The Potential of Retail Media in Central and Eastern Europe in 2024
With its robust e-commerce market, diverse consumer base, and rapidly expanding digital ad spend, Central and Eastern Europe is poised to become a significant force in retail media. Retail media’s ability to serve ads to shoppers at the point of purchase makes it a highly effective tool for both retailers and brand advertisers.
The Future of Retail Media in Europe Lies in CEE
While the digital advertising world often focuses on the US and Western Europe, the next big frontier can be found in Central and Eastern Europe (CEE). This dynamic region is home to about 100 million e-shoppers who collectively spent over €86 billion on e-commerce marketplaces in 2023 (E-commerce Europe, 2023). The unique attributes of each country, changing consumer behavior, combined with rapid digital growth, position CEE as a big opportunity for retailers and marketplaces in terms of retail media advertising.
E-commerce Landscape in CEE
The B2C e-commerce market in CEE is booming to say the least, with a total turnover reaching €86 billion in 2023, accounting for 10% of Europe's total e-commerce revenue (E-commerce Europe, 2023). Poland leads with a market value of approximately €30 billion, followed by Czechia and Hungary with values of € 4.6 billion and €1.8 billion, respectively (Statista, 2023).
The region’s e-commerce industry consists of diverse marketplaces, giving CEE a unique characteristic. In contrast to Western Europe, where Amazon and Ebay tend to be the leading marketplaces, the CEE market is mainly dominated by regional marketplace platforms. Homegrown platforms such as Allegro, Rohlik, Emag, Alza, and Pigu are significantly larger and more popular than Amazon and Ebay.
This distinctive e-commerce landscape presents a promising opportunity for regional retailers to capitalize on retail media by leveraging their strong market presence and customer loyalty. Recognizing this potential, some local players, like Allegro and eMag, have already established their own retail media networks. By offering targeted advertising solutions through these networks, they enhance both profitability and customer engagement, positioning themselves to compete effectively with global giants.
CEE’s Consumer Behavior and the Role of Retail Media
According to Statista (2024), the main drivers of e-commerce growth in the CEE region are high digitization rate and the increasing number of e-shoppers. With internet access exceeding 85% in the region, CEE provides a solid ground for the growth of online shopping. This is further underscored by the fact that four countries in Central and Eastern Europe boast a higher percentage of e-shoppers than the EU average of 75%. Leading the way, Slovakia has an impressive 86% share of e-shoppers, followed closely by Czechia at 84%, Estonia at 78%, and Hungary at 76%.
PwC's Voice of the Consumer Survey in CEE (2024) reveals that over a third of shoppers in the region use e-commerce platforms to discover new products, conduct further research, and make final purchases. Privacy also remains a significant concern with about 42% of Polish shoppers worried about the security and privacy of their personal information (Statista, 2023). As a result, average e-shopper in the region tend to use ad blockers and refuse third-party cookies, reducing the amount of data available to retailers and advertisers.
Given the increased role of online shopping and heightened privacy concerns, retail media can play a crucial role in addressing these challenges. By leveraging first-party data from e-commerce platforms and offering privacy-safe advertising solutions, retail media networks ensure that ads are both relevant and respectful of user privacy. This enhances customer engagement and trust while navigating the complexities of modern e-commerce in the CEE region, ultimately driving the growth and effectiveness of digital advertising in the market.
Regional Digital Advertising Spending
Digital advertising has become the dominant medium in CEE, attracting over 63% of all media investments and overtaking traditional formats like TV, radio, and outdoor by about 20% in 2023 (IAB Europe, 2024).
According to the AdEx Benchmark Study (IAB Europe, 2024), the overall digital ad spend in Europe reached €96.6 billion in 2023, with CEE contributing around €11 billion. And, despite representing less than 10% of Europe's total ad spend, CEE countries show robust growth. Nations like Ukraine, Croatia, Bulgaria, Romania, Hungary, and Poland are outpacing the European average growth rate of 11.1% in digital ad spend, driven by retail media, video, and audio formats. Retail media, in particular, is gaining traction as e-commerce platforms leverage their data and audience reach to offer targeted advertising opportunities.
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The double digit growth in digital advertising spend is set to continue into the future according to Dentsu’s (2022) predictions. Particularly, CEE’s ad spend is forecasted to grow to USD 19.1 billion in 2025, which is about €17.5 billion, representing a significant year-on-year growth rate of 25.2% compared to 2024.
Retail Media’s Increasing Share in Search Ads
Among all the digital advertising formats, a significant shift is seen in search advertising, where the focus has moved from traditional, non-retail search to retail search, reflecting the growing adoption of retail media by e-commerce and retailers. This shift towards retail media networks highlights the effectiveness of Sponsored Product Ads offered by retail media platforms. Specifically, Sponsored Product Ads are able to drive more sales by reaching shoppers at the point of purchase with personalized messages leveraging robust first-party data targeting capabilities. Read more about Sponsored Product Ads in one of our previous blogs.
Based on the predictions of e-Marketer (Lebow, 2024), retail media accounted for 45.5% of the total search ad spend globally in 2023, and by 2027, retail media is predicted to account for 67.8% of the total ad spend. For the CEE region, this translates into the USD 12.9 or around €11.8 billion opportunity in retail media in three years waiting to be unlocked by regional retailers and advertisers.
Performance of Display and Programmatic Ads
Other digital advertising formats such as display, video and programmatic ads are also widely used in the region. Display ads account for more than 50% of digital media spend, with Romania, Croatia, and Bulgaria investing over 70% of their total ad spend in this format. Videos drive the growth of display advertising, particularly in Bulgaria and Romania, where they make up 40% of display ad spend.
Programmatic displays, though showing negative growth due to concerns about third-party cookie deprecation, remain significant in countries like Ukraine, Czechia, Slovakia, and Slovenia. Retail media networks can mitigate these challenges by adopting first-party data strategies, ensuring that ads remain relevant and personalized despite the evolving digital landscape. Finally, digital audio advertising, driven by the popularity of podcasts, is the fastest-growing format, though total ad spend in this area reached only €36 million.
Embracing Retail Media in CEE
In conclusion, with its robust e-commerce market, diverse consumer base, and rapidly expanding digital ad spend, Central and Eastern Europe is poised to become a significant force in retail media. Retail media’s ability to serve ads to shoppers at the point of purchase makes it a highly effective tool for both retailers and brand advertisers.
To seize this opportunity, retailers and marketplaces should partner with a retail media tech provider offering comprehensive solutions. Look for features such as robust sponsored product ads with advanced search capabilities, first-party data activation for precise targeting and personalization, real-time insights, and seamless integration. By embracing these technologies, retailers can increase customer engagement, boost sales, and solidify their position in the growing CEE retail media landscape.
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