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Leading delivery app Glovo launches their dream media ads platform and easily scales up to 40x vendors in 3 months with custom-built tools and features from Topsort.
How Auction-powered Sponsored Listings Grew into a Pillar of Profitability for Amazon
How a 15M GMV Chilean Baby E-Commerce Site Used Promoted Listings for Cyber Monday
Julián Mayorca
Global Head of Monetization at Rappi
See how the biggest marketplaces, delivery apps, and retailers launched their monetization journeys with Topsort’s APIs
and tools
Keep up with the industry with our original articles about the auctions based advertising, marketplaces, monetization tech, and native media and more!
March 24, 2023
Marketplace and vendor level metrics all in one place for easier comparison and real-time data analytics
We are excited to announce the Analytics tab for those of you wanting more real-time insights and deeper analytics of their ad businesses.
Performance monitoring is a crucial part of ad business management. In addition to marketplace-level metrics, admins need a birds-eye view of vendor performances and want to be able to see how each of them is doing.
We already have very robust reporting and analytical features within the admin dashboard, but we heard that some of our partners were going through manual processes to better understand metrics.
We know that you want to have a clear understanding of how your ad platform is performing and what your vendors are doing, but sorting through data from multiple sources, exporting and importing vendor metrics, writing formulas, and making comparisons can be overwhelming.
Topsort's Analytics is a new section on the admin dashboard that provides you with the visibility you need to effectively manage your ad business. Topsort Analytics gives you insights on both marketplace and vendor levels.
At the marketplace level, you'll be able to see 10 key ad metrics to have insights about how your ad business is doing for any time frame you pick. You'll also be able to view trends for each metric by comparing them over any selected time period.
At the vendor level, you'll have a column list of all your vendors, with each row representing the vendor's ad metrics. Using the vendor analytics table, you'll be able to see how each vendor is performing, and make informed decisions to optimize your overall ad performance.
You can customize the vendor table to view to display the metrics you selected. If you still want to use another tool to analyze these numbers, you can still export all data. Customize the export file with the metrics that matters to you the most for any time period you want.
With Topsort's Analytics, you can say goodbye to the hassle of using multiple data analytics tools, and hello to the convenience of having everything you need in one place. Upgrade your ad management game with Topsort's Analytics today!
Do you want to see analytics tab and other Topsort features in action? Book a demo today!
March 8, 2023
We launched a new and improved banner ads experience with improvements in configuration, campaign creation, and targeting.
Topsort’s vision is to let you launch, scale, and optimize your ad platform on your terms, intelligently. We understand that each marketplace is unique and our ad formats can be configured to help you build an ad experience that fits perfectly into your business dynamics.
That doesn’t stop us from improving the experiences to give you stronger and more flexible tools.
We are excited to announce the launch of our new and improved banner ads experience. This revamp was driven by our commitment to providing you with a streamlined and intuitive platform to manage your banner ads.
We’d like to explain why we decided to redefine the banner ads experience for retail media in the first place. If you want to jump to the product update details, just scroll down a little bit.
Banner ads have been one of the most popular ad formats, but we can say they have been poorly used for decades and got notoriety because of cookie-based retargeting. With the rise of Retail Media banner ads, they seem to get their popularity back.
But the way banner ads have been being leveraged, created challenges for their use with retail media.
Sponsored listings as the core format of auction-based ads have been the gold mine for marketplaces because they are relevant and don’t bother the users.
Retail media banner ads, on the other hand, had the relevance issue. Category pages, search result pages, and other high-intent pages would benefit from relevant banners. But nobody likes to see the banner of “men’s boots” on the beachwear category page.
This can be managed by marketplace admins by manually checking each banner and advertiser, which brings us to scalability issues.
What about when you have hundreds of vendors and hundreds of categories? How can you ensure all banner ads are relevant? Let’s add banners on search result pages to make it more complicated.
How many people do you need in your management team to manage these thousands of variations?
And even if you do, how can you price a banner that shows up when people search for “Valentine's day gifts for wife” during a peak season vs a banner ad on the gifts category page on any random weekend?
Fixed prices can result in overpricing of the banners that result in unhappy vendors or underpricing that results in loss of ad revenue. And, this is the 3rd challenge with retail media banner ads.
