The Commerce Media Ecosystem: Where Data, AI, and Ecommerce Shopping Converge

The $140 billion commerce media revolution is here, and it's transforming how we shop and advertise. By combining first-party transaction data with AI, this powerful ecosystem delivers highly relevant, outcome-driven ads that enhance the relationship between consumers, retailers, and brands – transforming the growth paradigm for all stakeholders.

Let’s take a closer look at digital advertising’s third and biggest wave yet. 

Understanding the commerce media ecosystem 

Commerce media refers to the universe of retailers and marketplaces that leverage first-party transaction data to deliver targeted, performance-driven advertising solutions. 

Unlike traditional digital advertising, commerce media platforms operate at the intersection of shopping and advertising, creating a closed-loop where marketing directly connects to measurable sales.

E-commerce remains the foundation of this ecosystem, with retail media networks (RMNs) managing ads across verticals such as home goods, food delivery, apparel, and much more. But, this opportunity is also extending to new high-growth areas like finance or travel. In fact, non-retail categories of commerce media are expected to reach 13.5% of the market by 2028. 

Market size and growth projections

With market projections to eclipse $140 billion globally in 2025, commerce media is one of the fastest-growing segments in digital advertising. Even as Amazon dominates 75% of U.S. retail media spend, the overall market is expanding rapidly, creating opportunities for retailers of all sizes to develop their own media networks.

This growth is driven by several factors:

1. Digital privacy evolution: Faced with cookie deprecation and stricter privacy laws, advertisers are turning to platforms with robust first-party data.
2. High-margin revenue potential: Retailers and marketplaces can realize significantly higher profit margins in media (70-90%) compared to retail operations (2-5%).
3. Performance-driven advertising: Especially in uncertain economic conditions, brands prioritize measurable, performance-based marketing channels.
4. Technological advancements: Sophisticated machine learning (ML) and AI tools have made it possible for every retailer to activate first-party data at scale.

Key players in the commerce media ecosystem

The commerce media ecosystem revolves around three key stakeholder groups, each with distinct objectives but interdependent interests:

Suppliers (Advertisers)

Brands rely on key retailers and commerce platforms to reach their target audiences and drive growth. Often competing against tens of thousands, or even millions, of available products, suppliers need effective tools to stand out in highly competitive marketplaces.

What advertisers value most in commerce media:

• Direct access to high-intent shoppers
• Closed-loop measurement that connects ad spend to actual sales
• The ability to use retailers' first-party data for precise targeting
• Opportunities to influence purchase decisions at the moment of consideration

Retailers and Marketplaces (Media Owners)

Online retailers and ecommerce marketplaces are transforming their digital storefronts into powerful advertising platforms. By combining premium real estate with first-party data targeting, these companies create a profit engine that enhances the user experience.

What media owners gain from commerce media:

• New high-margin revenue streams (often 70-90% margins)
• Stronger relationships with brand partners and suppliers
• Additional value from their first-party data assets
• Competitive differentiation in the retail landscape
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Shoppers (Consumers)

At the center of this ecosystem are shoppers, who benefit from seamless product discovery and more relevant recommendations. When executed properly, commerce media doesn't feel like advertising to consumers, but rather helpful suggestions aligned with their interests and needs.

What consumers gain from effective commerce media:

• Increased discoverability of relevant products
• Personalized shopping experiences
• More informed purchase decisions
• Potentially better pricing through advertiser competition

When the commerce media ecosystem functions effectively, it creates a virtuous cycle: advertisers reach high-intent audiences and drive sales, media owners generate profitable revenue and improved CX, and consumers discover products better suited to their needs.

