U.K. brands spend more on retail media but ‘disconnected commerce’ hampers faster growth

Though the U.S. leads in retail media spending, capabilities and complexity, European and British brands are adjusting their spend to catch up to, and learn from, their American counterparts.

AA/WARC estimates published earlier this month suggest that retail media grew 17.5% year on year in 2025 to £3.7 billion, just shy of 10% of the U.K.’s overall £40 billion digital ad market. It’s the country’s third fastest-growing channel after social media and addressable TV. 

The catch is that much of that spending still goes toward traditional shopper marketing activations, such as in-store display or digital search inventory, rather than focusing on off-site targeting increasingly favored by retail media players across the pond.

“[The Richmond campaign] is probably biased more towards classic shopper marketing, largely because it’s a really high penetration category and the aisle we operate in has high footfall. As a result, the challenge is how you stand out in the shopper journey,” Doe said, without providing a breakdown of the campaign’s budget.

According to KPMG there are at least 28 retail media networks operating in the U.K., including leading grocers like Tesco and Sainsbury’s, as well as high street pharmacy and convenience chain Boots; in other major digital European markets such as France and Germany, Carrefour is another key player. Compare that with the 250-plus networks operating in the United States, and the billion-dollar gap in collective investments starts to make sense.

As in the U.S, however, Amazon takes the lion’s share – an estimated 73% share of retail media spending in the U.K. “Amazon drives the market,” said Alex Walker, managing director at Havas Market UK.

Amazon, and its grocer rivals, are each attempting to capture a greater share of upper-funnel brand investments, often by increasing their menu of video formats. Just last week, Amazon enabled advertisers to target Netflix media buys using its commerce data via its DSP.

Amazon reps emphasized video inventory in pitches to the agency, according to Jess Haley, managing director, EMEA at Kepler. The higher price of that inventory – often arranged through private marketplace (PMP) deals – was one factor in pushing up overall spend, she said.

“Big brands are being pushed to spend close to 30-40% more every year because platform competition is increasing,” said Haley.

Tesco Media, meanwhile, added video ad formats to its app and website estate in April; the grocer claims it can reach an audience of 12 million shoppers.

“We think it’s an opportunity for top-of-funnel media… [to] turning the inspiration mindset into an immediate, measurable outcome,” said Nick Ashley, propositions and go to market director at Tesco Media.

Advertisers that have used the formats since their April debut include Diageo, Pepsico, brewer Greene King, dairy firm Kerrygold and tea brand Twinings. Around 2,500 campaigns ran via Tesco Media last year, a 24% year-on-year rise; 91% of brands increased their spending with the network in the same period, according to Tesco’s most recent annual results.

And just last week, the Co-op (the U.K.’s eighth-largest supermarket by revenue) inked an out-of-home partnership with Smart Outdoor that would make it the fourth-largest outdoor ad provider in the country.

But while buyers talk approvingly of the first-party data available via Tesco’s Club Card loyalty scheme, as well as similar capabilities in Sainsbury’s Nectar network, the category as a whole lacks consistency for marketers hoping to re-allocate upper-funnel budgets, according to Kavita Cariapa, head of commerce media, EMEA at Dentsu.

“We haven’t seen the longer tail of retail media networks, particularly in EMEA, prove the impact of their full funnel offering,” said Cariapa.

The majority of brands using the channel are doing so like Richmond — as a conversion lever, in concert with upper-funnel investments in play elsewhere.

One obstacle holding back further investment on retail media is a lack of coordination between sales teams with responsibility for trade or wholesale relationships with retailers, and the marketing departments tasked with directing a brand’s digital media strategy. It’s a problem that’s dogged advertisers in the U.S. 

Publicis head of retail media Ian Black called this “disconnected commerce.” The division has benefitted retailers, by granting them additional leverage in wholesaling and trade negotiation, and it’s led to a situation where some advertisers have felt “strong-armed” into investments, per Sean Crawford, managing director for North America at SMG, a company that manages retail media investments for brands and helps set up media networks for retailers.

He said that by giving some ground, retailers might unlock greater spending from advertisers acting according to a more holistic strategy — one led by its marketing team.

“It’s all the same pound and dollar. Retailers need to structure themselves to empower that conversation,” said Crawford.

Black said that heavier retail media users, such as beauty and FMCG advertisers, were beginning to restructure teams to better manage retail media investments. “Clients in CPG, beauty, pharma, are strategically shifting and restructuring to combine the powers of both [commercial and marketing] teams,” he said. Black declined to name specific clients.

Sharon Palmer, director of group accounts and client success at performance agency IDHL, also said control of retail media budgets was beginning to shift away from sales teams. “It has been something that’s been part of a trade conversation between the brand and the trade budget; now it’s moving more and more into marketing,” said Palmer.

Grocers and high street retailers like Boots will need to fulfill a shopping list of requests from media buyers if they’re to capture a greater share of retail media revenue. Self-service buying options are one. Tesco and Sainsbury’s already offer the ability for buyers to manage spend directly, but a greater degree of access would grant media agencies finer control over campaign measurement, argued Black.

“It gives us the ability to actually handle and manage and optimize campaigns directly ourselves, and also in many cases integrate into our own planning and buying technologies,” he said.

More consistent measurement is, inevitably, another. “It’s probably a retail media cliché, but you’ve got all these networks and they don’t have a standardized measurement framework between them all,” said Havas’ Walker. “It’s quite a heavy lift.”

For brands like Richmond to consider shifting more of their upper-funnel budgets to retail media,  better measurement, easier buying tools and a mutual solution to the “disconnected commerce” problem are needed.

Cariapa argued they’re more critical issues than inventory or format rosters, concluding that “[t]his is on the retail media networks to prove out why we are actually activating these campaigns vs. [bringing more] solutions and extensions first to the table.”