In-house vs. outsource: what’s the right way to run your retail media business?

With margins of around 70 to 90%¹, retail media continues to be an undeniably attractive commercial proposition for retailers. At the time of writing, there are more than 200 individual retail media networks (RMNs) in operation around the world², testament to the compelling (and geographically ubiquitous) revenue opportunity that retail media presents.

Not all retailers are alike, of course. While many have already come a long way in terms of their media maturity, many more are just starting out. That’s particularly true in verticals like quick commerce, DIY, and banking, where most are still at a relatively early stage on their journey towards data and media monetisation.

As they move through that maturity journey, one key decision that RMNs need to make is the choice between ‘in-housing’ their operations or partnering with a third-party that can support them on their journey. And—generally speaking, at least—we see a tendency for retailers to begin with an outsourced approach before embarking on an in-housing journey that comes with a multitude of challenges. Essentially:

• Smaller RMNs and those at the beginning of their journey (those with low-mid maturity) may find outsourcing more viable as they lack the resources and skillsets needed to ‘catch up’ with the market. Over the longer term, they typically move to a ‘build, operate, transition’ (BOT) model with help from the RMN partner that got them started.
• Having built their foundations, more mature retailers might begin to shift their operations in-house. Over the past couple of years, however, there’s been a growing realisation that the technology, organisational structure, and operational setup needed to deliver at scale isn’t always there. In this case, a third-party can still be sought to help transform and scale their retail media business.
• There’s also a third approach, where we see retailers in-housing from the beginning, but leveraging consultancies and other advisory—and even managed services—for certain elements in the initial phase, before in-housing.

Naturally, outsourcing and in-housing each come with their own pros and cons. Let’s look at each approach and see what the main advantages and disadvantages are.

In-house retail media team

Pros

1. Full control and customisation
   In-housing a retail media business offers an extra degree of control. Building a common tech stack, for instance, allows a retailer to use it across multiple teams. In turn, that helps to ensure a coherent brand message and strategy across customer engagement and media alike. That empowers more seamless customer journeys, ensures proximity to trade teams, and enhances the overall retailer and brand relationship.

   There’s also the fact that a retailer’s culture, nuances, and knowledge of its customer base tends to lie with the true experts in-house. If working with a third-party, it can help immensely for them to have experience in your sector.

2. Data ownership and security
   With ever increasing scrutiny over data privacy and security, many retailers would prefer to keep their data in-house. This allows for visibility across data access and warehousing, without jeopardising control. It also allows for data to be aggregated from multiple sources to build audiences, enable measurement, and derive the insights that fuel retail media sales.
3. Enhanced responsiveness and agility
   Retailers often have complex organisational structures and operational processes. Adding another player to the mix can limit agility and cause delays in the deployment of new retail media opportunities onsite or in-store. Keeping retail media in-house allows for greater collaboration, communication, and visibility across strategic projects.

Cons

1. High initial investment
   The initial outlay required to set up a retail media business is very high. Whether it’s tech, people, or something else entirely, building a business in-house often requires retailers to engage in numerous projects with consultancies. Often, the combined cost can end up being the same as it would have been to work with a third-party provide a full set up (if not more).

   There's also the time and effort it takes to find new talent, upskill existing talent, and identify and integrate the tech needed to support a full RMN ecosystem. Partnering with a provider that has this in place (or can at least connect with an existing tech stack) can save a lot of time in the short term.

2. Lack of expertise
   As noted above, building a retail media business is a complex endeavour. Because of that, getting the right skills and experience into the business is essential. While hiring talent from other RMNs can help to overcome some challenges, working with a tried and tested partner—one that has already dealt with the issues that retailers typically face—can help to avoid pitfalls and supercharge scalability.
3. Slower time to market
   Despite it being quicker to turn things around when teams work collaboratively in-house, the lack of ‘go to market’ experience can slow down the ultimate rollout. That’s far from ideal in the fast-paced environment we all work in today. Ideally teams work collaboratively, but the nature of a large retailer often results in many teams with many goals, meaning that and prioritisation isn’t always aligned across teams.

Outsourcing to a third-party provider

Pros

1. Data Strategy
   Data forms the basis of everything in retail media. Without the right data setup and architecture in place, audience targeting, measurement, insights, inventory management and more won’t reach the minimum standard needed to run a successful retail media business. The benefit of working with a third-party provider is that they (should) have the blueprint to help set this up via gap analysis and implementation plans.
2. Overcoming complex ecosystems
   Modern RMNs are an ecosystem made up of third-party platforms, tech, and service providers. Setting these up is time-consuming, as is the process of working out which ones best fit your needs. Without the necessary experience, product, tech, legal, and privacy teams can quickly be overwhelmed by that task—which is why outsourcing these integrations is a common choice.
3. Flexibility to scale
   Providers that offer a suite of solutions across tech, data, science, training, and upskilling give a retailer the flexibility to scale. Not only can retailers get support in those areas where it’s needed most, they also have the option to develop their RMN in stages—something that can be far more palatable from a cost perspective.
4. Risk mitigation
   In the dynamic landscape of retail media networks, Chief Marketing Officers (CMOs) and Retail Media Directors play a pivotal role in driving success and achieving their targets. By strategically outsourcing certain elements of the setup, retailers can not only streamline their operations but also collaborate with partners to share responsibilities. This partnership allows them to collectively navigate challenges such as campaign performance, resource allocation, and revenue targets, fostering a more innovative and resilient approach to achieving their goals.
5. Empowered innovation
   The retail media market is moving at rapid pace. One of the other advantages offered by third-party providers is that they tend to be closer to the bleeding edge when it comes to innovation—meaning that retailers can benefit without needing to invest in the dedicated tech and resource required to recreate those next-gen experiences internally.

Cons

1. Ownership
   Clear ownership between retailers and third-party providers is essential when it comes to outsourcing. Ultimately, a retailer needs the contracts in place that will enable it to in-house operations in future. If an external provider has its own tech, or subcontracts a third-party, things can quickly get complicated.

   There are IP considerations here, too. Most third-parties won’t want to share methodologies for targeting and measurement science, as that’s their IP. As a result, it’s important for everyone to be clear from day one as to what services will remain if a retailer decides to move in-house.

2. Reliance
   When you take the two points above to their logical conclusion, the risk is that a retailer becomes too reliant on a third-party provider—even to the extent that they’re effectively stuck using their services for lack of another option. When working with a partner, it’s crucial to ensure there’s a long-term plan in place.

Clearly, both approaches here have their advantages and disadvantages. The decision to internalise or outsource will largely come down to size, strategy, skillset, and the market your business is in. If you run a smaller business and want to accelerate your retail media rollout, for instance, a third-party retail media expert can get you there faster. For larger businesses with existing capabilities, only very specific support may be required.

Ensuring you pick the right providers to support in the delivery and growth of both areas is key to a successful retail media business.

dunnhumby can help build your retail media business from the ground up, providing the right platform to support your needs, as well as the expertise to upskill your teams and scale your retail media proposition. Get in touch to find out how.

1 What happens when retail media overtakes TV advertising? – The Grocer, 18th June 2024
2 List of Retail Media Networks – Mimbi, January 2025