Marketplaces, retailers, and delivery apps are dynamic businesses. Each vendor and brand have different goals and budgets. The snacks category becomes more valuable during the World Cup finals than on Monday afternoons. Just to make pricing more complicated, there are also brands who want to improve their visibility on certain pages by showing a banner for a whole month.
CPM, bids, or exclusive prices make the whole thing complicated. You might need a long spreadsheet to keep track of them. And don’t forget to report the results.
When we launched our banner ads format, we addressed all of these solutions by combining auction-based high-visibility and mobile-friendly banner ads with a fully-configurable workflow.
We turned a poorly used ad format into a premium offering.
From working with many marketplaces, retailers, and delivery apps, we’ve also learned that each business has different dynamics and wants to create a banner ads experience that fits their businesses.
They wanted more configuration with their retail media banner ads, easier management, and precise targeting. They also wanted to be able to have absolute control over their banner placements to offer exclusivity and fixed tenancy.
Our smoother and more coherent new banner ads experience comes with improvements in three core areas: Configuration, Campaign Creation, and Targeting
You can create banner ads for search, category, and landing pages. With these 3 types of banner placements, you can serve banner ads for the entire user journey on your website or app. Now, you don’t need to spend time with Search and Category page banner ad slots because we got them configured for you. There is just one slot for category pages, and one slot for search results pages.
Instead, you can define landing page placements, but faster.
Your homepage, and the other high-value and specific pages that act as landing pages are perfect for banner ads dueto their high traffic. Using our intuitive UI, you can define as many placements as your want, like adding new rows to a spreadsheet.
You can create banner slots for multiple landing pages and even multiple banners for a single page. At any point, you can delete a configuration or add a new one. If you have a long list of pages and banner slots, consider bulk uploading the configuration.
We added new entry points to the campaign creation flow and improved the flow by adding more features.
Now, as an admin, you can create banner ads campaigns directly on the configuration page. You can still visit the vendor page and launch a banner ads campaign. This new flow saves you time by letting you create banner ads campaigns for vendors (even multiple vendors) easily. You can promote a vendor, a product, or a URL.
For faster campaign creation, use the “Create Banner” button or pick a slot from the list. Now, for each banner ad slot, you can upload different creatives for mobile and desktop, or crop one image to fit both.
Before launching your campaign, you can set a maximum CPM or turn autobidding on to maximize the results. By adding bidding to the banner ads, you can let multiple brands and vendors compete for that spot; bringing your banner ads to their true value and boosting your revenues. Both for autobidding and maximum CPM, you can set different daily budgets per desktop and mobile.
On the Banner Ads Overview page, you can see all your configurations, as well as the performance of each slot. You can see the number of bids, impressions, and CPM for any date.
We implemented new targeting features to create a relevant experience for your visitors and premium ad formats for your vendors and brands. For landing page banners, the targeting is built in. By creating exclusive banner slots for each landing page, you are creating a premium placement for visitors to those pages. You can drive the traffic from banners to a product, vendor, or URL.
For category and search result pages, you can target certain categories, keywords, and locations. Combine these targeting options to create banner ads campaigns to reach your desired audience with precision.
One of the most common requests we were receiving from our partners was about the fixed tenancy. Brands and vendors like to be shown on a certain category or landing page. With our recent update, you can create exclusive banners with a click of a button. When marked as exclusive, that banner slot will only be available to the vendors you pick and others can not enter the auctions for that spot during the exclusivity period.
To make a banner exclusive, simply select Exclusive from “Bidding or Exclusive” dropdown on the last step of campaign creation and set the start and end dates of the exclusivity or tenancy period.
It’s time to leverage banner ads to give your brands and vendors a chance to promote their brands and products while boosting your ad revenue.
Have a question? Want to see our new banner ads flow in action? Let's talk
October 27, 2022
Apple explored the power, upside, and profitability of "sponsored search"
In early 2015, Apple was facing a major problem. According to its own internal documents, its existing mobile advertising offering, iAd, was not competitive, and the business model was flawed, with high costs due to the need to pay publishers and the challenges of handling user data to achieve accurate targeting while preserving user privacy.
