Could Retail Media Be Your Brand’s Next Big Step?
Think back to the last time you browsed an e-commerce site or scrolled through social media. Did you see shoppable ads almost perfectly targeted at your preferences or aligned with recent purchases? If so, you’ve already experienced some aspects of advertising’s latest trend, retail media.
What Is Retail Media?
Retail media allows external advertisers to buy advertising space across a retailer’s brand space, usually on e-commerce websites. It can also include shoppable digital ads or even smart advertising, where viewers can buy products directly from ads on TV or other streaming devices.
It’s big business, too. According to McKinsey, “retail media networks” could account for as much as $100 billion in ad spending by 2026, with operating margins between 50 and 70 percent. While the most familiar users of retail media are large-scale brands like Amazon, which sells sponsored ads on high-traffic e-commerce platforms, there are plenty of opportunities for reaping profits without being a massive presence.
The experts at the Harvard Business Review helpfully break retail media programs or strategies down into three key “types,” as follows:
- Rewards-based programs: So-called “high-low pricing” retailers offer frequent promotions and include physical retail locations. They focus on delivering digital coupons and discounts through loyalty programs, targeting customers with rewards when they’re on the verge of purchases.
- Sponsored search and ads: Large-scale retailers that don’t offer many promotions, like Amazon or Walmart, offer sponsored search results and advertising opportunities.
- Third-party advertising: Some retailers now sell advertising on platforms like popular social media sites, allowing them to help manufacturers gain brand loyalty when customers are just starting to form preferences.
Regardless of the specific strategy, retail media is, at heart, about leveraging your existing platforms to advertise, sell ad space, and better target customers. And it can be a highly effective revenue stream!
Get Benefits for Your Brand
Boston Consulting Group (BCG) projects that the retail media market will account for over 25% of total digital media spending by 2026. A large part of the appeal is the transparency and control. Brands can measure and monitor performance more closely, then adjust content and spend appropriately. It’s also easier to connect retail media campaigns—and their successes or failures—to relevant omnichannel sales.
The retail media shift is also closely linked to the push for personalization and the shift toward privacy consciousness. Retail media is better positioned to link highly detailed data—as in aligning unique customer IDs, specific ad impressions, and SKU sales—in a way that allows businesses to target customers without compromising their privacy. First-party customer data is more valuable than ever, thanks to the uncertainty around third-party cookies and the growing number of customers who prefer stricter privacy measures.
McKinsey also reports that nearly 70 percent of advertisers say their marketing performance in retail media is significantly or somewhat better than in other channels. This is largely due to its ability to narrowly target customers based on demographics, past purchasing behavior, preferences, and more, helping brands better understand where to target which content.
There’s no one-size-fits-all logic to creating a retail media strategy. A well-rounded approach will include many of the following components to meet the expectations of advertisers and customers alike:
- A strong focus on protecting a positive customer experience
- The ability to deliver unique brand and customer insights
- Deep, insightful, first-party data
- A highly sophisticated tech stack
- A segmented approach to communicate value proposition
- A well-curated partner network
- People with the skills to bring together data analytics, ad tech, measurements, and partner relationships
Retail media can effectively harness the power of data to stake out a larger space in today’s competitive retail milieu. With a strategic approach, the right tech and knowledge, and a willingness to innovate, you can transform your basic commerce approach to a jumping-off point for a complex, profit-driving segment of your growing business.