Retail media has been steadily increasing year on year in the last decade but this year the industry will increase to $41.37 billion which is $10 billion more than 2021. In 2023, the industry will have bypassed $50 billion and will account for 1 in 5 digital ad dollars.
So it’s no surprise that retailers previously not offering retail media are jumping on board and setting up their retail media packages to sell to brands. Advertisers have plenty of options, as there are many major retailers already managing a retail media side to their business. These include big-box retailers like Walmart, Macy’s, Target, and Home Depot. These retailers provide first-party data to brands, allowing them to get closer to customers as they make purchasing decisions. Brands can leverage rich customer data and enjoy increased efficiency in return.
In this article, we’ll discuss 5 trends that will alter the retail media industry in 2022.
Retail Media as a Key Advertising Channel For Brands
With the end of third-party cookies looming, brands are shifting to retail media as a key advertising platform. Retailers are favorably positioned because they collect large amounts of first-party consumer data around its brands, such as customers’ interests and purchasing behaviors. As more retailers establish their own media platforms, brands will be easily able to access this valuable first-party data through retail media providers.
Through retail media, advertisers are able to connect to their customers while also gathering insights into their ad performance. Due to the high-margin income potential, 2022 will be a year of massive growth in retail media for online retailers.
However, retailers must quickly find the best way to manage their retail media offering to brands. Their offering must be seamless, and they must be able to effectively manage their media across a wide pool of brands.
Retail Media To Incorporate Video
In 2022, we are set to see a rise in the use of video in retail media. The days of static sponsored product posts will be pushed aside and more advertisers will embrace video as a channel to promote their products. Retailers have the added pressure of not only trying to obtain a strong ROI with customer data access but advertisers will expect that retailers will innovate and provide other advertising formats, outside of static ads. After testing it was concluded that video advertising in retail achieves a 7.5 times higher click-through rate than a static ad. Video also makes it easier for brands to share their story and demonstrate how their products work.
Walmart and Amazon are already using live videos to advertise products as part of their live commerce strategy, and you can bet that other major retailers are exploring approaches to adopt retail media live video advertising as well.
Setting the Standards of Retail Media
Retail media is not a “new” concept. Although Amazon advertising has been around for more than a decade, retail media’s significance has grown in recent years. As previously mentioned, the market is predicted to reach $50 billion in a short period of time, and industry standards are beginning to develop as the industry matures. A precedent is being set as brands look to the success of previous retail media initiatives. The strongest ad formats and editorial criteria trends for success are being identified, brands are becoming familiar with them and implementing them into their campaigns. The gold standards of retail media will continue to develop as new ad formats are added and evaluated in the market.
Retail Media Leverages Self-Service Offerings
Brands will require more flexible advertising solutions and we will see a change from managed services to self-service retail media services offered by retailers. Advertisers want to have access to advertising data and to be able to adjust and modify their campaigns quickly to make the most of their advertising dollars. They want to have more control over their media buying. Therefore in 2022, we will see an increase in the number of retailers offering a self-service solution to brands. Brands will be able to access their campaign data and update their campaigns quickly and easily without the need for the retailer to get involved. The retailer can therefore afford to take on more brands, as less man-hours will be required to take care of self-serve brand campaigns.
Retail Media and Machine Learning
Machine learning is used throughout the whole retail media process and will become even more important to brands as AI and machine learning continue to evolve. During campaign planning, brands can use machine learning to understand product seasonality and why customers respond to different advertising channels. Machine learning can be leveraged by brands to build audiences based on customers likely to buy a particular product or to switch to new brands. This data is invaluable for brands to utilize their advertising dollars as efficiently as possible and have a clear understanding on why certain audiences will respond in certain ways. Over time, this can save the brand time and money. Throughout 2022, as machine learning progresses and becomes even smarter, brands will continue to take advantage of this customer data.
With the estimated growth for the retail media industry in 2022 to be over $10 billion more than 2021, it’s certainly an interesting time to be part of the industry. Brands need to leverage the success of the channel and reap the benefits in terms of sales and access to first-party customer data. Over the next several months, we’ll be monitoring the industry’s progress, and we’re excited to see how far it can go.