What is Retail Media?

2022 is the year of retail media... but what is it? With the retail media market estimated to grow by 25% per year to $100 billion over the next five years and the dissolving of third-party cookies from major browsers like Chrome, retail media is at the forefront of retailers' priorities to keep up with the digital times.

Katherine Hwang
June 8, 2022

Retail media is having its heyday in 2022. According to eMarketer, US retail media ad spend hit $31.49 billion in 2022 and is expected to increase $10 billion more in 2023.

Digital advertising is nothing new, but retail media is revolutionizing how well it’s being done. In an age when online shopping is widely popular and third-party cookies are disappearing, businesses that use retail media are not only ahead of the curve, but protecting and enhancing customer experiences when shopping online or in-store.

But before we get ahead of ourselves, what is retail media?

Definition

Retail media refers to advertising within retailer sites and apps. With retail media, brands can promote their products on a “digital shelf” to customers at various stages of their buyer’s journey.

What do they look like?

Retail media solutions often appear as native ads or display ads. Native ads blend in to the look and feel of a website. Ever noticed a “sponsored” or “promoted” label at the bottom or top of a product or service offering on a marketplace website? That’s a sponsored listing, AKA an inconspicuous native ad at work.

Display ads are similar to billboards or banners you see at the end of aisles in physical stores. Getting creative with images and messaging gives brands fun and different ways to catch their customers’ attention.

Here’s an example of native ads on sites with different kinds of listings and how display ads appear on homepages:

Native Ad Examples

Display Ad Examples

Where do they appear?

Retail media ads appear often appear on a site’s home page, category page, search results page, or product details page. However, modern retail media solutions also enable advertisers to leverage shopper data to display targeted ads off-site. An example of an off-site ad offering is seeing an ad for L’Oreal hairspray when you’re on a news site because you recently viewed said hair spray on Amazon.

The benefits of retail media

Retail media benefits everyone involved in the buyer-seller ecosystem: Customers, retailers, and vendors/brands.

1) Customers

Native ads are non-intrusive to the viewing experience of shoppers and always relevant to their shopping interests. A more seamless and personalized shopping experience protects the buyer’s journey. Customers stay on your site and are happy to buy what they’re looking for. 

And ad personalization doesn’t require invasion of customer privacy. Personal data is protected. First-party data, information that users voluntarily provide marketplaces, is the only information needed to run relevant ads.

2) Retailers

Marketplaces can boost their overall revenue and GMV when they play the retail media game. Using retail media jumpstarts two new revenue streams: ad revenue generated from running auction-based ads and more sales revenue.

3) Vendors

Retail media’s ad personalization and targeting capabilities helps vendors reach customers at their I-want-to-buy moment. Retail media ads gives products and vendors more visibility and brand awareness. And great retail media optimizes your ad spend by learning from consumer patterns, which leads to higher conversions and return on ad spend.

Vendors also love it when they can advertise on more sites other than just the big retail giants’ sites (Amazon, Walmart, Target). Advertising on Amazon has become overly complicated to learn and execute successfully. Great retail media gives them more places to advertise on your site free of hassle and concern for invading customer privacy.

Lastly, retail media correlates sales data directly to ad spend. This is known as “closing the loop” between sales data and marketing data. Retail media can link ad spend to sales down to the SKU level. This level of granularity helps advertisers forecast better returns and stay agile with their ad campaigns.

Many are taking a slice of the retail media cake, worth $100 billion in revenue. The opportunity lies with retailers to act now to reap the benefits.