Something needed to be done.
Apple considered two options. The first option was evolutionary – to redesign its existing iAd business with better infrastructure and expand it to other properties – Apple News, Pay, Maps, Siri, etc. The second option, however, was radically different. Under this option, Apple would gradually close down its iAd business, and instead launch a completely new business: Search Ads in App Store.
The idea behind this second option was (in hindsight!) very straightforward. When an iOS user opens App Store and searches for, say, a to-do list app, then in addition to “organic” results returned and sorted by the App Store search engine, he would also get a “sponsored” listing – an ad from an app developer who is interested in promoting its app to the user searching for to-do lists.
If the user then clicks on the ad, the user is taken to that app’s page in App Store, and the developer is charged by Apple for that click. If multiple developers indicated that they are interested in showing their ads to users searching for to-do lists (as is likely to be the case), then Apple’s system runs an auction among them, with those bidding higher more likely to be shown to the user.
This is, of course, the same idea as the one behind Google’s AdWords or Amazon’s Sponsored Listings, responsible for generating tens of billions of dollars in revenue (and profit, due to very high margins!) on both platforms. And it would have the same attractive features: high relevance for the users, reliance on clear user intent (instead of fragile and sensitive behavioral and demographic data), and the fact that after clicking on an ad, the user would remain on the original platform, instead of leaving it.
In Apple’s own words, Search Ads in App Store would “enable promoted discovery for developers,” be “a natural & highly profitable business for Apple,” and would have “relevance + bids create balance via algorithm.”
It wasn’t clear how successful it would be in the new setting. And Apple did not really have a lot of experience running sponsored search auctions – they would need to spend substantial resources to develop such a platform from scratch, with estimated costs of many tens of millions of dollars per year. But on the other hand, Apple’s internal projections indicated that this would be a highly profitable initiative, with estimated internal rate of return (IRR) of 86.4%.
And Google had just launched a similar initiative, Sponsored Apps in Play Store, just a few months earlier. So Apple went ahead with the “revolutionary” option – Search Ads in App Store.
After more than a year in development, Search Ads went live in October of 2016.
The results have been explosive. By 2021, Search Ads were making Apple an estimated $5 billion a year – by comparison, a company as popular as Snapchat had only made $4.1 billion from advertising that year.
As noted by one observer, "It's like Apple Search Ads has gone from playing in the minor leagues to winning the World Series in the span of half a year." And they are just getting started: according to estimates by the prominent investment bank Evercore, Apple’s annual advertising revenue to grow to $30 billion by 2026.
The meteoric rise of Apple’s Search Ads in App Store, echoing the earlier similar explosive successes of Google’s AdWords and Amazon’s Sponsored Products, once again reinforces the enormous power, upside, and profitability of a seemingly simple idea: Sponsored Search.
October 20, 2022
Key to breaking through marketplace monetization in uncertain times ahead
With the news of the decline in global venture funding and Sofbank’s posting record losses for its Vision Fund, Marketplaces and Retailers all around the world have a hard-to-ignore fear of recession these days.
For many experienced entrepreneurs and professionals who have lived through the dot-com bust or the ‘08 financial crisis, weathering a recession might not be new. Entrepreneurs and marketplace leaders may need to revisit strategies to tackle the challenges that come with recession.VCs and large corporations are already revisiting their strategies in the face of current marketing conditions. One of the biggest venture capital firms, Sequoia Capital, shared their “digital toolkit” to help the startups navigate the challenging times ahead.
Even in times of layoffs, and technical teams shrinking, we’ve seen that more and more companies are investing in monetization through offering native ads.
We took a closer look at the specific impact for marketplaces and ecommerce brands.
Over the years, the number of digital marketplaces grew rapidly and turned into highly valuable assets for retailers. With competition in the market, growth might have taken precedence over monetization for online marketplaces.
A significant decline in spending during an economic downturn creates challenges for marketplaces and retailers. While consumers will continue to buy the essentials–food, health, personal care, etcetera.–decline in discretionary spending is inevitable.
These behavioral changes push marketplaces towards changing their strategies towards focusing more on monetization, customer and seller loyalty, and growing market position.