First-party data in Commerce Media: The new currency

Powering the interactions between these key players is another critical asset: first-party data. With growing concern over consumer privacy, first-party transaction data has become the most valuable currency for advertisers. Collected directly from customer interactions, this data provides unmatched insights from a future-proof source.
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Why first-party data is critical

First-party data is particularly valuable because it:

• Is collected with user consent, making it privacy-compliant
• Provides direct insights into actual purchase behavior, not just intent
• Enables closed-loop measurement of advertising effectiveness
• Creates unique targeting opportunities unavailable elsewhere

According to McKinsey, personalized marketing powered by first-party data can reduce customer acquisition costs by 50%, increase revenues by 5-15%, and boost marketing ROI by 10-30%.
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Methods for collecting and activating first-party data

Retailers and digital marketplaces collect first-party data through:

1. Transaction records: Purchase history, cart abandonment, and product interactions
2. Loyalty programs: Customer profiles, preferences, and engagement patterns
3. On-site behavior: Search queries, product views, and browsing patterns
4. App usage: In-app behaviors and location-based data
5. Customer service interactions: Support queries and feedback

The true power emerges when this data is activated through commerce media platforms, enabling capabilities like Audience Segmentation, Look-alike Modeling, Purchase Prediction, Personalized Ad Experiences, and Closed-Loop Measurement.
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How AI integrates in commerce media

AI is the backbone of effective commerce media platforms, enabling personalization at scale and optimization across the customer journey. Without advanced ML, the vast amounts of data collected by commerce platforms stays underutilized.
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Customer journey optimization

ML algorithms analyze trillions of data points to deliver seamless ads that enhance (rather than interrupt) the customer journey, at every touchpoint across page types:

• Product discovery: Greater prediction accuracy, enabling higher bids for each impression
• Search results: The most relevant sponsored products to display based on search intent
• Product detail pages: Complementary products that enhance conversion probability
• Add-to-cart: Additional items shoppers might need before checkout
• Post-purchase: Opportunities for reordering or complementary products
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Real-time personalization at scale

As part of any optimized customer journey, ML in commerce media also enables personalization across millions of unique shopper journeys, unlocking a better UX and higher conversions:

• User sequence modeling: Track and analyze sequential user behaviors to predict needs
• Contextual understanding: Process real-time signals to grasp current shopping context
• Relevance scoring: Determine which products are most relevant to individual shoppers
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Automated campaign management

Self-serve capabilities and automation accelerate advertiser activation and enable commerce media platforms to operate efficiently with minimal operational resources. 

• Automated bidding: Optimize for advertiser goals while maximizing publisher revenue
• Budget allocation: Focus spend on the highest-performing placements and audiences
• Performance prediction: Forecast likely campaign outcomes before launch
• Continuous optimization: Thousands of daily adjustments help maximize performance

Better ML predictions deliver more purchase conversions using less inventory, automated bidding enables high-performing ads to be shown on more pages, and conversion models drive more purchases per dollar spent, ultimately leading to higher ROAS (Return on Ad Spend).

Maximizing commerce media growth with data and ML

To fully capitalize on the commerce media opportunity, retailers and digital marketplaces need to embrace an AI-native approach to their onsite advertising. The ultimate prize? High-margin revenue that strengthens sales, brand relationships, and CX – all at the same time.

The most effective commerce media technology partners use advanced, real-time ML to automate complex decisions while maintaining the human-centered elements that drive engagement and brand loyalty. Key components of a successful strategy include:

• Data integration
  
  • Unified customer profiles connecting online and offline behaviors
  • Real-time data processing capabilities
  • Strong governance and privacy compliance frameworks
• Advanced AI applications
  
  • Full-funnel prediction models, from search to purchase
  • Advertiser-friendly automation for campaign optimization
  • Dynamic creatives, inventory, and pricing optimization
• User-centric design and ad experience
  
  • Seamless ad formats that enhance the shopping journey
  • Relevance-driven ad placement and frequency
  • Balanced ad load with UX considerations
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The future of shopping: Where commerce and media converge

For retailers and marketplaces, developing robust commerce media capabilities is no longer optional. Those who invest in this media commerce ecosystem—treating it not merely as a revenue stream but as a strategic lever to improve CX—will gain an unfair advantage among consumers and suppliers. The boundaries between shopping, discovery, and advertising are dissolving quickly into a seamless, personalized journey – powered by data and AI.

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