Retail Media: Retail Business or Media Business? The Pivotal Decision.
The retail media sector is growing rapidly and promises new revenue streams for retailers. But behind the impressive growth figures lies a fundamental question: “Is it part of the retail business, or is it actually the entry into the media business?” This question runs like a common thread through the entire industry—and the answer determines success or failure.
Marketplaces vs. Traditional Retail: An Uneven Comparison.
The top three players in retail media worldwide - Amazon, Alibaba/Tencent, and Pinduoduo - have one thing in common: they are predominantly marketplaces. On marketplaces, advertising revenue is 100% incremental because sellers have to pay for visibility. Those who don’t promote their products disappear on page 17 of the search results.
Traditional retailers face a different starting point. For decades, funds have flowed from brand manufacturers in the form of trade marketing. Many of the revenues labelled “retail media” today are simply reallocated budgets - a relabeling of existing money flows.
Red Ocean vs. Blue Ocean: Two Strategies for Retail Media.
Retailers essentially have two approaches:
- Red Ocean integrates retail media into the existing retail business. Media products are offered in supplier negotiations and are ultimately “a function of sales volume.” This approach favours retailers who already hold strong negotiating power.
- Blue Ocean treats retail media as an independent media business. Products are marketed to agencies and media decision-makers - independently of the retail business. “Then it’s Blue Ocean. Why? Because the retailer enters a new market segment they previously had no access to.”
The Truth Behind the Numbers: Nominal vs. Incremental ROAS.
A decisive factor in retail media’s success is measuring ad impact correctly. The industry is undergoing a paradigm shift:
Nominal ROAS (Return on Ad Spend) counts all purchases after an ad contact—including so-called “adjacent sets” (related products). This method inflates performance figures.
Incremental ROAS (I-ROAS) uses A/B tests to capture the true incremental value of advertising.
“We see a divergence by a factor of three between nominal performance and incremental performance.”
Loyalty Apps: The Key to Measurement and Customer Loyalty.
For the Schwarz Group (e.g., Lidl, Kaufland), loyalty apps are not just an additional advertising channel—they are the foundation of the retail media business. They enable:
- Measurement of ad impact across all digital channels
- Linking online advertising to in-store purchases
- Strengthening customer loyalty through personalised offers
„For me, the most important thing is that my media performance is measurable. We can measure all digital advertising“
says Robert Jozic, Executive Management at Schwarz Digital.
The Future: More Than Just Advertising.
Retail media is already evolving—beyond pure advertising. The future lies in three areas:
- Advertising: Classic advertising and insights
- Loyalty & Partnerships: Loyalty programmes and collaborations with non-endemic partners
- Media & Content: Entertainment and added value for customers
„In the future it won’t be just about commerce, and it won’t be just about advertising; it will also be about keeping customers happy in the long run with media and media content.”
Conclusion: Standardisation and Trust as Keys to Success.
Any retailer who wants to succeed in the media business must build trust. That starts with adherence to standards—from international industry standards to transparent measurement methods.
The crucial question for every retailer is not whether to enter retail media, but how: as an extension of the existing retail business, or as an independent media business with new target groups and budgets. The answer will make the difference between stagnation and growth.
We would like to thank Robert Jozic for his excellent talk at Retail Media Day 2025 in Zurich. #RMD25
