Retail media adoption growing in Australia, survey reveals key trends

A comprehensive industry survey shed light on the rapidly expanding retail media sector in Australia. The study, conducted earlier this year by IAB Australia, explored how advertisers and agencies are adopting retail media, their priorities in planning and measuring campaigns, and the challenges they face in this evolving landscape.

Retail media, a form of advertising where brands promote products on retailer websites and apps, has gained significant traction in recent years. According to the survey, a majority of advertisers and agencies in Australia have already dabbled in retail media campaigns. The research revealed that 62% of respondents had some experience with retail media, indicating its growing importance in the digital advertising ecosystem.

One of the key findings of the survey was the diverse range of advertisers embracing retail media. Categories executing retail media campaigns spanned various industries, with consumer packaged goods (CPG) leading the pack. Other prominent sectors included electronics, fashion and apparel, beauty and personal care, and home and garden products. This broad adoption across multiple categories underscores the versatility and appeal of retail media as an advertising channel.

The survey also delved into the primary objectives driving retail media activities. For both agencies and advertisers, increasing sales emerged as the top priority. Other key goals included enhancing brand awareness, improving return on advertising spend (ROAS), and acquiring new customers. Interestingly, the objectives varied slightly between agencies and advertisers, with agencies placing a higher emphasis on brand awareness compared to their advertiser counterparts.

When it comes to the types of retail media advertising products used or planned for use, the survey revealed a diverse mix of options. Display ads on retailer websites and apps were the most popular, followed closely by sponsored product listings. Other prominent formats included retail search ads, off-site display ads, and video ads. This variety of ad formats highlights the multifaceted nature of retail media and the different ways brands can engage with consumers throughout their shopping journey.

The survey also explored the factors influencing participation in retail media among advertising agencies. The most significant influencers were client demand and the potential for improved targeting and personalization. Other important factors included access to first-party data, enhanced measurement capabilities, and the ability to reach consumers closer to the point of purchase.

Despite the growing adoption of retail media, the survey identified several barriers to partnering with retailers for these activities. The top challenges cited by respondents included limited scale and reach, lack of transparency in reporting and measurement, and concerns about data privacy and security. These findings underscore the need for retailers to address these issues to foster greater trust and collaboration with advertisers and agencies.

Interestingly, the survey also examined the impact of shifting ad spend towards retail media. A significant portion of respondents indicated that they were reallocating budgets from other advertising channels to invest in retail media. The primary sources of this shifted spend were social media advertising, display advertising, and paid search. This trend suggests that retail media is not just growing as an additional channel but is also competing for existing digital advertising budgets.

The research also delved into the measurement tools and attribution elements considered important for assessing the effectiveness of retail media campaigns. Sales lift measurement emerged as the most crucial tool, followed closely by return on ad spend (ROAS) and brand lift studies. In terms of attribution, last-click attribution was deemed the most important, with multi-touch attribution and incrementality testing also ranking highly. These findings highlight the industry's focus on demonstrating tangible results and accurately attributing sales to retail media efforts.

Looking ahead, the survey explored perceptions of how impending privacy legislation in Australia might impact retail media advertising opportunities. A majority of respondents anticipated a moderate to significant impact, indicating that privacy concerns are top of mind for industry professionals as they navigate the evolving retail media landscape.

The survey also touched on retailer investment barriers to setting up retail media propositions. The top challenges identified included the need for significant technology investments, difficulty in attracting and retaining talent with relevant skills, and concerns about potential conflicts with existing retail operations. These insights provide valuable information for retailers considering entering the retail media space, highlighting the key areas they need to address to build successful propositions.

In conclusion, this comprehensive survey offers a detailed snapshot of the retail media landscape in Australia as of August 2024. It highlights the growing adoption of retail media among advertisers and agencies, the diverse objectives driving its use, and the challenges that still need to be addressed. As the industry continues to evolve, these insights will prove valuable for stakeholders looking to navigate and capitalize on the opportunities presented by retail media.

Key facts from the survey

62% of respondents had experience with retail media

Consumer packaged goods (CPG) was the leading category for retail media campaigns

Increasing sales was the top objective for both agencies and advertisers

Display ads and sponsored product listings were the most popular retail media formats

Client demand and improved targeting were the main influencers for agency participation

Limited scale and lack of transparency were the top barriers to retail media partnerships

Social media, display, and paid search were the primary sources of shifted ad spend

Sales lift measurement and last-click attribution were deemed most important for effectiveness assessment

A majority anticipated significant impact from upcoming privacy legislation

Technology investments and talent acquisition were key challenges for retailers entering the space