By Alban Villani, CEO Europe, Epsilon
The latest figures from IAB Europe anticipate retail media ad spending in the region to more than double from €13.8 billion in 2024 to €31.3 billion by 2028. This isn’t just investment in another media channel. As it matures, retail media is evolving beyond simple shopper visibility to a more integrated role in full-funnel marketing. It is becoming the engine room for broader marketing strategies.
Its success in this endeavour is far from guaranteed. Fragmentation, identity challenges and siloed data all represent blockers that could push retail media back into the realm of ‘just another media channel’.
For retail media to realise its disruptive potential throughout the funnel, retailers must focus on addressing these areas: maximising first-party data usage, and optimising conversion strategies.
The challenge of fragmentation and identity
Fragmentation is perhaps the greatest barrier to retail media’s full potential. While retail media networks (RMNs) provide valuable closed-loop measurement, brands and retailers struggle to reconcile media activation with long-term customer value. This challenge is especially pronounced across multiple walled gardens and international markets, where siloed data and platform restrictions make it difficult to gain a long-term view of the customer journey.
The post-third-party cookie landscape in Europe, particularly in Germany, has further complicated identity resolution. With deterministic identifiers becoming scarce, brands are turning to persistent identity frameworks. These solutions help connect anonymous media engagement with known customer interactions in a consented manner, allowing brands to maintain customer insights alongside pseudonymisation and hashing.
Unlocking the true value of first-party data
On top of this identity layer, first-party data has emerged as the most valuable asset in digital marketing, fuelling this new media engine with enhanced audience segmentation and campaign optimisation. But its true power lies in how it is activated across the entire funnel.
Integrating retail media insights with email marketing, app engagement, site personalisation, and predictive modelling enables a more seamless customer experience. Retailers that activate first-party data across multiple touchpoints can foster deeper relationships, increasing customer lifetime value beyond the initial transaction.
Conversion rate optimisation: the missing link
Many brands and retailers are discovering that while retail media touchpoints are effective for customer acquisition, long-term retention requires more advanced orchestration. It’s all too common to focus on driving traffic but fail to consider the post-click experience, which is critical to maximising return on investment. This is where conversion rate optimisation (CRO) comes in.
Retailers must refine the shopping experience by improving page load speeds, enhancing product content, streamlining checkout processes, and leveraging personalised recommendations. By integrating CRO insights with audience data, brands can create a feedback loop that continuously improves future media investments, ensuring that every ad dollar translates into meaningful conversions.
The rise of composable adtech
To address fragmentation and improve integration, the industry is shifting toward composable, modular adtech solutions rather than relying on monolithic platforms. Traditional advertising technology often locks brands into closed ecosystems, limiting flexibility and cross-channel interoperability. Amazon’s new Retail Ad Service exemplifies this challenge—while it standardises and enhances accessibility, it also pushes retail media back towards traditional media norms, potentially undermining its differentiated value.
Identity frameworks like CoreID play a crucial role in enabling seamless data unification across platforms. By adopting API-driven, interoperable solutions, advertisers can connect media activation, analytics, and customer experience in a way that maximises efficiency and scalability.
Retail media as a full-funnel strategy
As retail media matures, success won’t be measured by ad spend growth alone. The real winners will be those who break free from short-term attribution cycles and rethink how retail media fuels customer relationships. The future isn’t just about connecting media touchpoints—it’s about connecting consumer intent with brand experience in a way that traditional media never could.
Retailers and brands that treat retail media as more than a transaction driver will gain an edge. They’ll build ecosystems where media activation, identity resolution, and conversion strategies work together to deepen customer value. The challenge now is not scaling retail media—it’s proving that it can be a long-term growth engine, rather than simply another line in the marketing budget.
Read more retail media news, insights and interviews at Retail Media Age.
