Retail media represents the third wave of digital advertising following Search and Social. The market value increased from US$10bn to over US$100bn in just 6 years, an impressive growth trajectory that took Search and Social 14 and 8 years respectively to achieve. The primary growth driver has been Amazon, with many retailers and e-commerce platforms launching their own advertising businesses.
Understanding Retail Media
Retail media is digital advertising that enables brands to promote their products and services on retailers’ websites (on-site) or third-party websites (off-site), leveraging retailers’ first-party data for precise customer targeting throughout their shopping journey.
Three Key Types of Retail Media:
1. Onsite advertising: Advertising on a retailer’s own inventory, including websites and apps
2. Offsite advertising: Advertising using retailers’ data outside their own inventory
3. In-store advertising: Targeting shoppers with retail-data informed ads within physical stores
The vast majority (~90%) of retail media today is onsite advertising. The two most common formats are:
1. Sponsored products: Organically integrated into search results while display ads promote brands or products through static banners or videos.
2. Display ads: Promotional content that can appear throughout the shopping experience
Offsite retail media refers to advertising using retailers’ data outside their own inventory, currently representing approximately 10% of the mix but expected to grow. However, this growth faces challenges – within the next 2-3 years, signal loss from cookie deprecation will partially impact growth expectations (with Google’s expected phase-out by early 2025).
In-store advertising targets shoppers with retail-data informed ads within the physical store environment, though it remains relatively small compared to online retail media potential.
Why Retail Media Matters to Advertisers
Advertising on retailers’ websites provides brands with significant opportunities to reach consumers close to the point of purchase where conversion rates are higher and measurement or sales attribution is more straightforward. Consumers shopping online are already in a buying mindset, making them more receptive to advertising.
Retailers have discovered how to monetize first-party shopper data. As stated in the report: “Hail the money I spend on advertising is wasted; the trouble is I don’t know which half.” Retail media offers a solution – providing measurable, attributable advertising tied directly to sales outcomes.
Figure 7: The Trinity of Retail Media Formats
There are three main categories of retail media:
– Sponsored Products
– Banner Advertising
– Email Replacements
– Brand Pages
**Offsite**:
– Banners
– Mobile
– Connected TV
– Online Video
**In-Store**:
– Sampling
– Digital Signage
Retail Media Explained. 