The Rise of Retail Media – Exploring its Growth

An increasing number of customers are now shopping online, making it imperative for brands to strengthen their digital marketing game. As a matter of fact, in 2021, digital advertising accounted for over 50% of total global ad spending and the trend is expected to continue in future. In the hyper-competitive digital landscape, brands are being compelled to look for new touchpoints to engage more customers closer to the point of sale.

While brands have been targeting prospective customers through social media platforms for many years, the time is now ripe for leveraging retail media. Through this medium, marketers can connect with customers as they are shopping on eCommerce platforms. What exactly is retail media? How has it grown over the years? Read on to learn more about the rise of retail media and its applications for marketers.

What is retail media?

Retail media can be described as advertisements that feature on an eCommerce website, mobile application, or online marketplace. Retailers who own these platforms are known as retail media networks (RMN). Retail media networks support the digital marketing efforts of brands by allowing them to advertise on their respective platforms as the consumers are shopping.

The popularity of retail media has skyrocketed as not only is it near the point of sale, but as they are actively seeking similar products, the chances of conversion are extremely high. As a result, the total ad spends on retail media networks is expected to touch $52.2 billion by 2023.

Retail media is regarded as the equivalent of in-store advertising and has become an extremely important part of the digital consumer journey. Amazon launched its retail media network in 2012, and in 2021 it recorded a revenue of $2.1 billion. As a result, many enterprises have now entered this space to capture an increasing number of customers.

Marketing Technology News: MarTech Interview with Janaka Fernando, Optimizely Practice Director at Valtech

Growth of retail media

In 2021, 25% of retailers reported revenues of over $100 million through their retail media networks. In the coming years, retail media is expected to grow at a CAGR of 25% to reach $100 billion, which would translate to around 25% of total digital ad spending.

The biggest reason behind the growth of RMNs is the decision to discontinue the use of third-party cookies. These platforms collect first-party data every time a customer performs an action on the online store. Whether it be the purchase of a particular product or the use of a credit card, every data is recorded. When access to data for marketers will be limited in the coming years, retailer data holds the key for planning targeted ad campaigns.

All the brands who will partner with RMNs will get access to this data, which will allow them to target their customer segments in a better way. Brands will be able to ascertain their ROI accurately, thereby being in a better position to optimize their digital marketing campaigns.

Prominent Retail Media Networks and Use Cases

Some of the most prominent retail media brands networks who are ruling this lur=creative segment are: –

• Amazon: – Amazon has emerged as the global leader in eCommerce, with millions of active users worldwide. As a leading RMN, Amazon has been able to offer ad space to brands from across domains and has managed to capture almost 89% of total retail media spending last year. Like Google, Amazon also offers a self-serve platform that enables marketers to bid on keywords and pay only when a user clicks on an ad.
• eBay: – eBay is also a prominent retail media network that caters to a wide segment of industries. eBay offers sponsored listings at the top of search results that look like normal listings. This platform also offers display ads on its category pages as well as the homepage for brands looking to create brand awareness.
• Walmart: – Walmart is one of the largest retailers worldwide and deals in a huge range of products. Walmart has its own ad centre that enables brands to leverage the shopper data available with the platform. Marketers can use sponsored product listings offered by Walmart to run attention-grabbing display ads to attract customers. Walmart Connect allows the brands to advertise to retail customers at self-service checkout counters in physical stores.
• Home Depot: – Home Depot has its own retail media network, Retail Media+. This network empowers marketers with multiple advertising options that include email marketing, onsite ads and offsite ads. As more than two billion users visit the website every year, the target customer base is extremely attractive to marketers.
• Kroger: – Kroger is a prominent retailer in the US with its own RMN, Kroger Precision Marketing. This platform allows brands to run their ads directly on different Kroger channels. Kroger also offers numerous offsite ad options that include OTT, social media, and display ads.

Retail media is growing at a rapid pace and will continue to do so as marketers are always looking for first-party data. With many platforms entering this segment, the future for RMNs certainly looks promising.

Marketing Technology News: Why Marketers Should Strive for Answer-driven Marketing