Is it Retail Media or Commerce Media? (And Why it Matters)

Retail media will account for nearly 20 percent of global digital media spending this year and likely surpass social media spending by the next decade. With an annual growth rate of at least 21 percent through 2027, retail media is one of the fastest-growing advertising channels in marketing history.

Driven by such impressive growth, industries ranging from banking to fitness are leveraging their substantial first-party data and consumer attention to offer retail media networks such as Chase Media Solutions, which launched earlier this month.

Of course, by aligning with the retail media gold rush, nonretailers hope to cash in on the latest ad trend. Chase’s media offering and its inevitable followers will be labeled as retail media initiatives — but are they?

They're more likely an evolution of retail media at the intersection of commerce and advertising called commerce media.

The classification as either retail media or commerce media is important because it determines how advertisers will manage, staff, budget and strategize their programs. This distinction impacts everything from operational execution to strategic planning and will shape the next era of advertising.

Retail Media or Commerce Media: What’s the Difference?

The underlying foundation of both is commerce data (sometimes called purchase data or purchase signals), which are details about consumer purchases and interests, such as demographics, browsing habits and product interactions. Marketers utilize these signals to drive decision making to enhance each phase of the campaign lifecycle: researching, planning, creative, targeting, bidding/buying, measurement, and optimization.

While retail media and commerce media share the foundational use of commerce data, their application and control distinctly separate them:

• Retail media operates under the control of retailers and is primarily designed to convert shoppers where transactions occur — be it online, in-store, or even across their owned, non-e-commerce domains (e.g., Amazon Ads inventory on Twitch).
• Commerce media, however, casts a wider net, incorporating any advertising effort that leverages commerce data to influence consumer behavior across various platforms, not limited to retail-owned properties. This broader scope allows for greater flexibility and application in different industries, which might not traditionally be considered retail.

The delineation becomes more important as more nontraditional entities like banks continue to enter the advertising arena.

Why it Matters

As commerce media is embraced by nontraditional retail businesses, such as Chase, it raises questions that can complicate strategic management such as:

• Where should the money come from? The expansion of retail media to commerce media blurs traditional boundaries, causing conflicts in budget allocation. Funds once reserved for retail media are now challenged by the need to invest in broader digital strategies.
• Who owns it? The emergence of non-retailer commerce media prompts questions about management. Is existing retail media expertise sufficient or is new knowledge required? Will existing agencies and vendor partnerships suffice?
• What are the risks of a crowded market? The influx of various players into the already rapidly expanding retail media space increases advertiser complexities and risks market saturation, potentially stifling growth.

These are just a few of the considerations that arise when classifying advertising as either retail media or commerce media.

Conclusion

Whether ads appear within an online retailer's site or a banking app like Chase Media Solutions, commerce data is the linking thread.

The success of retail media has proven that commerce data is the new gold standard and, in the impending post-cookie era, one of the most valuable signals marketers can use to target and optimize audiences. Because of this, more nonretailer networks are expected to emerge in the coming months and years.

While on paper it doesn’t really matter if it's a retail media network or a commerce media network, in reality, understanding these nuances is crucial as they directly influence how advertising strategies are formulated and executed. Each requires different management tactics, expertise and strategic planning due to their operational and target audience differences. The clear distinction between them ensures that marketers can allocate resources and design campaigns that are optimally aligned with their specific goals and the platforms they're using.

Nich Weinheimer is executive vice president of strategy at Skai, an omnichannel marketing platform.