Times of crisis also create the perfect conditions for the birth of new businesses. Marketplaces need to update their strategies to be well-prepared for the potential competition.
These crisis times are also an opportunity for expanding into new markets or new formats, however we believe that a marketplace needs to have a solid monetization strategy that works in recession times, before considering growth.
The times of putting growth, or hypergrowth, as the top priority are gone, simply because the market is not rewarding the aforementioned growth the same way it used to.
At its core, monetization is about increasing capital. Marketplaces need to find new strategies to stay profitable and competitive.
Similar to many other businesses, marketplaces should focus on profitability rather than growth until the magnitude of the slow down in the economy is clearer. That doesn’t mean a complete stop on growth spending, but more of a balanced growth strategy with a focus on improving profitability.
For marketplaces, the monetization models are limited, especially for the ones that are operational heavy. During this downturn, no matter what the business model is(subscription fees, commissions, listing fees, etc.), money flow needs to be optimized.
After embracing reality, it’s time to act. You do not have years to plan your next steps. You know the market and your business. Do what is needed to preserve cash, increase the cash flow, and cut unnecessary expenses. Profitability is the main focus, now!
The money you want to spend on the Superbowl Ads is better spent on increasing your employee, consumer, and vendor loyalty. Expensive sponsorship deals with Hollywood stars can wait.
While optimizing your current monetization strategy, look for new methods.
While looking for new monetization methods, avoid drastic changes or complete overhaul, unless your marketplace monetization strategy is clearly not robust enough to support you through the recession.
Instead, explore new methods that could easily fit in your current strategy.
Talk to your customers, vendors, industry experts, and discuss options internally. Study the quantitative and qualitative data to find a method that aligns with your vendors’ goals and enhances your customers’ experience.
Your focus is on growing profitability, but you are not alone in this game. As you’re looking to monetize in new ways, so are your vendors! Partner with them to find solutions that benefit both of you.
Help them to thrive in these times by giving them the tools to sell more on your platform. Adapt a close feedback loop with them and respond proactively to market changes together.
Monetization is as important for your vendors as it is for the marketplace.
Native ads are the perfect way to help your vendors sell more on your platform. In the form of sponsored listings and banner ads, they help your customers find relevant products and your vendors increase their sales.
Amazon’s +$30 billion dollar per year revenue from Amazon Ads shows the true potential of the native ads on a marketplace.
Increased revenue and profits are the 2 immediate benefits native ads can give a marketplace or an e-commerce platform. That makes native ads a powerful and flexible monetization lever; something you need during the current market.
Thankfully, Topsort offers a great monetization method for marketplaces of any size.
With Topsort’s API-first solution, you can build a high-revenue ad platform for your marketplace in just weeks.
We’ve combined our expertise in game theory and auction design with marketplace and vendor priorities to bring you the best auction-based advertisement infrastructure out there.
Your vendors can also create effective ads with little angst and more confidence using our intuitive UI.
Jun 22, 2022
Fixed-price guaranteed delivery ads are rarely priced right: to do so would require a magic 8-ball. The better alternative? Ad auctions!
Do you run out of ads to show to your users? Or, conversely, run out of space on your website or app to satisfy all of the demand from advertisers that you have? You are not alone. Fixed-price guaranteed delivery ads are rarely priced right: to do so would require a magic 8-ball that could foresee all the changes in demand, supply, market conditions (and everything else under the sun). Fortunately, there is a solution to this problem.
Ad auctions have sufficient flexibility to adjust to changing market conditions, and most importantly, adjust to reveal the true market value of your advertising space. Hint: it may be much higher than you think.
On August 16, 2010, Dell announced an acquisition of data storage company 3PAR, for $1.15billion, representing an 87% premium over 3PAR’s latest market price ($18 per share vs. $9.65 at market closing). This initially looked like a fairly standard acquisition, with a very nice premium going to 3PAR’s shareholders, who were very happy with the price that, if anything, exceeded the company’s value to them. However, things were about to take an unexpected turn.
A week later, on August 23, Hewlett-Packard entered the picture and made an offer to acquire 3PAR for $1.5 billion ($24 per share)—a 30% markup relative to the already-high price offered by Dell.
