How retail media is taking a larger share of digital spends

As brands compete for customer attention on the ever-cluttered digital medium, retail media is increasingly becoming crucial for brands to connect with their consumers. According to a Statista report, the revenue from advertising for the online retail market exceeded $1 billion in the financial year 2023 in India. Compared to the advertising revenue in the financial year 2021, this increase was twofold.

Today, brands see retail media networks as an effective way to reach the audience. Retail marketing helps the brand stand out through impactful communication, visibility, offers, or product benefits, ensuring it captures attention and drives conversion. 

Thus, e-commerce and quick-commerce platforms get most of a brand's digital ad spend. It boosts sales and helps brands understand customer behaviour and preferences using data. 

Revathi Batola, associate director-key accounts, TheSmallBigIdea, believes that retail media advertising is exploding and has been steadily rising this year. It's critical for brand exposure and targeting. “This helps them tailor messaging and promotions to the right audience. Ultimately, it’s about creating a more integrated and meaningful connection with consumers across multiple touchpoints,” she says.

Convenience and variety make e-commerce platforms the top options. Quick-commerce is also gaining traction for its speed and convenience. 

Sahiba Sachdev, VP, media planning and buying, Interactive Avenues, says marketers no longer see e-commerce, quick-commerce, and food delivery platforms as advertising opportunities solely for brands present on these platforms. 

Users interact with these apps daily—whether to place orders or track deliveries—creating a level of engagement akin to gaming addiction. These platforms remain relatively uncluttered, offering better ad placements and engaging users during highly "mindful" moments.

“Marketers are now analysing the usage and adoption of these platforms more thoroughly. Metro and Tier-1 cities have already embraced these platforms, and their penetration is rapidly extending into Tier-2 and beyond. As a result, brands see higher recall rates for their ads,” adds Sachdev. 

Additionally, e-commerce platforms with their in-house DSPs allow brands to retarget transacting audiences, enhancing the programmatic ecosystem. 

Batola says customer demands and context determine the preferred mediums. Ultimately, it all depends on factors like product type, delivery speed, and consumer intent.

Retail media spends are high for consumer electronics, fashion, cosmetics, and groceries. Health and wellness, home products, and food and beverage are increasingly leveraging this channel. 

Kiran Giradkar, CMO, BN Group, an edible oil company, says for FMCG products, e-commerce isn't a primary sales driver. Though it serves as an essential discovery tool for customers, it is not unprofitable. For example, delivering a Rs 100 product could cost Rs 50, making the model unsustainable. 

“Most FMCG items, like cooking oil, are typically purchased through general trade or supermarkets. These are low-involvement categories, bought infrequently, and rely heavily on traditional retail channels. However, an e-commerce presence is necessary for visibility, as it enhances brand recognition and awareness, indirectly boosting offline sales,” he explains.

Due to poor conversion rates, the company is not extensively advertising its items online. Instead, it is exploring quick commerce platforms.

“We're considering quick-commerce for Nutrica Cooking Oil, which we launched just five months ago. While it makes sense for us in the long run, we're not active on quick commerce yet,” he says. 

The company spends 70% of its advertising budget on retail media, 40% on brick-and-mortar market activations, and 30% on digital marketing, which targets relevant audiences. It now plans to spend 20% of its total marketing budget on quick-commerce.

“Quick-commerce relies on Return on Advertising Spend (ROAS). If I allocate 20% of my budget—say Rs 10 lakhs—I need to see a clear return to justify further spending. Performance marketing here is directly tied to business outcomes: the more income it creates, the more I reinvest. Unlike e-commerce, quick-commerce is more result-oriented. It will be directly aimed at driving sales,” he says.

HRX by Hrithik Roshan spends over 60-70% of its budget on retail media advertising. Pallavi Barman, chief strategic advisor, HRX, says retail marketing is the most effective tool for the 10-year-old brand to navigate the funnel, grab attention, and bring clients to HRX. The Myntra-exclusive brand aims to optimise interaction within this single "mall" rather than competing across platforms.

“Our focus now is customer conversion. On Myntra, our challenge is to guide general fashion consumers toward the sports and fitness categories. Retail marketing plays a critical role here. It helps convert Myntra’s existing traffic into fitness-oriented customers, leading them from fashion to sports and, ultimately, to HRX,” she says.

While HRX is exclusive to Myntra for fashion, the brand spans multiple categories. “We will definitely leverage quick-commerce for other categories currently in the works,” she adds.

The medium gains even more significance during the festive season as it allows brands to tap into heightened shopping activity. 

“You notice brands tailoring messaging to match seasonal needs, whether it’s promoting holiday specials, gift ideas, or limited-time offers. It's a key tool for making the most of the festive buying frenzy while also building lasting relationships with consumers,” Batola adds.

Quick commerce apps have become a last-minute saviour during the festive season—whether for gifting, ordering snacks for guests, or purchasing home décor and Puja Samagri—all delivered in under 20 minutes. Sachdev says brands recognised and capitalised on this opportunity. 

“Quick-commerce platforms also introduced post-paid, EMI, and pay-later options, enabling customers to purchase high-ticket items more conveniently. E-commerce platforms, on the other hand, offered massive discounts, leading consumers to shift away from traditional retail stores. These measures boosted user engagement and resulted in a 26% growth in sales on e-commerce platforms this festive season, as per industry reports,” she adds.

Data is key in retail media. Batola claims it helps companies target the right audience based on real-time buying behaviour and interests. 

“Think of it as a GPS—guiding you to your destination by using real-time traffic and route information,” she says.

Sachdev says retail media gives brands easily accessible data for tailored promotions.

“Data is integral across the full funnel, but the mid and lower funnel goals reap the most significant benefits. Brands no longer want to adopt a "spray and pray" approach; instead, they focus on audiences with transactional signals that place them in the product consideration bucket,” she says.

Barman believes data analytics is the key to digital and retail marketing success. It provides useful insights, particularly in platform ecosystems.  

“For example, if a customer adds a Rs 5000 pair of Nike shoes to their cart but doesn’t complete the purchase, data reveals their price sensitivity. Knowing this, we can target them with HRX shoes priced below Rs 5000, effectively converting them. These use cases are only possible with robust data and analytics, continuously improving the precision and impact of digital marketing efforts,” she adds.