IAB UK: retail media spending reaches £2bn after 32% rise

UK online retail media advertising spending reached £2bn in the first half of 2026, up 32% year on year, making it the fastest-growing category tracked by IAB UK’s latest digital advertising study.

The Digital Adspend Study H1 2026, produced with Mediasense and reported by InternetRetailing, put total UK digital advertising investment at £21.2bn, an increase of 13%.

What happened

Retail media expanded at more than twice the rate of the wider digital advertising market. Its first-half spending total exceeded those of gaming advertising, at £0.7bn, digital out-of-home, at £0.5bn, and classified advertising, also at £0.5bn.

Search continued to account for the largest category of expenditure. Investment rose 10% to £9.1bn, leaving it well ahead of the other advertising formats measured in the report.

Video advertising attracted £5.1bn, an 18% increase on the same period a year earlier. Display spending rose more slowly, increasing 9% to £3.1bn.

The figures show a distinction between market size and growth: search retained the biggest spending total, but retail media recorded the strongest percentage increase.

The background

Advertising delivered to televisions through internet-connected devices was another area of growth. Connected TV spending increased 22% year on year to £1.7bn in the first six months of 2026, representing about a third of online video investment.

That expansion came despite concerns among advertising investors. Economic uncertainty was named as one of the three biggest challenges by 70% of respondents to the study.

AI and automation were cited by 37%, while 30% identified measurement. The findings put assessing advertising performance among the principal concerns facing investors as spending increased.

The wider market figures provide context for individual retailers’ marketing decisions, including Stripe & Stare’s move to broaden its marketing after sales reached £15m.

What people are saying

Rob Ishag, UK country manager at creative supply-side advertising platform TripleLift, said retail media’s expansion pointed to a broader role for commerce data. Rather than being used principally to target people close to making a purchase, he argued that it was becoming relevant across more stages of the shopping process.

Ishag identified advertising outside retailers’ own websites and apps as the main opportunity. In his view, combining commerce information with the context and creative presentation of an advert could help brands reach shoppers before they had settled on what to buy.

That would shift the emphasis beyond capturing existing purchase intent. His assessment was that retail media could also support audience reach and brand-building, rather than serve only campaigns focused on immediate sales.

On connected TV, Ishag said advertisers increasingly regarded the channel as an established part of video planning rather than a supplementary purchase. He saw scope for brands to bring retail media data and connected TV advertising together to reach consumers at different points in their decision-making.

What happens next

Mediasense forecasts that total UK digital advertising investment will rise 12% across 2026 to £45.2bn. That is a projection for the whole market, rather than a separate forecast for retail media.

Growth is then expected to ease to 10.5% in 2027. The outlook remains one of rising investment, although at a slower rate than the first-half increase recorded in 2026.