Retail media is probably the biggest trend in retail this year and is expected to grow by 26% to $30bn in the next couple of months. Its prominence has only been pushed further by the announcement of the disappearance of third-party cookies by Chrome and other major browsers.
So, who is winning in the retail media world? Of course, we have to look at the pioneer of retail media: the giant that is Amazon. In 2021, Amazon brought in $31bn in ad revenue. To put that into perspective, Walmart, Amazon’s closest competitor in the retail media space brought in $2.1bn in ad revenue for the same year.
As a retailer, why should I care?
First of all, BCG estimated profit margins for advertising on retailers' own channels to be as high as 90%.
Secondly, you have to stay competitive. Your vendors and brands are selling across multiple sites, perhaps including Amazon. If every other retailer offers them the opportunity to promote their products and increase sales, then why should they stay with you?
Finally, retail media is a great source of first-party data about your customers and vendors, especially prominent as third-party data is so hard to come by. With all this in mind, as a retailer, how can you be a “winner of retail media” and take a slice of the cake?
1. Relevant, high-quality content
As a retailer, there’s nothing worse than the fear of customers coming on your site and then clicking on an ad that takes them to a different site. Or, if your design team has worked so hard to build an aesthetic sight for a third-party ad to start advertising flip-flops with a flashing red and yellow banner. Retail media is different; all the advertising is done by your existing vendors, and the ad can be as simple as a well-designed “Sponsored” tag. Even better, the ads will only be placed in high areas of relevance. For example, if you’re browsing sunglasses, you might see a video product listing for a sunglasses ad.
2. Flexibility and fluidity in the Omnichannel world
Retail media platforms are tech-heavy. This is why so many retailers chose to partner with retail media providers like Topsort who have the infrastructure perfected. Omnichannel is the buzzword of the retail world at the moment and without retail media, there is no buzz. Selling and advertising across multiple channels, having a presence online and in-person, and of course, creating a relevant ad platform is a necessity to thrive in 2022 retail. As a retailer, you might have brick-and-mortar stores, but a profitable online store is a whole different business.
3. Vendors WANT this... so make onboarding simple!
Retailers make their money by vendors paying to promote their products and listings, so, the easier your retail media platform is, the better! Some brands have specialist advertising teams that create campaigns full-time, but the midsized and smaller vendors do not. Advertising should be simple, intuitive, and available without embarking on a huge training program. Successful retail media platforms are offering vendors "free ad credits" to get started. This way, they can test out making campaigns, see the results and ROAS and put their own money in!
4. Keep pricing dynamic (even better auction-based)
Pricing ads is hard. Correction, pricing optimally is near impossible. Why? Because dynamic market changes and fluctuations are too much to keep track of. Retail media platforms that price their ads based on vendor auctions have a much greater chance to exceed revenue expectations and save employee time! Retail media infrastructure with machine learning functionalities can assess these factors that influence prices within a fraction of a second and adjust accordingly for price optimization.
5. Real-time reporting
Data is of course at the forefront of advertising with retail media. Vendors want to track and see reporting of their campaigns to assess their ROAS and CTRs. Retailers want to track the progress of the overall platform and be able to zoom in to analyze the performance of individual brands, products and campaigns. Real-time reporting ensures transparency and ease of data extraction. It's also great in customer support to help out vendors in real-time. As third-party cookies are phased out, data is one of the most valuable sources on the internet. Retailers using retail media can learn from each campaign with hundreds of thousands of data points every day.
The buzz of retail media is still on its way up and the potential to get on board is huge. 65% of top US retailers have an existing media monetization program with many more in the pipeline. As digitalization and e-commerce continue to rise, and the share of the retail media pie starts to shrink, now is the time to launch your retail media offering.