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For several years now the term \u201cretail media\u201d has been buzzing around both retail and media circles. Whether you\u2019re looking for a deeper understanding of the implications and applications of retail media or need a down-and-dirty explainer on what retail media actually is, you\u2019ve landed in the right place.<\/p>\n
This special Retail TouchPoints<\/em> resource hub will be regularly updated with the latest news, stats, trends and developments in retail media. Read on to learn:<\/p>\nWhat is retail media?<\/strong>What is a retail media network?<\/strong>Retail media vs. Commerce media<\/strong>Why is there so much excitement about retail media?<\/strong>Why is retail media growing so fast?<\/strong>Why are so many retailers launching retail media networks?<\/strong>Top Retail Media Networks<\/strong>Top Retail Media Service Providers<\/strong>Types of Retail Media<\/strong>Onsite vs Off-site Retail Media<\/strong>The New Arena: In-Store Retail Media<\/strong><\/p>\nThis page was last updated on Nov. 8, 202<\/em>4<\/p>\nWhat is retail media?<\/strong><\/h2>\nRetail media is when a retailer offers advertising capabilities and services, similar to what media outlets such as publishers and television networks have done for years.<\/p>\n
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Image courtesy Albertsons Media Collective<\/figcaption><\/figure>\n<\/div>\nRetail media ads can offer run the gamut from \u201con-site\u201d advertising opportunities \u2014 such as ads and videos on its own website, app or even in its physical stores (an Amazon Sponsored Product ad is the most basic example of this) \u2014 to what is typically referred to as \u201coff-site advertising.\u201d Off site advertising is when a retailer lets advertisers leverage its first party data to reach customers on third-party channels like social media or other websites it doesn\u2019t own (\u201cretargeting\u201d is a common example of this).<\/p>\n
Off-site retail media <\/strong>is typically more complex than on-site and is therefore something that only the more mature retail media networks offer at this stage. For more on off-site retail media advertising, skip ahead to this section.<\/p>\nIn addition to advertising opportunities, many of the more sophisticated retail media networks also offer services for the brands that advertise with them, which can include data analytics, self-serve advertising platforms, campaign management assistance and more.<\/p>\n
Related reading:<\/strong> Instacart Enables Off-Site Shopping Ads in New Partnership with Google<\/strong><\/p>\nBack to top<\/p>\n
What is a retail media network?<\/strong>The terms \u201cretail media\u201d and \u201cretail media network\u201d are often used interchangeably, and for all intents and purposes they are essentially the same thing.<\/p>\n
Retail media is the broader term used to describe the concept of retailers using their systems, infrastructure (like a retailer\u2019s ecommerce site and\/or its stores), data and access to shoppers to help advertisers reach consumers. A retail media network is the actual platform that retailers put in place to do this. Examples of retail media networks include Amazon Advertising, Walmart Connect, Target\u2019s Roundel, Kroger Precision Marketing and Best Buy\u2019s Retail Media+.<\/p>\n
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Retail Media vs. Commerce Media<\/strong><\/h2>\nAnother term often used interchangeably with \u201cretail media\u201d is \u201ccommerce media.\u201d While they are essentially the same thing, many industry experts believe the term \u201ccommerce media\u201d offers a more accurate definition of what these new advertising platforms are able to do.<\/p>\n
Especially as offerings like social commerce (where consumers can buy products directly on social media) and in-game purchasing (as consumers increasingly do in gaming and metaverse environments) take off, some feel the term \u201ccommerce\u201d more accurately describes the full scope of retail media capabilities. This is because, in these and other instances, while a campaign may be based on retailer\u2019s data and functionalities, the actual consumer connection, and even the transaction, takes place in a non-traditional commerce environment. Therefore, \u201ccommerce\u201d is a more encompassing term to describe this new set of advertising capabilities. <\/p>\n
Non-Retailers Launching Retail Media Advertising<\/strong><\/h2>\nThe term commerce also is broad enough to encompass new media offerings from consumer-focused companies that are not traditional retailers.<\/p>\n
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Image courtesy Chase<\/figcaption><\/figure>\n<\/div>\nOne vocal advocate of the shift from \u201cretail\u201d to \u201ccommerce\u201d is Forrester analyst Sucharita Kodali, who said on LinkedIn: \u201cIt\u2019s time to stop calling it \u2018retail media\u2019 and start saying \u2018commerce media.\u2019\u201d The story that prompted this statement from Kodali was a news item about Uber and Lyft (two non-retailers) making big gains with their media efforts. Other non-retailers that have recently joined the retail media ecosystem include Chase Bank and Expedia.<\/p>\n
