European Explosion
While most of the world has felt the impact of a global recession, Europe has seen this most acutely, with online retail sales down YoY for the first time in modern history (Forrester, 2023).
Conversely, European Retail Media has bucked this trend. In 2022 retail media spend across Europe was estimated to be £9.7bn up 20% versus the previous year and expected to triple in the next three years to a staggering £25.1bn in 2026 (Statista, 2023).
Growth Drivers: Channels vs Spend
After strong growth in 2020 and 2021, online retail sales saw negative growth during 2022. While much of this downturn can likely be attributed to stabilisation after a huge online boom during European lockdown, it still suggests Retail Media growth is not being buoyed directly by current spending patterns.
Sponsored brand ad spend increases almost 10% YoY
Sponsored product ads up 7% YoY
So what is driving growth?
New channels
Retailers see Revenue Opportunity
While Amazon is clearly still the dominant force in Europe, retailers have realised the huge opportunity presented by RMN – either launching their own programmes or partnering with networks such as Criteo and Citrus.
Furthermore, retailers also have first party ePOS and loyalty data (Tesco Clubcard, Nectar) which is an interesting ‘walled garden’ for Amazon to compete against.
Brands Capitalise on Cross-Platform Promotion
Brands can’t afford to miss out on an opportunity to market to a customer regardless of where or when they see that ad throughout the buyer journey.
Competition is also driving the need for channel expansion. In a recent conversation with Danone and Wavemaker, we highlighted how new entrants are continuing to threaten SOV and market share while increasing CPC by 7-8% YoY.
However, Danone also highlighted some of the core challenges with a cross-channel strategy:
- Budget management
• Striking the balance between investment vs strategy
• Accounting for commercial variances by retailer – CPIs, TS, Shopper etc
- Supply chain
• Stocking and forecasting
• Distribution lines and budgets
Tech like Pacvue, Criteo & Citrus with data partners like Nielsen IQ, Data Impact & Profitero make it very easy to scale a cross-retailer strategy.
Amazon remains in a league of its own
Despite the growth of the new channels, Amazon remains the dominant marketplace, accounting for nearly 80% of retail media budgets for European brands. With Amazon’s launch of several new tools and features this year as part of the Amazon Selling and Ads API, including more AMC functionality and Sponsored Brand Videos, it will continue to command the lion’s share of advertising wallets.
Amazon should not sit in a silo – full-funnel tactics are key
With Retail Media maturing in Europe, advertisers have more choice than ever before on which channel and ad type to use to influence a buying decision. With so many consumer journeys beginning on Amazon, it is important for customers to see a consistent brand story and image throughout the buying journey.
Advertisers can take advantage of the Amazon ecosystem; from Twitch Video Ads to Sponsored Brand Video, Search Ads and everything in-between, you can monitor, launch and scale campaign operations across Amazon.
Amp up your performance and efficiency by unlocking differentiated strategies on Amazon DSP and Amazon Marketing Cloud (AMC). Pacvue AMC Advertising provides access to proprietary data sets, with granular, category level data.
How Cisco was able to maximise advertising spend at scale across 5 European Markets winning Pacvue and Merkle the 2022 Amazon Ads Partner Scaled Technology Award.
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