June 6, 2022
As privacy regulations tighten around the world and further limit the use of third-party data, brands and vendors are looking to e-commerce marketplaces and retailers for a lifeline: evolving their advertising strategy using first-party data on those sites and apps.
Retail media networks, essentially e-commerce sites — think Amazon, Target, Walmart.com — allow businesses to advertise directly to consumers as they shop online. These networks create a win-win situation:
Retail media is growing faster than ever
Retail media has established its reputation as the hot new advertising channel (eMarketer predicts that 2022 “the year of retail media networks”). The evidence is clear: in the US alone, retail media ad spend jumped 53.4% from 2020 to 2021, and continues to rise. This year, advertising directly on retail sites and apps is set to increase another 31.4%, bringing $41.37 billion in sales.
The time is now for brands, merchants, and vendors to leverage e-commerce for advertising. And there’s still a lot of digital ad spend up for grabs.
Drivers powering the growth
But the biggest emerging driver in the next phase is privacy.
What privacy means for e-commerce
Consumers are demanding privacy protection in all the technologies they use, making it difficult to target effectively. Brands and their media agencies need privacy-sensitive — and furthermore, privacy-adaptive — alternatives to reach their audiences.
A key benefit of retail media networks is that advertisers can tap into the platform owner’s unique first-party data. This data contains key insights on shoppers, including purchase history, brand and product preferences, basket mix, and propensity to try new products, and are collected over months, years, and decades. This means ads based on first-party data can be personalized to each shopper, leading to higher conversion rates.
Machine learning and product discovery
Consumers want privacy, but they also want to be introduced to products they didn’t know they wanted. This is where machine learning takes product discovery to another level. Let’s say a shopper is looking at swimsuits. Chances are high that the consumer is planning a vacation, so through ads for other holiday-oriented items, such as tour guides, platform owners will increase GMV and ROAS for their advertisers. Machine learning excels at the kind of smart product pairing that delights and retains shoppers.
Moloco aims to empower e-commerce companies to unlock the value of their first-party data. That’s why we introduced Moloco Retail Media Platform for marketplaces and retailers to drive sales and new revenue, improve platform stickiness, and grow shopper lifetime value. Learn more here.
CPCs keep rising on major channels, especially as platforms like Amazon look to drive up prices to increase ad revenue. That means there is an opportunity for other marketplaces to become attractive, affordable ad dollar investment media for merchants. It is important that RMPs provide brands with quality data to justify their investment.
With the deprecation of third-party identifiers like tracking cookies that merchants have relied on to target consumers, social media platforms, and streaming media sites, retail media are increasingly crucial and incredibly efficient revenue channels for advertisers and marketplaces alike.
Retail media is a great way for you to open a whole new revenue stream, drive sales for your merchants and, most of all, help your shoppers discover new products they’ll love. Ready to cook up a plan to grow your marketplace? Here are the key ingredients essential to a successful retail media business.