Retail Media’s £3.8bn moment: why advertisers are rewriting the rules of media investment

The UK digital advertising market has crossed a significant milestone. According to the latest IAB UK Digital Adspend Study, conducted with Oliver Wyman, total digital ad spend reached £40.5bn in 2025, growing 10% year-on-year and significantly outpacing UK GDP growth of 1.4%. 

Among the standout performers was retail media, which grew 18% year-on-year to £3.8bn. 

But this isn’t simply another fast-growing channel. It reflects a deeper structural shift in how advertisers are planning, measuring and evaluating media investment. 

Retail media’s evolution beyond shopper marketing 

Retail media’s growth reflects a fundamental change in how brands think about the path to purchase. 

For many advertisers, retail environments now provide something that is increasingly difficult to achieve elsewhere in the ecosystem: high-quality first-party data combined with closed-loop measurement. In a climate where scrutiny around return on investment remains intense, these capabilities are particularly valuable. Brands are no longer satisfied with understanding reach or engagement alone; they increasingly want to see the direct commercial impact of their media investment. 

As a result, retail media is moving beyond its traditional role within shopper marketing and trade budgets to become a core element of full-funnel media strategies. 

Retailers becoming full marketing partners 

Retailers themselves are evolving rapidly to meet this demand. 

What began primarily as sponsored product placements has developed into a much broader media ecosystem. Retail media networks are now supporting a range of formats across on-site and off-site environments, including display, video and social integrations. Many retailers are also expanding into channels such as connected TV and digital out-of-home, extending the reach of their data and audiences well beyond their own platforms. 

In doing so, retailers are increasingly positioning themselves as end-to-end marketing partners capable of supporting both brand-building and performance objectives. 

This reflects a wider industry shift towards the convergence of commerce data and media activation. 

The wider digital landscape 

Retail media’s growth sits within a digital advertising market that continues to expand and diversify. 

Video remained the fastest-growing major format in 2025, rising 20% to reach £9.3bn and accounting for 23% of total digital spend. Social media investment also grew strongly, increasing by 21% to £11.5bn, representing 28% of the market. Search maintained its position as the largest category, accounting for £17.9bn and 44% of total spend. 

Beyond these major formats, other channels also experienced solid growth. Digital out-of-home increased by 11% to £1.1bn, gaming rose 11% to £1.3bn and audio grew 14% to £410m as podcasts continued to attract new advertiser interest. 

At the same time, the industry is preparing for further transformation, with nearly half of respondents to the study identifying AI and automation as defining forces for the sector over the next decade. 

What happens next 

Looking ahead, the UK digital advertising market is forecast to grow to £44.7bn in 2026 and £49.1bn by 2027. 

Retail media is expected to remain one of the strongest areas of growth. However, sustaining that momentum will depend on maintaining the qualities that have driven its success so far: transparency, strong measurement, and collaboration between retailers, brands and agencies. 

The strategies that will ultimately deliver the greatest impact will be those that successfully connect retail data with creativity and full-funnel thinking. 

Because retail media isn’t just growing. It is reshaping how marketing works. 
 
Check our full Adspend report here.