Three days later, on August 26, Dell responded with $24.30 per share. It took a day for HP to respond with $27.00—only for Dell to immediately match it. HP came back in 90 minutes with an offer of $30 per share.
On September 2, after much deliberation, Dell increased its offer to $32 per share and HP responded with $33, valuing 3PAR at $2.4 billion—much higher than the initial price offered for the company (and happily accepted by shareholders)!
There is no doubt that if 3PAR’s management tried to price the company in advance, or tried to negotiate with just one potential customer, there is no way they would come even close to that value. Of course, the reason why they were able to ultimately receive it is very clear—the bidding war between Dell and HP led them to make the best offers they could, in the process uncovering the true value of 3PAR. That is the magic and power of auctions: they help sellers uncover the true value of the items they have for sale.
Internet advertising is no different. Search engines like Google and Bing and top e-commerce marketplaces like Amazon and Alibaba have generated tens and hundreds of billions of dollars by running ad auctions for ad slots, uncovering the true value of their inventory in the process.
Remarkably, ad auctions allowed them to achieve these results without having to explicitly price that space. While flat-rate, fixed-pricing advertising is also present on the Web (and was in fact the original way online advertising was sold), it is overshadowed by auction-based systems.
The reason is simple: pricing is very hard.
Put yourself in the shoes of the management of 3PAR before the bidding war between HP and Dell started. Would you be able to price the company correctly? Would you be able to ask, with a straight face, that HP pay you $2.4 billion for the company—several times the company’s value at market closing? In fact, HP probably wouldn’t be able to justify paying such a high price to its board!
It is the auction between HP and its competitor that helped uncover the company’s true value and made the deal happen at such a high price.
Selling advertising at fixed prices is no different. You have to make all kinds of guesses to figure out the price—and then buyers will try to negotiate the price down. You will find yourself having to justify the prices all the time: buyers may claim that they are too high, your management may push that they are too low, etc. And in the end, you are bound to set the price incorrectly, simply because the world is complex and always changing.
If your prices end up being too high, you will find yourself with unsold inventory, wishing that you charged less. If your prices end up being too low, you will find too much demand from advertisers, resulting in suboptimal revenue and annoyed partners who cannot get ad space at published prices. The problem is compounded by the fact that the true value of that space may vary by geography of the user, time of day and day of the week, the exact location of the ad, and a bunch of other factors. All of this results in an astronomical number of possible combinations (and thus possible prices)—each of which is hard to get right.
By contrast, ad auctions resolve all of these issues naturally and organically. Advertisers submit their objectives and valuations to the auction system. These objectives and valuations can be changed at any time, giving advertisers a lot of flexibility.
The auction system then sells ad impressions in real time, to those who value them the most. Most importantly, the price at which ad space will be sold will be automatically set by the auction—it will be determined by market competition, with the auction serving as a powerful and accurate price discovery mechanism. In some cases, demand from advertisers will be low, and the price will naturally below as well. In others, demand will be high, and advertisers may naturally increase the price given there are limited eyeballs. In both cases, prices will accurately reflect the true value of the ad space—without the platform having to rely on the magic 8-ball to predict them.
Ad auctions work incredibly well in a variety of settings, have an almost-magical ability to adjust to market conditions, and automatically discover prices that reflect the items’ true market value.
Online advertising is no exception: auctions in such settings work remarkably well and are responsible for some of the most notable business successes of the past two decades. Topsort is here to offer the exact transition or solution you need to deploy an auction-based advertising model and price right at the market’s true value.
Jun 8, 2022
There are many types of advertising on the Web and mobile platforms. What makes Auction-powered Sponsored Listings unique?
The key feature special to Sponsored Listings is that they are directly relevant to what a user is doing or looking for right at the moment when they see the listing. When a user is searching for new shoes on an e-commerce site, she will see Sponsored Listings for shoes. When a user is searching for a hotel in Hawaii, he will see Sponsored Listings for hotels in Hawaii. This high relevance is the core feature of Sponsored Listings and is the foundation for the positive experience with Sponsored Listings for the platform, its vendors, and its customers.
