Leading omnichannel advertising platform Skai and the Path to Purchase Institute (P2PI) are releasing The State of Retail Media 2024, the third annual report analyzing growth, opportunities, and changes in the growing sector. Retail media is experiencing exponential growth, with many retailers creating their own networks as an added revenue channel and brands increasing spending due to strong opportunities and ROI.

Skai’s and P2PI’s State of Retail Media 2024 draws insights from around 100 U.S. consumer product manufacturers and agencies. It explores the evolving dynamics of retail media and spotlights its expansion beyond traditional retail boundaries. This year’s data underscores the critical need for cross-channel integration, incrementality proficiency, and technological agility to maximize retail media’s full potential.

Retail media continues to gain prominence in media plans

Out of 10 advertising channels, retail media was ranked as the most important across the board, and 81% consider it very or extremely important for 2024. This is underscored by the fact that 77% of respondents attest to retail media driving good or excellent results for their businesses in 2023.

Navigating the expansion of retail media across channels will be a 2024 priority

In 2023’s study, only 17% reported good alignment between retail media and their different channels — this year, that number increased nearly 3X to 47%. And it’s not just the advertisers aligning; in 2023, Amazon formed what, once upon a time, would have been unlikely joint ventures with Snap and Meta, signaling more partnerships on the horizon. One thing is certain: retail media and the future of commerce can no longer be treated in isolation from other channels.

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Consistent performance  + enhanced insights fuel retail media’s growth

The biggest drivers for the acceleration of retail media spend are a higher ROI compared to other ad channels (47%), improved insights from retailers (38%), and the ability to better measure upper-funnel impact (36%). Within retail media, onsite ads and social commerce budgets will see the largest increases this year. And, despite consistent calls for standardization, the associated challenges were not a deterrent for retail media investment for most marketers (80%), proven by growing investment.

Tech innovation critical for retail media’s new era

Most advertisers are relying on third-party tools for business intelligence (58%), retail media management (57%), and digital shelf analytics (49%) to manage their retail media campaigns. AI will immediately significantly impact targeting and optimization, helping drive efficiencies and market leadership.

Brand and agency priorities are not aligned

Agencies offer brands tremendous value to brands — filling knowledge gaps, providing budget recommendations, and keeping up with the continued proliferation of networks. However, this study shows disparities between brand and agency approaches to success KPIs, budget allocation & prioritization. They also differ slightly in how they perceive challenges, such as the growing number of networks, data usage, and incremental measurement best practices.

Incrementality and measurement challenges remain

Only 30% of marketers feel proficient in incrementality measurement, and with varying definitions of incrementality, a standardized approach is impossible. The most frequently used metrics are advertising and media performance, such as CPC, ROAS, CTR, CPA, ACoS, and Viewability, which act as the north star, guiding advertising campaigns toward desired outcomes while optimizing budgets in an important channel.

“2024 is shaping up to be a significant year for retail media as it grows in every direction — up the funnel, video & CTV, off-site display, innovative in-store opportunities, and new partnerships with social publishers,” said Gil Sadeh, Chief Growth Officer at Skai. “This 2024 report marks our third annual survey on retail media’s evolution and Skai’s ongoing commitment to help our brands & agency clients navigate the future of commerce media via smart, data-based decisions.”

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