Decades ago, virtually all shopping took place in person, and in-store advertising played a significant role in driving sales. Today, however, it’s a different world. With a significant amount of shopping taking place virtually, advertisers and retailers are forced to pivot to a new and ever-changing world. For those looking to take advantage of customers during the purchase process, retail media advertising is a growing area full of potential. This is what you need to know about retail media, including what it is, why it matters, and what advertisers can do to capitalize on it.
What Is Retail Media?
Retail media is effectively the digital recreation of in-store advertising. Rather than placing ads on aisle end-caps, adding coupon dispensers to store shelves, or positioning items in the checkout line, advertising is placed on a website or shopping app at or near the point of purchase. Amazon is an excellent example; search results will often feature sponsored products mixed in with organic results, highlighting options customers may not see otherwise. Alternatively, brands can have ads placed in sidebars on product pages, the home page, or even on the checkout page across all kinds of retail sites – in short, anywhere that may influence purchases.
Retail advertising is usually employed by brands that directly sell products with retailers on said retailers’ platforms, but not always. However, for any brand or product that shares a similar customer base to a retailer’s website, retail media can be a beneficial strategy.
Why Is Retail Media Growing in Importance?
Retail media isn’t anything new, and it’s not exactly reinventing the advertising wheel, but it’s a space that’s rapidly growing with no signs of stopping – and it’s growing far faster than anyone could have predicted.
The biggest piece of the puzzle? COVID-19. While a move toward more digital avenues was inevitable, the pandemic hastened the process significantly. With stores limiting hours and facing stock shortages coupled with shopper fear of contracting a dangerous illness, more people than ever took to the web to shop for daily use products. Grocery stores expanded curbside options as well, which also require using a site or app to place orders. The numbers speak for themselves – groceries made up over 10% of all online shopping in 2020.
The trend isn’t limited to groceries, either. From 2020 to 2021, the online shopping space grew 18%. Retail media hasn’t followed this trajectory yet, but its growth is on the horizon; the retail advertising space is expected to grow from $20 billion to $50 billion in the next five years. As such, those who make strides early are well-positioned for success as this space ramps up.
The move away from third-party cookies is also a contributing factor, albeit on a smaller scale. Now that advertisers are forced to rely on first-party data, targeting opportunities are more valuable. By noting how users interact with websites, including clicks and purchases, advertisers can better frame ads to improve conversions.
Popular Retail Media Channels
Retail media channels come in all shapes and sizes, and they’re not all made equal. Companies considering breaking into the retail media space or expanding current campaigns are encouraged to not only consider all available options but to do due diligence into the best choice for corporate objectives.
- Ecommerce Platforms: Ecommerce platforms, like websites and apps, are ideal places for product ads across all pages. For most, this is the primary source – or, in some cases, only source – for ad placement.
- Social Media Ads: Social media ads on platforms like Instagram and Facebook are integrated into feeds, putting products in front of target demographic eyeballs. This method has proven effective, too; around half of young social media users have made purchases from social posts.
- Streaming Services: Streaming services, like Hulu and Peacock, offer ad-sponsored subscriptions at limited price points. When ads align with show types, advertisers can target potential customers in a seamless way.
- Over-The-Top (OTT) Devices: Similar to streaming services, OTT devices, like Rokus and Amazon Fire Sticks, have advertisement placement options that can appeal to media users in a compelling way.
- Connected TV (CTV): As with streaming services and OTT devices, CTVs, like Roku TVs or Samsung smart TVs, permit advertising in limited quantities.
Most advertisers start and end with e-commerce sites, but in many contexts, adopting alternate routes can be a benefit.
The Benefits of Retail Media
Retail media has its obvious benefits, as evidenced by the growth in this space. These include:
Pre-Empt the Competition
Retail media is widely employed, but not by everyone. That means this is still a growth area with lots of potential for expansion. Unlike avenues that are oversaturated, there’s still room to stand apart. By creating a solid plan now, businesses can develop a strong strategy rather than scrambling to play catch-up later.
Maintain Brand Equity
The first page of search results is an important place for brands to be, but on third-party sites, this isn’t always guaranteed organically. With retail media, however, it’s possible to secure placement in the most important areas. When customers see the brands they expect to see – the names they know and trust – they’re more likely to move forward with a purchase.
Capitalize on Lower Prices
As the market currently stands, retail media space is relatively affordable. However, this is likely to change as popularity grows. Those who move forward soon can take advantage of an appealing market, making the most of advertising opportunities before the market is swamped and expensive. This may be a benefit with a ticking clock, which is all the more reason to move quickly.
Showcase Unique Offerings
While the market is young and growing, advertisers have more flexibility to play with what works and what doesn’t. This can allow advertisers to hit their stride before it’s too late, and find ways to stand apart from the rest of the field. By highlighting unique offerings rather than using standard ads that will blend into the crowd, it’s possible to make the most of advertising dollars.
The Challenges of Retail Media
As with all marketing strategies, retail media isn’t without its issues. Before diving into the deep end, keep the potential challenges in mind – and the potential solutions.
