Diageo retail media boss: ‘If retailers want to be media owners, they need comparable metrics’

What’s changed is the nature of the relationship itself. Where once Diageo’s primary interaction with retailers was transactional, selling product to be stocked and sold, today those same retailers are positioning themselves as media owners. “In the past, it would be us selling product to a retailer that’s buying it, but now the retailer is selling media and Diageo is buying it,” Dunn says. “It’s a complete flip of the relationship.”

That flip has also required internal change. Media buying, data usage and measurement expectations now sit alongside long-established commercial relationships, often involving different teams within the same organisations on both sides of the table.

• Roger Dunn will chair The Drum Awards for Commerce Media. Enter before the February 11 deadline

Despite retail media’s growth, one of the biggest practical challenges remains where the budget actually comes from. Unlike traditional media channels, retail media rarely sits neatly in a single pot.

“In retail media, there’s definitely different budgets of where it might be funded from,” Dunn says. “So you’ve got the classic marketing budgets, which might be brand or performance within that. But then you might have a shopper marketing spend… And then there’s even commercial trade marketing spend, which is usually wrapped up in those commercial arrangements.”

The result is a channel that touches multiple objectives and stakeholders across the business, each with slightly different priorities. That complexity, Dunn argues, is both a challenge and a strength. Retail media spans the funnel, from sponsored products driving immediate conversion to category-building formats and offsite activations that use retailer data to reach shoppers on TV or social.

“It is a multifaceted medium,” he says. That breadth makes retail media powerful but also harder to standardize – a tension that shows up most clearly when it comes to measurement.

Given that complexity, Diageo has to be selective about where it invests. For Dunn, the starting point is rarely scale alone. Instead, he looks at markets on a case-by-case basis, recognizing that most retailers are inherently national, with only a handful operating globally.

“Typically, we look at it on a maturity basis,” he explains. Not maturity as a retailer, he clarifies, but asking, ‘how mature are they as a media owner?’

That maturity is judged by assets, data and – crucially – measurement capabilities. “As with any marketing, but especially with retail media, because it’s so measurable and it has that closed loop reporting, you need to know it’s going to work.”

Retailers that can’t demonstrate effectiveness or provide meaningful data naturally become lower priorities. “You just have to follow your nose in terms of where you’re going to get measurable results, because it is inherently a measurable media channel.”

And yet that measurability is also where retail media risks hitting a ceiling. Despite its promise, Dunn believes inconsistent metrics and attribution models are holding the channel back from unlocking larger budgets.

“I think the main challenge… is around measurement and attribution and having common metrics so that we can measure apples to apples across different networks,” he says. While he acknowledges that purchase cycles differ across categories, he argues that there should still be alignment on core definitions.

“What is a new customer? Is it a new customer in the last four weeks, or is it the last 12 months?” Without shared answers to those questions, comparing performance across networks becomes almost impossible.

“You know, metrics is the key thing to align on, especially if retailers want to be considered as media owners in the same vein as other publishers that do offer some of these metrics. They need to have comparable measurement opportunities or options.” 

The problem is structural as much as philosophical. Retail media networks are built on different technologies, each with its own definitions and reporting frameworks. On top of that, retailers are competitors, so aligning on metrics can feel like giving up an advantage.

“There are all different reasons,” Dunn says. “Different retailers have provided different levels or depth of data, often based on the journey they’re on.” Some are only just beginning to behave like media owners, while others are far more advanced and comfortable sharing broader sets of metrics.

But for Dunn, the direction of travel is clear. Retailers that invest in measurement sophistication are more likely to win a greater share of the budget. “If you can prove that something works, then you can justify much greater increases in spend,” he says. “That’s what it comes down to.”

That expectation mirrors how brands treat other media owners. “If retailers want to be considered as media owners in the same vein as other publishers… they need to have comparable measurement opportunities or options.”

Measurement challenges are also evolving as expectations of retail media change. While the channel is often associated with lower-funnel performance, Dunn argues that this is an incomplete picture. In his view, retail media can be just as valuable for targeting higher up the funnel, particularly for product launches or brand building and that ultimately means Diageo wants to see “lots of different metrics.”

That versatility only increases the need for agreed standards – without them, it’s difficult for brands to assess trade-offs between lower- and upper-funnel activity across different retail partners.

Looking ahead, Dunn sees the advances in AI search as both an opportunity and another layer of complexity for retail media. AI already touches creative, optimisation and targeting, but the emergence of conversational search opens new territory.

“Platforms like ChatGPT or Claude or Perplexity… they offer a new way for consumers to find products,” he says. “As an advertising platform, there’s huge potential there.”

ChatGPT recently announced its plans to integrate ads into the platform. The Drum’s columnist Kiri Masters wasn’t shy in declaring the threat this posed to retail networks.

Retailers, Dunn believes, are well placed to build their own AI-driven experiences in defence, particularly in specialist verticals like grocery or electronics. That could lead to entirely new ad formats, from sponsored conversations to bespoke product recommendations.

“There’ll be a need to have, you know, those chat interfaces that are very specific to those verticals and that’s where they can monetize them and create new ad units.”

For now, the priority for brands is visibility. “The most obvious initial one is knowing how your brands are surfacing in some of these LLMs,” Dunn says, pointing to the growing focus on tracking mentions and recommendations within AI systems.

Paid opportunities may follow, but the pattern feels familiar. As with retail media itself, growth will depend on transparency, measurement and proving value – the same fundamentals that Dunn believes will ultimately determine which retail networks win.

Commerce media is moving fast. The Drum Awards for Commerce Media are here to recognize the work keeping pace – and setting the standard. Join us in Miami in April as part of The Drum’s year-round Commerce Media program. Learn more and enter.