Is Retail Media Destined to Disappoint?

Over the next five years, billions of dollars are expected to shift from CPG trade and marketing budgets to retail media networks, with global spending projected to hit $176 billion by 2028 and account for 50% of digital ad spending by 2030. However, questions linger about whether these forecasts rely on overly optimistic or flawed assumptions.

For these projections to hold, several shopper experience-driven factors must be addressed:

Relevancy. Can AI and advanced learning tools ensure ad placement and content are increasingly relevant to shoppers, minimizing disruption from a flood of ads across websites, in-store screens, and mobile apps?

Engagement Technology. Shoppers resist using mobile apps in-store unless they deliver clear value or save time. While current apps often provide value, they fall short on efficiency. Technology prioritizing advertiser goals over shopper preferences risks becoming ignored if not thoughtfully implemented.

Return on Advertising Spend. Advertisers are skeptical of vague metrics like “eyeballs” or general sales attribution. Without technology enabling precise engagement metrics, retail media spending may fall short of its potential.

Flooding stores with media screens and digital elements could disrupt shoppers without delivering the attributable sales lift retailers and brands seek to justify investments. Assuming that what works in moderation will scale effectively is a risk if shopper behavior and preferences are ignored.

Encouragingly, efforts are underway to tackle these challenges. Generative AI is being leveraged to enhance shopper intelligence, keeping retail media targeted, relevant, and shopper-focused. 

As with anything that requires shopper effort in-store, less effort usually generates more spending. As retail media content become more prevalent within the physical store, if its presence is design to help shoppers make quicker, better decisions, it will be embraced and those that invest in it will be rewarded with increased sales and shopper loyalty. If it become just another layer of disruptive ads and visual clutter, it will suffer the fate of earlier efforts to bring unconventional media into the shopping domain.