By contrast, other types of Internet advertising try to guess what a user might be interested in, and these guesses are usually unsuccessful. The result is cluttered web pages and apps, frustrated users tired of irrelevant and distracting ads, and slow websites that try to collect data from all over the internet.
None of these issues apply to Sponsored Listings.
An immediate and direct benefit to the e-commerce platform or marketplace running Sponsored Listings is increased revenues and profits. Precisely because Sponsored Listings show highly relevant products to users looking for them right at the time they are searching for them, their effectiveness is very high. That translates to a high willingness of vendors and brands to pay to promote their listings to prominent positions on users’ lists of results.
The high performance of Sponsored Listings makes them a powerful and flexible monetization lever. This lever can be used strategically by the retailer or marketplace to lower its prices or commissions, either uniformly across the platform or selectively in strategically important areas to attract additional brands/vendors/suppliers.
This lever can also create a strategic competitive advantage. A platform with Sponsored Listings can offer a better value proposition for brands and vendors than its competitors who do not have Sponsored Listings. If you derive meaningful revenue from Sponsored Listings, and your competitor does not, you can lower your commissions or prices and eat into their market share while remaining profitable. And if they have Sponsored Listings and you do not, that puts your marketplace at a strategic disadvantage.
Another important benefit of Sponsored Listings is that they generate additional revenue and profit without cannibalizing sales. When a user clicks on a Sponsored Listing, they remain on your website and continue their journey there whether they buy the item or not. By contrast, other types of ads take users away from your website—and they may never come back!
Finally, a well-designed Sponsored Listings platform is beneficial for the customers. Crucially, Sponsored Listings are fundamentally different from other types of ads—by design, they are relevant to the customers and to the customer’s current activity. They are not distracting. The quality of sponsored results is high because brands and vendors are putting money behind their message—if their products are not relevant or not good, their investment in the sponsored promotion will not pay off.
In fact, research shows that on Sponsored Listings platforms, customers are more likely to click on results labeled as “Sponsored.” The label gets their attention and conveys a valuable signal that the seller is willing to put extra sponsorship money behind their product.
Finally, the benefits to the platform and the vendors carry over to the customers in the form of lower prices and commissions, wider product variety, and better product discovery.
The idea behind Sponsored Listings may appear simple and natural, but it took many years of trial and error by many companies to zero in on it from among many other possible forms of advertising, perfect it, and realize its full potential. The perfect illustration of this process is the evolution of advertising on Amazon.
Amazon understood the value of their digital “real estate” very early, and in 2003, established a subsidiary, A9, focused on search and advertising. In 2006, they released their first advertising platform, Clickriver.
The idea behind Clickriver was to allow third-party providers to advertise their products that are complementary to what a user was searching for. So, for instance, a user searching for luggage might see an ad for a hotel chain, or a user searching for a television set might see an ad for a TV installer. Unfortunately, while such items are somewhat related to the user’s direct intent, they were not really what most users were looking for. Moreover, after a click, a user was taken off Amazon’s website, thus cannibalizing Amazon’s own sales. After four years of trial and error, the Clickriver program was discontinued.
Amazon regrouped, and in 2012, took the wraps off its new ad initiatives, as the newly created Amazon Media Group. They explained the strategic importance of the initiative: “If we think about Amazon in two worlds, one world is an Amazon with ads and lower prices. Another world is an Amazon with no ads and higher prices. Which one would we choose? I think nine times out of 10, or 10 times out of 10, we would take Amazon with ads and lower prices.”
Another period of experimentation followed, with various ad offerings eventually assembled under the Amazon Advertising umbrella, with Sponsored Products as the cornerstone. Exponential growth followed, often dramatically exceeding expectations. E.g., in 2018, analysts expected Amazon to make $2.8B from ads. Instead, it made around $10B. By 2020, Amazon was making more than $20B per year from advertising, with Sponsored Products being the key contributor.
Jun 8, 2022
2022 is the year of retail media... but what is it?
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, let's start with the retail media definition with what is retail media? and what are the examples of retail advertising?
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.
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:
Retail media ads appear often appear on a site’s home page, category page, search results page, or product details page, as seen in the retail media advertising examples above. 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.
