June 1, 2021
As modern commerce continues its rapid expansion into the digital world, vendors face increasingly stiff competition in the billion-dollar battle for consumer attention.
Digital retail grew by 32% in 2020 to account for 14% of all retail sales, representing a growing opportunity that consumer-oriented businesses can’t afford to ignore. Just as brand advertisers followed shoppers from city streets into brick & mortar department stores with end cap displays and other types of in-store advertising, modern retail media advertising platforms give marketers the power to stand out in bustling online marketplaces.
But what is retail media advertising in the context of today’s increasingly digital commercial world? And how can digital marketplaces make the most of this growing opportunity? This article will explain what retail media advertising is and why it’s a crucial part of any digital commerce environment.
Retail media advertising originated in brick & mortar retail environments and has since migrated to the digital world to serve much the same purpose. Originally, businesses paid retailers to display in-store signage and promotional materials within their stores in the interest of capturing customer attention and driving more purchases for the SKUs carried. Unlike traditional media-based advertising that aims to capture consumer attention in non-retail environments, retail media advertising targets consumers as close to the end of the buyer’s journey as possible. In-store shoppers have a clear intent to buy, and if they’re in the area of the retail media placements, they’re showing interest in that category of product.
Retail media advertising works the same way in online spaces, with advertisers paying a platform or marketplace to showcase their products, usually consumer goods, at or near the point-of-sale. A common example would be a company like Gillette promoting its razors within search results pages for grooming products in online marketplaces like Amazon or Target.com. Retail-adjacent industries like travel or insurance can also leverage retail media placement to great effect. E-commerce sites or apps aren’t the sole opportunities for brands to leverage retail media advertising, but they are one of the most common applications.
A retail media advertising network is a collection of ad placements that a retail entity has on its website, app, or other digital platforms. It might span a single property or many, but typically includes ad inventory on key locations along the buyer’s journey, such as the home, category, search, and product detail pages.
Retail media advertising systems, though most commonly found within web-based shopping platforms, can also be employed across a variety of other digital marketplaces. Examples include:
The COVID-19 pandemic has rapidly accelerated the world’s progress towards a commercial world that exists primarily online. Consumers are not only more comfortable shopping online, but have also expanded the categories of goods that they’re comfortable purchasing via digital channels. Groceries made up 12% of all U.S. e-commerce in 2020, much of which came from first-time shoppers. E-commerce at large is expected to account for nearly 14% of total U.S. retail sales in 2021, for an estimated $908 billion. Worldwide, 2021’s e-commerce spend is anticipated to approach $5.8 trillion.
Retail data provides a highly personalized picture of shoppers, making it an excellent foundation for targeted ads. As digital marketplaces continue to grow, the demand for retail media ad inventory will keep pace. With the arrival of iOS 14.5 and increased privacy restrictions, advertisers have fewer tools to optimize their paid acquisition campaigns. Consequently, the relative value of first-party, on-platform data will increase. Furthermore, the online retail space’s closed loop makes it easier to attribute ad activity directly to sales.
Most major online marketplaces like Amazon, eBay, and Groupon have historically built their own retail media solutions, but smaller companies can also benefit from retail media advertising.
The appeal of leveraging a retail behemoth like Amazon for retail media purposes is that it has the infrastructure necessary for collecting data and serving ads. However, Amazon’s retail network is completely separate from Target, Best Buy, and other large retailers. Analyzing the data obtained from ad campaigns spread across multiple retail media networks requires a cross-platform strategy that many marketers aren’t currently equipped to execute.
Creating your own retail media network could solve that issue and open up new revenue opportunities for your business. However, the resources required to build an in-house retail media platform are typically beyond all but the largest and most well-equipped businesses.
While you could undoubtedly learn the nuances of online advertising, the learning curve can be costly. To provide the best service for your advertisers, marketplaces need to predict the ad placements that have the best chance of hitting their goals, and not all strategies are appropriate for all brands. Advertisers want guidance, and knowing what to tell them comes from experience, making a strategic retail media partnership far more valuable.
At Moloco, we’re well aware that the transition from brick-and-mortar to retail media digital advertising will be full of unique challenges, especially for businesses that lack the resources of modern tech giants. Our Retail Media Platform helps publishers of all sizes unlock new, ad-based revenue streams for their digital marketplaces by empowering their vendors to stand out in an increasingly crowded landscape.
Powered by the same trained algorithms that drive success for our programmatic advertising clients, our recommendation engine lets marketplaces easily leverage both first and third-party data to predict customer behavior and connect them with the products they’re most likely to purchase. Partnering with the Moloco Retail Media Platform gives businesses of all sizes access to one of the most profitable revenue streams available with minimal financial risk. Helping digital businesses unlock the power of their data has always been Moloco's mission, and we look forward to playing our part in facilitating the next chapter of digital commerce.
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