The new report identifies the need for brands to look beyond retail media and take a more holistic approach to connected commerce.
To download the report, fill out the form below.
Brands spent $107.8 billion on connected commerce activation in 2024 — and no, it wasn’t all devoted to retail media (although 66% of it was).
That spending estimate is just one of the noteworthy findings from “The Evolution of Connected Commerce: From In-Store to Online,” the latest industry report from strategic consultancy Winterberry Group. (Read the media release here.)
Based on interviews with more than 50 industry professionals, the report examines the current state of connected commerce, a field of marketing that represents “a reimagination of how brands and retailers work to create unified shopping experiences,” according to the report. Mars UnitedSM Commerce is proud to be the report’s Presenting Sponsor.
Michael Harrison is a Managing Partner at Winterberry Group, where he leads the firm’s marketing consulting practice. Mars United spoke with Harrison to get his perspective on the report’s key takeaways and recommendations for brands and retailers.
What made Winterberry Group undertake a study on connected commerce at this particular time? What trends were you seeing across the industry?
In our discussions with brands and retailers, we consistently heard a lack of understanding about the difference between connected commerce and retail media. Retail media has been getting all the traction in publications, but a significant portion of the dollars and the effort that CPGs are devoting to connected commerce is actually outside retail media networks.
Brands are undergoing a transformation to consolidate their traditional shopper, e-commerce, and brand efforts — as well as their trade activity. Retailers are leveraging their first-party data to drive acquisition, trial, conversion, and loyalty. All these themes are core to what connected commerce really is. We wanted to clear up the ambiguity about what is happening across these various connected commerce ecosystems.
Did the strong response you received from participating companies and executives validate your decision?
We interviewed over 50 individuals across agencies, technology providers, service providers, analytics companies, and brands. And nearly all of them talked about the issues they were facing in connecting their digital and physical activity, and the underappreciated importance of the physical side.
They also talked about the current disjointed nature of retail media networks and the struggle within retailers between the traditional merchant organization and the emerging media company. These two need to be integrated.
Their other focal point was the lack of unified measurement. As a brand, if you’re trying to measure the effectiveness of connected commerce across retailers, each one has its own methodology, so you end up comparing apples to oranges, bananas — and sometimes even carrots.
Were there any big surprises for you in the report’s findings?
Our report marks the first time that connected commerce has been sized. We were surprised to find that almost 40% of all the dollars flowing through connected commerce were outside the retail media networks. There is a significant amount of money being put toward off-platform efforts that are driving purchase overall or at specific retailers.
The strong focus on retail media was certainly no surprise. Do you expect that to continue in the short term?
Spending on retail media networks will likely grow as the networks embrace third-party contextual commerce providers and make them part of their own offerings. Brands want the networks to go further and deliver more off-platform opportunities that can drive to on-platform.
Retailers right now are clearly thinking about themselves as retailers, not as publishers, and they want more on-platform activity. But somewhere down the road we’ll reach an equilibrium. They play different roles: on-platform solutions are very good at conversion and off-platform solutions are very good at trial.
What would you say are the key takeaways for consumer brands?
They need to break down the organizational silos. When we talk to brands, they’re thinking about retail media as shopper dollars or brand dollars. But consumers don’t understand the difference. They want a cohesive experience that combines their digital and physical experiences. Organizations have to integrate their silos to deliver that connected experience.
The other key takeaway for brands is the need for unified measurement and attribution, to let them understand the impact of their investment and optimize their budgets not just across channels, but across retailers.
Any specific takeaways for retailers?
Retailers need to provide greater data transparency. The original walled garden approach created distrust in their measurement. Being more transparent will create a greater willingness among brands to spend on retail media. We heard a few times during the report process that brands are starting to feel like retail media networks are just another form of trade spending (with little accountability for the investment). This needs to be a performance-driven channel that’s driving measurable transactions.
And they need to break down the silos, too. The dichotomy between retail media in the U.S. and the UK is really interesting. In the UK, retail media started in the store. In the U.S, it started with digital properties. Retail media networks haven’t grown as fa the UK, but they deliver a much more cohesive experience because they’re selling endcaps along with the media — as opposed to selling media and hoping somebody else sold the endcaps. In the U.S., the merchants and the media aren’t integrated. What we heard consistently from the UK is that the merchants are the ones driving the retail media networks.
Retail media might drive a lot of profitability. But if it’s not also selling product, that ultimately doesn’t mean anything for the business.
The report’s conclusion discusses the “next phase of connected commerce.” What advice would you give marketers as they head into this next phase?
Test often. I think we’re going to see generative AI influence a lot in this next phase. There are some interesting cases already where ecommerce platforms are building agents that help a consumer navigate through the site without actually clicking and searching. But companies like Perplexity and Meta are building agents for the consumer — so the consumer can ask their agent to speak to the retailer’s agent to get information and transact. Brands and retailers need to understand this technology and test it, so they’ll truly be able to deliver this connected commerce experience.
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With over 20 years of industry experience, Michael Harrison leads Winterberry Group’s marketing consulting practice, bringing strategic and executive competencies in all aspects of consumer marketing. Prior to joining Winterberry, Michael was a partner at data-driven marketing agency RAZOR before its merger with NSI Marketing Services, then served as chief strategy and analytics officer for the combined company, Ansira. He previously worked at Doner Advertising and Havas, building data and digital competencies, with a focus on global brands in retail, automotive, and consumer packaged goods.
To download the report, fill out the form below.
About Winterberry Group
Winterberry Group is a strategic consultancy specializing in the intersecting disciplines of advertising, marketing, data, technology, and commerce. The company collaborates with stakeholders across the advertising and marketing ecosystem — service providers, technology developers, media companies, brands, and investor groups — to identify and activate growth opportunities that drive the creation of real and lasting value.
About Mars United Commerce
Mars United Commerce is a leading global commerce marketing practice that aligns people, technology, and intelligence to make the business of our clients better today than it was yesterday. Our worldwide capabilities coalesce into four key disciplines — Strategy & Analytics, Content & Experiences, Digital Commerce, and Retail Consultancy — that individually deliver unmatched results for clients and collectively give them an unparalleled network of seamlessly integrated functions across the entire commerce marketing ecosystem. These disciplines are powered by our industry-leading technology platform, Marilyn®, which helps marketers understand the total business impact of their commerce marketing activation, enabling them to make better decisions, create connected experiences, and drive stronger, measurable results.