Privacy is a priority for today’s consumers, and customers don’t trust brands that can’t manage to keep their personal data secure. When applying retail strategies, advertisers are encouraged to balance adding value with protecting customer information. Otherwise, they risk making decisions with customer data that ignore consent, which can put customer relationships on shaky ground.
Obtaining a Comprehensive View of Customers
As many advertisers know, it can be hard to combine online and offline data for a customized experience, especially when info sources are so varied and splintered. Retail media doesn’t make this existing challenge any easier, creating additional gaps in providing a curated buying avenue. Once advertisers learn how to incorporate all data in advertising strategies, the benefits of retail media will greatly expand.
Lack of Transparency
The end of third-party cookies comes with a host of issues, but lack of transparency is among the most notable. With a restricted ability to track customer movement and activity, programmatic advertising poses a particular challenge, including in the retail media area. It’s not always easy to know how ad budgets are being spent, putting additional onus on the advertiser to ensure campaigns are running according to plan.
Analyzing Trends and Seasonality
Trends accompany the retail market in person and online, and the performance of retail advertising will of course follow these patterns as well. While this isn’t a true limitation, it does hamper the efficacy of retail media in the off-season. Prior to allocating ad spend, make sure strategies align with retail trends. Failure to do so can mean wasted ad spend and campaigns that don’t pay off.
Retail Advertising Trends Changing the Industry
Digital advertising avenues are anything but static. Retail media is continuing to grow and morph as technologies and trends change. These evolutions are poised to change the industry in a way advertisers should keep in mind.
- Incorporation of Video: Video advertisements are nothing new, but this isn’t a standard part of the retail media space. As video evolves, companies will be best positioned to showcase products in a way that encourages purchases. This space is small now, but advertisers should approach future ads with a potential game plan in place.
- Leveraging Self-Service Offerings: Self-service platforms are already a valuable part of digital advertising methods, and retail media is no exception. Know how these options work and how to streamline the process.
- Machine Learning: Machine learning can benefit businesses looking for ideal ad placement in innovative ways. This technology can do things like identify seasonality patterns and analyze how customers respond across various channels – a pro for anyone creating a campaign.
- Programmatic Advertising: Know that in the retail media space, programmatic advertising is popular. Before dipping into the retail advertising arena, know-how programmatic works and why.
- Visual Search Tools: Image search has been around for a while, but it’s rarely connected to advertising. However, as retail media continues to grow, the presence of ads in visual search results may be a factor in visibility and traction.
- Omnichannel Experiences: While retail media is a growing space, it’s not the only one. Advertisers should focus on new areas, but not at the expense of tried and true methods that still generate results.
- Voice-Activated Search Advertising: Voice-activated searches are popular with smart home and mobile tools, like Amazon’s Alexa and Apple’s Siri. Make sure ads are positioned to do well in this space, too.
- Email Personalization: The elimination of third-party cookies challenges personalizing emails with search behaviors, but the use of retail media holds potential for recouping data losses.
- Streamlined Transactions: Buying online is easier than ever, with outlets like Amazon allowing customers to make purchases in a single click. Advertising on such sites should facilitate these ends, not stand in the way.
How to Grow Your Retail Media Sales
New to retail media? Unsure how to guarantee meaningful growth? That’s okay. By keeping these strategies and pointers in mind, it’s easier to make sure your foray into this field is meaningful and effective from the start.
Retail media that fails to connect with the correct audience is money wasted. When planning campaigns, using the right platforms and approaches to ad placement will put your ads in front of the right people – that is, the people most likely to make purchases.
Stay Locally Relevant
Not all businesses have a local focus, but if yours does, staying relevant within the area community can be key. In addition to focusing on national channels with broad reach, don’t ignore local targeting that reaches your prime consumers.
Diversify Advertising Channels
Amazon and other mega-retailers, like Walmart, are obviously strong sources for retail advertising, but they’re not the only places to consider. Diversification is always a benefit, so look at the obvious resources as well as more flexible avenues that may also be a good fit for your business.
Podcasts aren’t a traditional advertising method, but they can be an effective way to break into an untapped market. Podcast listeners often can’t skip past ads and will endure them with minimal fuss to get to the meat of their content. It’s a smaller space too, with far less competition. Just keep in mind that placement makes a difference, and not all podcasts will be the right fit.
Seasonality can be a challenge, but it can also be a benefit. Knowing how seasonality influences your business, as well as the ways it can impact the retail space as a whole, is only an advantage in placing ads, both where and when.
Focus on the Customer
At the end of the day, nothing matters more than the customer. Whatever advertising strategy you choose, prioritizing the customer experience, from marketing material to the purchase process, needs to be customer-centric. From tailoring ads to specific websites to changing targeting strategies for varying demographics, connecting with a customer is still the top priority.
Retail media may be new ground for advertisers used to traditional in-store methods, but for many brands, it’s going to be an essential way forward. Those slow on the uptake or resistant to this kind of change are likely to face headwinds, especially as online shopping continues its rise to the top. By understanding the benefits and shortcomings, planning campaigns designed to resonate with buyers, and staying on top of trends, it’s possible to make the most of this burgeoning area of digital advertising.