What: UK online retail media spend rose 32% year on year to £2bn in H1 2026, the fastest growth of any digital advertising category, according to IAB UK and mediasense.

Why it is important: As commerce data moves from conversion targeting to full-funnel brand building, including offsite and CTV, department stores with premium audiences and first-party data are positioned to capture upper-funnel budgets that supermarkets struggle to attract.

UK digital advertising grew 13% to £21.2bn in H1 2026, according to IAB UK's Digital Adspend Study produced with mediasense. Search remained the largest category at £9.1bn (+10%), followed by video at £5.1bn (+18%) and display at £3.1bn (+9%). Online retail media grew fastest, rising 32% to £2bn and overtaking gaming (£0.7bn), digital out-of-home (£0.5bn) and classified advertising (£0.5bn).

Connected TV followed a similar path, reaching £1.7bn (+22%), with a third of online video investment now reaching TV screens via the internet. Rob Ishag, UK country manager at TripleLift, argued that commerce data is no longer a bottom-funnel targeting tool but a strategic layer across the customer journey, with the main opportunity offsite, where commerce intelligence combined with context and creative reaches shoppers while intent is still forming. He described the convergence of retail media and CTV as the market's real growth area.

Respondents cited economic uncertainty (70%), AI and automation (37%) and measurement (30%) as their top challenges. Mediasense forecasts UK digital ad investment to rise 12% to £45.2bn in 2026, moderating to 10.5% growth in 2027.

IADS Notes: The 32% growth confirms a trajectory already visible in the economics of the channel: retail media has become a profit engine for retailers operating on thin margins, with Walmart's acquisition of Vizio giving it connected-TV data that can be tied to purchase behaviour, an early sign of the retail media and CTV convergence now showing in the UK figures (The Robin Report, August 2026). The offsite opportunity described by TripleLift follows the same logic as retailers' partnerships with Meta, through which Kroger, Walmart and Best Buy activate first-party data across social, video and CTV to reach shoppers earlier in their journey (Retail Touchpoints, March 2026). Capturing brand budgets at that stage requires coordinated onsite, offsite and in-store planning backed by robust measurement, rather than the sale of formats and activations in isolation (Internet Retailing, June 2026). Measurement remains the binding constraint: more than 99% of European retail media spend stays online because brands invest where they can prove effect, prompting IAB Europe to propose a shared framework for in-store inventory (Inside Retail, September 2026). For department stores, the competitive question is whether a less frequent, discovery-led shopping journey can deliver the scale and measurable value that supermarket networks already offer, as The Iconic, Myer and David Jones are attempting to demonstrate in Australia (Inside Retail, July 2026).

UK retail media hits £2bn as spend jumps 32% in H1 2026