What's Happening?
The offsite retail media sector is experiencing significant growth, but it faces several challenges that are becoming increasingly prominent. According to a report by RetailX in association with Koddi, which surveyed 126 U.S. marketers, key issues include measurement and attribution difficulties, targeting inefficiencies, and format inconsistencies. Advertisers report challenges such as difficulty in comparing results across platforms, limited access to performance metrics, and a lack of transparency about ad placements. These issues highlight a fragmented ecosystem where brands struggle to obtain consistent insights. Additionally, offsite media lacks the rich first-party data and contextual relevance that onsite media offers, making it difficult to target consumers effectively. Privacy concerns and data access limitations further complicate the landscape, with complicated data privacy policies and restricted access to retailer data being notable hurdles.
Why It's Important?
The challenges faced by the offsite retail media sector have significant implications for advertisers and retailers. The lack of standardization and transparency can lead to inefficient ad spending and reduced return on ad spend (ROAS). As the sector evolves, overcoming these challenges is crucial for brands to confidently scale their offsite advertising efforts. The current issues may deter brands from investing heavily in offsite media unless improvements in measurability, standardization, and integration are achieved. This situation presents an opportunity for retailers and platforms to innovate and create more cohesive and transparent advertising solutions, which could enhance advertiser confidence and drive growth in the sector.
What's Next?
To address these challenges, strategic partnerships between retailers and social platforms are being formed to expand audience reach and enhance data sharing. The adoption of clean room technology and privacy-first data collaboration is expected to improve identity matching and analytics while respecting privacy regulations. Industry bodies are working towards establishing standardized metrics and transparency to build advertiser confidence. The future of offsite retail media lies in offering seamless, unified campaign options across various touchpoints, driven by full-funnel strategies and dynamic data activation. This approach could attract a more diverse advertiser base, including non-endemic brands and new verticals, thereby diversifying revenue streams and driving growth beyond the current FMCG-centric model.
