Summary
READ ITIn the dynamic narrative of digital marketing, there has been a new player that has emerged: retail media. Revolutionising how brands connect with their customers, this innovative approach has paved a new path for how retailers are able to monetize their digital platforms. But before we dive deeper into retail media, lets explore exactly what it is, and the reason behind why it is seen to be gaining significant traction within the marketing world.
What is retail media?
Retail media in simple terms can be understood as the allocated advertising space that is offered to retailers by brands on their digital platforms, i.e, their websites or on their mobile applications. Retail media creates the opportunity, for these brands to promote their products or services dirrectly to audiences at crucial touchpoints during their shopping journey to create a frictionless and engaging shopping experience.
Forms and types of Retail Media
Retail media offerings can be categorized into three main types:
- On-site: This refers to advertising within a retailer's own digital platforms, including its website, mobile app, and emails.
- Off-site: This involves advertising on third-party channels, such as social media, other websites, or connected TV platforms, leveraging the retailer’s customer data and insights.
- In-store ads: These are ads displayed within a retailer’s physical space, such as on in-store screens or through audio announcements. Sampling programs can also function as a form of in-store retail media.
A second revenue stream for retailers
With the mass adoption of retail media, it has been seen to emerge as a second revenue stream for retailers, transforming traditional platforms into powerful advertising real estate, much like real estate marketing does for property businesses. In order to complement the primary practice of selling products, by allowing for brands to advertise directly on their websites, brands such as Amazon, Walmart, Apple, etc are have been able to tap into this lucrative market.
This additional source of income makes it an attractive opportunity, for brands because it not only leverages their existing assets such as established customer base and infrastructure but also doesn't require more investments. It is important to note that retail media has been seen to boast higher returns when compared against traditional retail sales. In other words, it is more scalable and offer better margins, since it's mostly software sales, and not physical products.
What is a retail media network?
A retail media network (RMN) is simply inferred as a digital advertising channel operated by a retailer that allows brands to purchase ad placements across the retailer's owned and operated channels. These channels typically include:
- E-commerce sites
- Mobile apps
- In-store digital displays
- Email newsletters
- Social media accounts
These networks, leverage the retailer's first-party customer data to offer highly targeted advertising opportunities to brands. This enables advertisers to reach consumers at crucial points in the shopping journey, often when they are actively considering a purchase.
Top Retail Media Networks
Several major retailers have launched successful retail media networks. Here are some of the top players in the field:
- Amazon Advertising
- One of the pioneers and largest players in the retail media space
- Offers a wide range of ad formats across Amazon's ecosystem
- Walmart Connect
- Leverages Walmart's vast in-store and online presence
- Provides omnichannel advertising solutions
- Target Roundel
- Utilizes Target's rich customer data for personalized advertising
- Extends reach beyond Target's own properties to external websites and apps
- Kroger Precision Marketing
- Focuses on CPG brands, offering targeted ads based on purchase data
- Provides closed-loop attribution to measure campaign effectiveness
- Instacart Ads
- Allows brands to promote products within the Instacart app and website
- Particularly effective for CPG and grocery brands
Why are so many retailers launching retail media networks?
New Revenue Streams:
RMNs provide retailers with a high-margin revenue source, helping offset thin margins in traditional retail operations.
First-Party Data Utilization
With the phasing out of third-party cookies, retailers can monetize their valuable first-party customer data through targeted advertising.
Enhanced Brand Partnerships
They allow retailers to deepen relationships with brand partners by offering valuable advertising services.
Improved Customer Experience
Retail media can enhance the shopping experience by presenting relevant product recommendations to consumers.
Competitive Advantage
Having a robust retail media offering becomes necessary to remain competitive and attract brand advertising dollars in a competitive market.
E-commerce Growth
Increased the value of digital shelf space, making retail media more attractive to both retailers and brands.
Retail Media vs. Social-Commerce Media
The recent surge of social commerce
The boundaries between social media interaction and e-commerce transactions are becoming increasingly hazy as a result of the recent explosion of social commerce. The growing incorporation of product shopping functions into well-known social media sites like Facebook, Instagram, Pinterest, and TikTok is the main cause of this phenomena.
Thanks to features like shoppable posts, in-app checkout, and live shopping events, users can now find and buy things directly from within their preferred social media apps. This trend has been noticeably increased by the COVID-19 epidemic.
Why do we say media and commerce are now the same?
Retail media is essentially a blend of the two. Major platforms like Instagram and TikTok allow users to shop directly from content.
Traditional retailers are also creating in-house media agencies to monetize their platforms, allowing brands to engage consumers using transaction data. This shift benefits retailers, brands, and consumers seeking personalized experiences.
Why is retail media growing so fast?
A more native approach, better trusted by consumers
The retail media will be the biggest advertisement form factor in the future. It's expected to reach $200.000 millions by 2030.
An Answer for the Problem of Third Party Cookies
In the context of digital advertising, retail media has developed as a strong response to the impending challenge of third-party cookie deprecation. With major browsers such as Google Chrome preparing to phase out third-party cookies, marketers are finding it increasingly difficult to effectively target and measure their campaigns.
By utilising first-party data that is directly gathered by retailers through their loyalty programs and e-commerce platforms, retail media networks provide a strong answer. With the help of this data mine, which contains priceless details like past purchases, surfing habits, and product preferences, it is possible to target audiences with extreme precision without using third-party cookies.
Future Trends of On-Site Retail Media
Video content is king
While the most common form is banners, videos do exist in retail media. However, it is not much modern yet. It's form factor it still old-fashioned (horizontal, etc).
Modern video widgets, to target younger audiences with retail media
Today's modern video widgets go far beyond traditional banner ads, offering immersive and interactive experiences that resonate with Gen Z and Millennial shoppers.
1. Stories
Inspired by popular social media platforms, Stories widgets bring a familiar and engaging format to retail sites. These vertical, full-screen experiences allow brands to create immersive narratives that unfold as users tap through a series of short video clips or images.
2. Carousels
Video carousels allow users to swipe or click through a series of short video clips, providing a dynamic and interactive way to browse multiple products or content pieces.
3. Vertical Scrolling
Taking cues from popular apps like TikTok, vertical scrolling widgets allow users to seamlessly move through a feed of short-form video content.
4. Add-to-Cart CTAs
Our video widgets integrate seamlessly with e-commerce functionality, featuring prominent and intuitive Add-to-Cart call-to-action buttons.
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