Retail media booms as walled garden costs surge 27 per cent in a year

Retail media booms as walled garden costs surge 27 per cent in a year

Marketing budget allocation towards walled gardens – the closed ecosystems run by the ‘big four’ technology platforms – increased year-on-year by 29 per cent in the UK. This is despite media agency professionals reporting a 27 per cent rise in cost per conversion according to findings from Criteo.

Forecasting ahead, 91 per cent of agency respondents expect the cost of campaigns in walled gardens to continue to increase over the next 12 months, largely due to audiences being harder to understand within these platforms. This is according to Criteo’s ‘Future of Commerce – The Rise of Retail Media on The Open Web’ report – which surveyed 500 UK brand marketers and decision makers in media agencies – citing over three-quarters (78 per cent) of marketers plan to invest more in first-party data led retail media as a direct result of how they feel about advertising options offered by walled gardens.

Retail media involves placing brand advertisements within retailer category pages and search listings, using audience insights drawn from first-party data held by media owners (in this case, retailers). ASDA, Currys, Very and Boots are just some examples of UK retailers working with brands in this way.

Media agency respondents already see this type of retail media investment returning greater impact in terms of relevance to the actual purchase (58 per cent), sales growth (53 per cent) and audience targeting (51 per cent) when compared with walled garden environments. Furthermore, over two-thirds (68 per cent) of marketers believe it to have the highest level of brand safety, surpassing apps (64 per cent), social (65 per cent), search (65 per cent) and marketplaces (66 per cent).

Importantly walled gardens hold onto their place in the advertising ecosystem with marketers planning to invest an average of £303,000 this year. Bigger brands – those with more than 1,000 employees – plan to invest as much as £459,000 on average.

In fact, Amazon (40 per cent) still tops the media agency list of ‘most desirable’ online retail environments to display ads on, but retail competitors now follow very closely including Boots (30 per cent), AO (26 per cent) The Very Group which includes and Littlewoods (22 per cent) and ASDA (18 per cent).

Retailers must therefore better understand the potential of retail media for partners, customers and shoppers. Agencies point to a lack of retail media knowledge (57 per cent), as well as low technology adoption among eCommerce sites, apps and other digital platforms (53 per cent) as substantial hurdles.

Issuing a call-to-action for the industry, 55 per cent of agency respondents go as far as to warn that retailers who fail to update their advertising models and only offer traditional options will miss out on the opportunities that brands will want to capitalise on.

Sam Benkel, MD, Retail Media Northern Europe at Criteo, said: “Advertising on retail sites is inherently a brand-safe environment with first-party data and strong performance – a combination guaranteed to secure recurrent spend from advertisers. This gives retailers a huge opportunity to scale, reinvest profits in lower prices, update technology, and improve marketing to enhance the customer experience.

“Larger advertisers are often early adopters; they certainly have led the way in retail media and will continue to do so. However, as retailers develop smarter predictive algorithms and more personalised experiences, challenger brands with an understanding of auction dynamics and audience targeting can make themselves just as discoverable. Ultimately, it’s this breadth of media on offer that will ensure ads can continue to display natively, prioritising the user experience.”


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