Retail Media 101
Retail media is quickly becoming an essential part of the marketing mix for brands. As retailers build out advanced digital platforms and collect more shopper data, they are offering targeted advertising opportunities that brands can’t ignore. However, the world of retail media is complex, full of industry jargon and new concepts. This retail media 101 guide will break down the basics so you can get up to speed.
What is Retail Media?
Retail media refers to paid advertising on retail-owned media properties, both in-store and online.
This includes:
- Digital ads on retailer websites and apps
- Physical in-store advertising like signage and displays
- Advertising on retailer-branded credit cards and shopping bags
- Sponsored search and product listings on retailer sites
- Retailer-operated streaming TV channels and radio
Retail media spending in the U.S. is expected to grow to nearly $50 billion in the next few years. All major retailers like Walmart, Target, Kroger and Amazon have retail media networks that brands can buy media through.
See how Amazon defines Retail Media networks
The Retail Media opportunity
For Retailers
For retailers, retail media represents a new revenue stream and a way to monetize their shopping data and online/mobile presence. Key retail media opportunities include:
- Generating incremental advertising revenue by selling ad placements and sponsorships on their own websites/apps
- Monetizing their 1st party shopper data by allowing brands to target and reach key consumer segments
- Providing measurement and attribution for brands by connecting ad exposures to sales data
- Building loyalty and engagement with shoppers through more personalized and relevant ad experiences
- Offsetting promotional discounts and keeping product prices high by offering brands guaranteed visibility
For brands
For brands, retail media allows for greater targeting, optimization and measurement compared to other digital media channels. Key retail media opportunities include:
- Targeting specific product/category shoppers based on retailers’ purchase data
- Optimizing ad campaigns with closed-loop attribution tied to offline sales data
- Gaining placements on retailers’ owned sites where intent to purchase is strongest
- Promoting products to consumers actively browsing and searching on retail sites/apps
- Achieving sales lifts and ROI from influencer marketing to a purchase-ready audience
- Ensuring product visibility on virtual shelves and securing premium placement via sponsorships
- Building partnerships with retailers by investing ad dollars on their platforms
How Retail Media helps brands
Retail media offers brands close proximity to the moment of purchase. Shoppers are already in a buying mindset when they visit a retailer, so retail media can spark immediate conversions.
Retailers also have valuable insights into their customers through transactions, CRM data, loyalty programs and more. This shopper data allows retailers to help brands identify and target their best customers at scale.
Examples of Criteo or Amazon PPC reports.
With competition to win the digital shelf increasing, retail media gives brands better control over product discoverability online. Paid search placements and sponsored product ads ensure brands get in front of actively browsing shoppers.
Retail Media formats
On-site display ads are a major retail media format. This includes banner ads, takeovers and video ads on retailer websites and apps. Display targets shoppers based on their browsing behavior using tactics like retargeting.
Paid search placements put brands at the top of search results on retailer sites. When shoppers search for a generic term like “detergent”, brands can pay to show their specific products.
Sponsored product listings increase visibility for brands’ items on category and search pages. Brands essentially pay for preferential placement on the digital shelf.
In-store advertising includes traditional formats like displays, demos and endcaps as well as emerging digital options like smart carts and beacons.
Off-site retail media extends beyond retailers’ owned properties by using their shopper data to target ads on social media, streaming TV and more.
How Retail Media planning works
Retail media needs an omnichannel planning approach that looks at both online and offline touchpoints. Campaigns should have a balanced media mix that drives awareness, consideration and conversion across platforms.
The planning process starts with identifying campaign objectives and KPIs. For retail media, typical goals are sales lift, return on ad spend (ROAS) or share growth. Establish clear benchmarks for success upfront.
Next is audience targeting. Retail media lets brands reach existing customers as well as find new, high-value shoppers. Leverage retailer loyalty data, owned data and third-party data to build custom segments.
With the audience defined, brands can start allocating budget across specific retail media tactics. Use both always-on foundational formats like sponsored product as well as seasonal activations and campaigns.
The final step is optimization and measurement. Track performance daily using metrics like clicks, site visits and sales. Adjust targeting, creative and bid levels to improve results.
More about retail media campaigns
Key players in Retail Media
On the brand side, marketing and sales both play important roles in retail media. Marketers handle upper funnel goals like awareness as well as measurement. Sales owns retailer relationships and sets lower funnel KPIs.
Agencies help develop omnichannel retail media strategies. They also execute and optimize campaigns, providing an outside perspective on what works. Many agencies have in-house retail media experts.
DSP platforms like TradeDesk provide the technical capabilities to manage and buy retail media programmatically across many retailers. DMPs help organize audience data for targeting.
Retailers obviously power retail media. They develop valuable shopper data assets, create ad products and provide performance measurement. Retail media networks like Walmart Connect operate this side. See the list of top retail media networks in the world.
Retail Media measurement
Understanding retail media measurement is crucial for proving performance (this is the purpose of retail media analytics platform like mimbi). Key metrics include:
- ROAS: Return on ad spend, calculated by sales revenue divided by media cost
- Incrementality: Sales lift generated above a baseline, isolating the ad impact
- Multitouch attribution: How each ad exposure contributes to a conversion
- In-store sales: Critical for measuring halo effect of online retail media
With the rise of ecommerce, marketing and sales must converge. Retail media brings together brands, agencies, platforms and retailers to engage the modern shopper. Following retail media best practices will allow brands to navigate this growing opportunity.
