Retail media has been the rising star in the adtech firmament for a while now. A recent report by BCG suggests that retail media — when retailers (or e-tailers) monetize their customer data by allowing advertisers access to their captive audiences — is a market slated to grow by 25% year-over-year to $100 billion over the next five years, accounting for over 25% of total digital media spending by 2026.
The Rise and Rise of Retail Media Networks
A retail media network (RMN) is a full-scale, data-driven, tech-supported advertising network set up by a retailer to offer advertisers programmatic media buying across all of their owned and paid media channels. Brent Ramos, director of product search at Google marketing, analytics and cloud partner Adswerve, calls them an iteration of ad exchanges, which offer first-party data, audience access and ad space for brands to drive acquisition on multiple channels.
Such networks are creating an entirely new performance marketing category for consumer-driven verticals such as consumer-packaged goods (CPG), fashion, travel, auto and more. This Merkle study found that 81% of CPG companies plan to spend more media dollars with retail media networks in the coming years, with the majority of dollars today going to the likes of Amazon, Walmart and others.
It makes an attractive proposition for the advertiser (brand) because, in essence, it is a quintessential source of second-party data, which fills an important gap. While zero- and first-party data is reliable and safe, it may not be enough to power campaigns at scale; and while third-party data offers scale, it may lack the insights to drive real relevance.
Second-party data strikes the right balance between the two, besides being highly attributable, offering an opportunity to catch shoppers in the right moment and mind frame, and delivering a high ROAS. As a bonus, the retailer's first-party data is also brand-safe, presumably having been acquired on known channels and following prescribed opt-in processes.
Retail Media Offers New Source of Revenue
Megan Cameron, VP, New Stream Media at Merkle, highlights another motivation for brands — decoupling audience targeting and measurement from media buying. Being able to access retailer data without any direct media spend component gives companies more control over the media supply chain and allows them to isolate what is most valuable — a retailer’s first-party data, she said.
For retailers, retail media offers an exciting new source of high-margin revenue from something they were already investing in — advanced data management capabilities to inform their omnichannel marketing efforts. The inherent contextuality from this wide and deep first-party data enables them to offer advertisers access to a premium audience, with greater insights into customer behavior and path to purchase.
Retailers with an online and offline presence, as well as a strong offsite digital footprint (social media and other paid channels), can offer advertisers better behavioral data across more touchpoints and charge a premium for it. While large enterprise retailers (e.g., Amazon, Walmart) offer audience scale and diversity, niche players and category leaders (e.g., crafting or pet care brands) offer hyper-targeted audiences.
Retail media also offers the advertiser a wide spectrum of formats, from onsite, offsite and in-store display, to onsite search, recommendation engines, email ads, podcast mentions, in-store radio and basically anything else the retail can pull off with their audience. The more innovative and engaging, the better.
Jayesh Easwaramony, founder of Spectra Global and adtech and data commercialization expert, is unequivocal when he said retail media will be the fastest growing segment within digital for the next two years. “It will be an 'always-on' media channel for CPG players and reach up to 10%+ of digital advertising spends in mature markets where ecommerce penetration is high. In emerging markets, it will be used as a way to eliminate media wastage by targeting in-market shoppers rather than mass targeting for higher value products.”
Related Article: 4 Types of Customer Data and How to Use Them
Retail Media Plus Contextual Advertising Is Double the Power
Sixty-nine percent of marketers, according to Forrester, cite gaining greater insights into customer behaviors and preferences as the main driver of second-party data partnerships, which happens to be retail media’s greatest promise.
At Adweek NexTech 2021, Ben Sylvan, GM for retail data partnerships at The Trade Desk, spoke of ‘tremendous contextual moments’ that retailers could offer seemingly disconnected brands to reach audiences. For example, auto brand Ford could aim messages around safer travel towards expectant parents searching for cribs or strollers at retailer Target.
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Retail media allows for an ideal blend of contextually relevant, brand-safe and high-intent inventory with an added layer of audience targeting to enable a high degree of personalized advertising. No wonder, then, that brands looking to future-proof against the deprecation of third-party cookie targeting are reallocating budgets increasingly into contextual advertising, said Cameron.
“This is highly valuable real estate, similar to in-store media opportunities," she added. "Whether it’s aligning sponsored search with keyword targeting, display advertising in category shopping pages or ownership of branded content hubs, brands can leverage contextual advertising on RMNs to consistently engage with shoppers in the retailers’ digital storefront.”
As maturity grows, Easwaramony sees contextual ads linking more directly to ecommerce, such as shoppable video formats or price comparison widgets embedded into contextual ads, thus collapsing the buying funnel and further increasing advertiser ROI on retail media.
While contextual marketing can help brands and retailers traverse behavior and audience targeting gaps in a world where third-party data, exchanges and cookies are decreasing, Ramos cautioned that for it to move beyond campaign use-cases, it needs to be informed by multi-dimensional actions or holistic intent that considers the buyer’s full journey. That’s where retail media, contextual marketing and the right technology can make a powerful combination.
Related Article: 4 Methods for Hyper-Personalization That Get Results
The Retail Media Opportunity Is Emerging and Evolving
The retail media space is evolving as more retailers and ecommerce players look to monetize their first-party customer data, and more advertisers look for alternate, brand-safe channels to reach audiences.
The entire ecosystem is maturing, with pre-built programmatic platforms getting more supple and existing networks gearing up to handle retail media use-cases better. The challenge for retail networks will be to invest in the right ad tech. “New formats, easy monetization models, simple UI’s, API availability, algorithms that perform and of course brand safety are all new frontiers for retailers — speed to production, with value, will be the key to landing brand dollars for advertising,” said Ramos.
More channels also mean more consolidation of optimization and attribution efforts, which is already a pain point for most marketers. Solutions like retail media networks can help manage and optimize multiple channels to a single source of truth within a controllable environment and will therefore become increasingly valuable to the consumer marketers’ portfolio.