Retail media benefits everyone involved in the buyer-seller ecosystem: Customers, retailers, and vendors/brands.
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.
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.
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.
May 12, 2022
By 2022, the use of third-party cookies will be banned on all major browsers.
We are all familiar with cookie-based display advertising, it is ubiquitous on the Internet. As you visit various web pages looking at shoes, light fixtures, or camping equipment, those sites put cookies in your browser. When at some later point you visit a news site forgo to a sports website to check the latest scores, you will often see the ads for—you guessed it—shoes, light fixtures, and camping equipment. The technology that makes this possible is known as the “third-party cookie”—the news website, through a chain of technologies, is able to access the cookies placed on your browser earlier, and can then try to guess which ads you might be interested in.
This technology is controversial. On one hand, it raises privacy concerns—users don't like being tracked around the Internet, and feeling like the Big Brother is watching. On the other hand, it allows better ad targeting, potentially resulting in more relevant ads, and higher revenue to publishers placing those ads on their websites, allowing them to generate more and better content.
The debates about the use of third-party cookies continued for years, but as of 2021, the privacy side has won. Mozilla’s Firefox and Apple’s Safari have already banned such cookies, forcing websites to only show generic ads targeted only based on very crude information (e.g., the geographical area from which the user came). But the biggest change, dubbed “Chromageddon,” is yet to come.
By 2022, the use of third-party cookies will be banned on Google Chrome, by far the largest and most popular web browser. The consequences for web publishers will be as dramatic as the name suggests. A pair of careful research studies, one from Google and one from Yahoo and Caltech, showed that disabling third-party cookies will lead to a massive reduction in revenues for typical web publishers: on the order of 50-65%. And for a meaningful fraction of publishers, the reduction in revenues is even more dramatic: up to 90%, leaving them with one tenth of the revenue that they previously had.
For many web publishers, such reductions are existential, threatening their ability to pay their content creators and thus the very existence of their businesses.
So is there anything that publishers can do to address this change and thrive in the post-cookie world? For “general” publishers, on which user intent or interest is not clear, or is not commercial (say, news websites), it may be hard to find a good substitute, and thinking of the entire monetization model may be warranted. But for other, “niche” websites, whose audience is focused on a particular theme (fashion, productivity, car repair, and so on), the outlook is much brighter: they can replace display ads with sponsored listings for items related to the theme and the content.
Next to that content, in place where display ads are currently shown, a publisher can allow vendors focused on this theme to show relevant products and services—and compete via an auction to determine the best ad to show. The details of the implementation may vary, and may depend on the particular characteristics of the publisher and its content. For instance, for a fashion website, next to a photoshoot, the publisher may auction off space to vendors selling items from the photoshoot, or related ones. For a do-it-yourself website, next to an article describing a DIY project, the publisher may auction off space to vendors selling tools and materials involved in the project. And similarly for other thematic websites.
Crucially, this advertising model is immune from “Chromageddon,” because it does not rely on any third-party cookies. For the same reason, it is easy to implement it in a way that is compliant with GDPR and other privacy regulations. And most importantly, the ads are highly relevant to the content, leading both to much higher user engagement and monetization rate than generic display ads.
Wondering how the real-time auctions work? Read articles about the auctions, sponsored listings, and common features of auction-based advertising
A revenue-optimal ranking rule that takesinto account effects on advertiser satisfaction and user experience
Results of a large field experiment on setting reserve prices in auctions for online advertisements.
Does advertising serve as a signal? Evidence from a field experiment in mobile search
For those who really want to get in the world of auctions and game theory! We curated scientific papers and researches that shaped real-time auctions!
Towards Efficient Auctions in an Auto-bidding World
Could auction welfare and revenue be improved in auto-bidding environments?
Budget Pacing for Targeted Online Advertisements at LinkedIn
An experiment on Linkedin Ads to make ads beneficial to advertisers and publishers!
Multiplicative Pacing Equilibria in Auction Markets
Can markets have multiple pacing equilibria with variations in natural objectives?
Autobidding with Constraints
What happens when all advertisers adopt optimal autobidding?
A bid optimizing strategy which automatically adjusts the bid to achieve finer matching of bid and traffic quality of page view request granularity
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