Retail Media Represents the Savior of More Than Just Retailers
The evolution of digital platforms and increased privacy restrictions have cattle-prodded a reluctant advertising industry directly where marketers say they’ve always wanted to go: a future where success can be measured in actions, not ads. This evolution is most obvious in the rise of retail media titans and the growing number of retail media networks that deliver value to brands in the form of sales, not just impressions.
Retail media isn’t just a path to revenue for retailers and other commerce players with strong first-party data. It’s the future of “smart media,” and it’s bound to reshape the advertising ecosystem. All players in the retail marketing space today need to be identifying where their role within retail media can be identified, extended and capitalized upon. Here’s why.
Understanding the Opportunity
According to eMarketer, retail media will represent a $45 billion ad market in the U.S. this year, with more than $10 billion coming from key players beyond Amazon.com. While the majority of retail media spend is directed to performance-driven product searches on retail properties, a growing portion consists of off-site ads. In fact, in 2023, $6.54 billion will be spent on off-site retail media ads — a notable 14.5 percent of overall retail media ad revenues. In contrast, this total stood at only $1.83 billion in 2020, or 8.8 percent of the total.
The retail media market went from $1 billion to $30 billion in just five years, more than twice as fast as it took social media to achieve that number. It will reach $100 billion faster than any channel ever has.
Ultimately, retail media sits at the nexus of opportunity and advertiser value in an ecosystem that has transformed itself around a singular goal: to be the place where ROI-positive sales can be driven by spending more on ads. Every company with any reasonable amount of traffic has raced to launch a commerce initiative because it’s become clear that the future isn’t going to be driven by ads. It’s going to be driven by actions — specifically transactions — and retail media is an example of this evolution.
What a Retail Media-Dominated Future Means for All Digital Players
All online companies today — retailers, publishers, affiliate sites and brands themselves — need to reorient themselves around retail media if they want to translate their strengths into maximum value. Here’s what that looks like:
- Retailers need to extend their inventory. For retailers and other commerce players launching retail media networks, inventory represents the ceiling to growth. These companies need to be looking outside their own properties to enhance their offering, including identifying high-intent inbound sources of traffic like CRM, influencers and affiliate. The advantage of tapping into this traffic is that there's new, high-intent, first-party inventory that can be leveraged, and these channels should enable easier testing and deployment of new inventory types like video and custom landing pages for multibrand promotions.
- Publishers need to habituate visitors to shopping. Content-focused publishers need to be opening their models to support retail media advertising by habituating their visitors to start shopping journeys from their properties. Whether via online reviews or product integrations into content, publishers need to acknowledge that simply surrounding their premium content with ad units isn’t going to carry them into the future. They need to translate their audience’s attention into transactions.
- Retail media executives need to unify teams. One challenge every big retailer faces is uniting internal teams that have different goals to drive a specific outcome. With retail media quickly becoming the most dominant contributor to retailer profits (just like Amazon Ads did for the world’s most powerful e-commerce company), executives running retail media should work with the CRM, influencer, and affiliate leads to extend their retail media footprint in high-intent, first-party channels.
The reason retail media is growing at such a prodigious clip is obvious: it works. Retailers have incredible first-party transactional data that allows them to understand precisely what their customers are looking to buy. More importantly, they’re able to serve retail media experiences for those products to people who are looking to make a purchase at that precise moment. It’s performance media at its finest — and it’s time for everyone to tap into it.
Michael Jaconi is the co-founder and CEO of Button, the mobile commerce technology company that's powering a commerce-driven internet.
Michael Jaconi is the cofounder and CEO of Button, the mobile commerce technology company that is powering a commerce-driven internet. Jaconi formerly served as the CEO of Rakuten Loyalty and Executive Officer of parent company Rakuten.