecation goes beyond changes to ad targeting and tracking. As the industry moves away from these identifiers, new challenges and trends have cropped up: IP addresses may be more difficult to access, retail media as an addressable channel is growing, and there鈥檚 greater focus on frequent media mix modeling (MMM) adjustments.

The continued growth and success of retail media hinge on achieving measurement standardization, according to Jeffrey Bustos, vice president of measurement addressability data at the Interactive Advertising Bureau (IAB).