We can expect to see retail media increase by more than $50 billion in the US in 2023 alone. Companies like Amazon and Walmart are already generating substantial advertising revenues. As media groups, it is daunting to have to take on yet one more major competitor in the digital ad marketplace, but this is an area that publishers can’t afford to miss out on.
What is Retail Media?
Big brands have caught on to the fact that the prime time to get shoppers to shop, is when they are already shopping. Think about how often you run into the grocery store for just a few items, but end up coming out with a cart load. It happens often, right? This is because it’s convenient to throw in one or two more things that look good. Add to that the fact that grocery stores are designed so that you have to walk through tons of other products to get the one thing you need. These products are arranged so that you will notice them and be enticed to grab one and they might even be accompanied by a free sample or eye-catching signage.
Retail media is basically the same thing but in an online form. Throughout your shopping experience, advertisements are placed on the retailer’s website or app that grab your attention and say, “buy me”. When you already have your wallet open, it’s a lot easier to buy a few extra things than when you are say, washing dishes.
For retailers big and small this creates an additional revenue stream for them to profit on. Here’s how it works. For simplicity let’s say a retailer such as CVS, Amazon, or Walmart sells ad placements to a brand within their network. That brand wanting to sell more products and better understand their customer’s buying behavior are sold ad placements on these retailers’ eCommerce websites and apps. These ad placements allow them to gather data and obviously sell more products. In turn, the retailers make money off of selling their digital real estate.
But it doesn’t always have to be a brand within the retailer’s network. It can also be a brand that has the same target audience as the retailer.
Is Retail Media Just for retailers and Brands?
Since the ushering in of online shopping and digital advertising in 2020, you can be certain that retail media is here to stay. But how do retailers make sure that the ads displayed on their sites aren’t scams, questionable content such as gambling, or low-quality ads?
Retailers need to ensure their own brand safety as well as their advertisers. Both retailers and brands can benefit from having a middleman, and that’s where publishers come in.
Threats of Retail Media for Publishers
While retail media is a huge opportunity for media groups, we won’t ignore that there are also threats. For one, it’s a real fear that retailers are taking over the online advertising space and as the market for this grows, publishers are going to be left out in the cold.
It’s expected that retail media advertising will increase by approximately 60% by 2027 according to GroupM. They noted that it will be made into a $168 billion market. Media groups worry that as more and more retailers start to offer retail media, brands will seek them out less and less.
The truth is, unless publishers shift their focus and are able to adjust to the ever-changing market, they might find themselves falling behind.
In-House Media Companies
Another very real threat to media groups is retail media networks such as Target’s Roundel which are making bigger moves in both the retail media space and traditional advertising. Retailers are investing in their own in-house media companies. The threat doesn’t just exist around advertising. These in-house companies are creating traditional content such as developing relationships with influencers and creating live shopping experiences.
Opportunities of Retail Media for Publishers
Despite these threats, there are also great opportunities for publishers.
Retail media offers brands what they’ve always wanted: a closer relationship with their customers through first-party data, and closer relationships with retailers themselves. This is one of the most important benefits of retail media and it’s quickly followed by creative services, personalization opportunities, and access to media properties.
These opportunities aren’t something that media groups need to be worried about being locked out of, on the contrary, there’s a growing need for both premium publishers and niche publishers alike.
Media groups now have the unique opportunity to get in on partnerships between brands and retailers. Seeing brands partner up, for example, Walmart and Buzzfeed offering Tasty branded kitchenware along with recipes, we’re able to get a feel for the vast array of opportunities and how they could be delivered. While Buzzfeed and Walmart are providing ways for shoppers to add items to an online basket for their Tasty recipes and have them delivered to their door, this whole idea could get flipped on its head. For example, retailers are already offering food-related content on their sites, so this traffic could be sent to a publisher’s site where customers could then continue on their way.
Where Media Groups Come in
Advertising revenue is vital for retailers, and brands and retailers alike need to preserve their customer’s user experience, and data privacy and protect their own names. This is where premium publishers can come in.
Retail media is expected to represent 20% of the total U.S. digital ad spend alone according to AdWeek. Media groups likely feel overwhelmed by having to take on another huge competitor in the digital ad marketplace. However, it’s an area that publishers should consider exploring and learning from. With companies like Amazon and Walmart already generating substantial advertising revenue, if they aren’t already, media companies should be paying close attention to the strategies of these companies.