Sponsored ads are a powerful tool for brands selling on digital marketplaces; they unlock greater audience reach, increased conversion rates, and better return on ad spend. At the same time, sponsored ads are a boon for retail media companies. Not only do sponsored ads improve the customer experience by offering more relevant and helpful recommendations, they also unlock high-margin revenue streams that are a win-win situation for the marketplace and its sellers.
This article offers an introduction to what sponsored ads are, what they mean for brands, and the mechanics of how they work in retail media environments.
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Interested in learning more about sponsored ads and sponsored results? Check out Sponsored Ads: The Ultimate Guide.
What Are Sponsored Ads?
Sponsored ads are advertisements that target specific shopping keywords or search terms. Instead of designing a brand-specific ad and paying for it to run on a website, sponsored ads blend in seamlessly with the retail media environment in which they appear. That means they’re usually indistinguishable from the content a visitor has come to that website to find.
When consumers shop online using digital marketplaces, they scroll through marketplace listings that are aggregated in response to their chosen search term. When sponsored ads are in play, consumers see both regular listings related to their search and relevant paid product recommendations in the form of sponsored ads. Typically, sponsored ads are boosted to the top of the list of products or are elevated to prime website real estate in some other way.
Why Should Brands Buy Sponsored Ads?
There are a number of reasons sellers will be interested in buying and running sponsored ads on your digital marketplace. The potential benefits all hit key performance metrics that are top of mind for brands and advertisers:
Reach new customers: Sponsored ads allow brands to get in front of and stand out to potential customers that aren’t already aware of their businesses.
Increase order value & volume: Increasing order value (the amount that customers spend) and order volume (the number of times they buy), leads to greater revenue.
Grow your following: Sponsored ads boost brands to primary placement among the listings in a digital marketplace, leading to increased visibility and brand loyalty.
Increase conversion rate: Brands connect directly with consumers who are already expressing interest in their products, boosting the likelihood of conversion.
Improve return on ad spend: Sponsored ads are pay-per-click, meaning sellers only pay when a customer clicks on the ad, not when they view it without taking action.
How Do Sponsored Ads Work?
There are a few fundamental components that sellers will need to make the most of sponsored ads on your retail media site. Budgeting, targeting, and analytics are the main mechanics that make sponsored ads a highly effective advertising strategy. Here’s what you need to know about each in order to offer sellers the option of buying sponsored ads on your digital marketplace:
It’s important to allow sellers to set unique campaign budgets. Typically, digital marketplaces allow for both budget caps that limit the total campaign spend and specific bid amounts that define how much the algorithm will bid for each click. Cost-per-click structures mean that advertisers won’t pay a cent until a customer clicks on their sponsored ad, making the strategy both profitable for retail media companies and accessible for brands of all sizes.
Sellers need to be able to define the keywords, search terms, or product specifics they want to target. It doesn’t make sense to show a sponsored advertisement for winter coats for a shopper that’s searching for summer bikinis, but showing that same ad to someone searching for long johns or warm ski gear might be a perfect match. Enabling precision targeting will ensure that sellers who buy sponsored ads on your platform get their products in front of the right people at the right time.
Some bigger retail media platforms, like Amazon, for example, offer automatic targeting that uses an algorithm to match sponsored ads to relevant search terms on the seller’s behalf. Moloco’s Retail Media Platform offers fully automated targeting through its intelligent Recommendation Engine, ensuring that consumers get the most relevant offers and maximizing revenue per impression for sellers at the same time.
Tracking & Analytics
Finally, give sellers the tools they need to be able to crunch the numbers and contextualize their campaign results. Generating reports and checking in on dashboards allows sellers to measure their progress and make changes on both current and future campaigns. Self-service campaign management tools are incredibly powerful for sellers since they provide access to real-time data that informs which levers they can pull to optimize the performance of their sponsored ads.Back to top
Unlock Sponsored Ads With a Retail Media Partner
Building out a proprietary retail media platform simply isn’t feasible for most digital marketplaces. Working with an experienced partner will enable you to unlock a powerful new revenue stream through sponsored ads, delight your customers with a personalized experience, and drive up conversions and average order value for sellers. Ready to learn how Moloco’s proprietary algorithms can turn your ecommerce site into a highly-profitable, ad-driven digital marketplace? Contact us today.