While both terms are currently being used, \u201cretail media\u201d remains the prevailing descriptor for these media channels, much to the chagrin of some: \u201cI don\u2019t like the term \u2018retail media networks,\u2019\u201d Michael Schuh, VP of Media Strategy and Product at Kroger\u2019s retail media network, Kroger Precision Marketing. \u201cIt makes it seem like we\u2019re this separate thing, when in reality we\u2019re just a media company within a retailer. I think there should be and there will be this movement toward thinking of retailers as just another media company and another investment lever for brands.\u201d<\/p>\n
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Why is there so much excitement about retail media?<\/strong><\/h2>\n\n
The explosion of retail media has been so seismic that Insider Intelligence<\/em> has crowned it the \u201cthird big wave of digital advertising\u201d (search advertising and social media advertising were the first two). And The Mars Agency recently declared: \u201cRetail media is now almost universally recognized as one of the most effective methods of commerce marketing.\u201d<\/p>\nNot only does retail media allow retailers to access untapped revenue from their existing channels and first party data, but it has arrived at a moment of great disruption in the world of marketing. Traditional TV viewership continues to decline at the same time that the third party cookies marketers have become reliant on to effectively target their digital campaigns are going by the wayside.<\/p>\n
The Benefit of Retail Media Advertising Campaigns<\/strong><\/h2>\nEnter retail media, an entirely new advertising channel that offers the benefit of rich first-party consumer data from retailers, a viewership with high purchase intent (a.k.a. shoppers) and a direct connection to the actual end transaction.<\/p>\n
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In 2022, global retail media revenue reached $101 billion, according to GroupM. That figure represents 18% of all global digital advertising and 11% <\/strong>of all advertising. In the U.S. alone in 2023, Insider Intelligence<\/em> projects that retail media spending will reach $45 billion.<\/p>\nAnd those numbers will only grow, with Group M predicting that retail media advertising will increase 60% by 2027, exceeding the expected growth for all digital advertising. <\/strong>Emarketer<\/em>\u00a0estimates that retail media ads will bring in\u00a0$106 billion\u00a0in U.S. ad spending by 2027.<\/p>\nBack to top<\/p>\n
Why is retail media growing so fast?<\/strong><\/h2>\nRetail media networks have become a hugely popular business tool to help retailers bring in incremental revenue. But they only do that if advertisers agree to shift their marketing money to retailers, which, as the numbers above indicate, they are clearly doing.\u00a0<\/p>\n
Beyond the mounting cost and restrictions of traditional digital marketing channels like social and search, there is another very big reason why advertisers are shifting their marketing spend to retail media \u2014 because unlike other advertising channels, retailers have a direct connection to consumers.<\/p>\n
\u201cOptimizing to transactions \u2014 that\u2019s the unlock here,\u201d said Quentin George, Partner at McKinsey and leader of the company\u2019s Commerce Media Practice. \u201cWhat gives retail media networks an advantage over almost every major media owner is that you have transactions involved. For the last 80-plus years, media has been optimized around impression delivery \u2014 you reach the audience we said we\u2019re going to reach. The problem is, all of the optimization happens around marketing activity and not marketing results. What retail media aims to change is to draw a direct correlation between an impression and a SKU-level sale, [and that\u2019s why] this is so exciting and transformative.\u201d<\/p>\n
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Why are so many retailers launching retail media networks?<\/strong><\/h2>\n\n
There are a number of reasons for the rush to set up retail media networks. First, there\u2019s the Amazon effect: retailers see how lucrative retail media ad sales have been for the perennial disruptor (nearly $38 billion in 2022) and want a piece of the action. And those have followed in Amazon\u2019s footsteps have, in many case, gotten it. For example, Macy\u2019s<\/strong> retail media network hit the market in 2020 and was able to generate $105 million in revenue by the next year, 2021.<\/p>\n\n
Image courtesy Macy\u2019s<\/figcaption><\/figure>\n<\/div>\nEvery one of the Top 10 retailers in the U.S. now has a retail media network. It\u2019s enough to make retailers without one of their own scramble, particularly as new entrants continue to report mind-boggling ad revenues. Walmart, which rebranded its media group as Walmart Connect in 2021, brought in $2.7 billion in advertising revenue in 2022 \u2014 not too shabby for a company with a core business that isn\u2019t<\/em> advertising.<\/p>\nBack to top<\/p>\n
Amazon Leads the Pack in Retail Media<\/h2>\n Amazon is by far the leader in retail media, capturing more than three-quarters of the U.S. market. In 2023, Amazon Advertising will be roughly 12X larger in share than its nearest competitor, Walmart Connect, according to Insider Intelligence<\/em>.<\/em><\/p>\nTop Retail Media Networks<\/strong><\/h2>\n\n
Amazon currently captures 77% of retail media ad sales. (Source: Insider Intelligence)<\/figcaption><\/figure>\n<\/div>\nBut that doesn\u2019t mean that advertisers aren\u2019t spending elsewhere. While 77% of CPG brands work with Amazon, 56% work with Walmart Connect, 29% with\u00a0eBay and 27% with\u00a0<\/strong>Home Depot, according to <\/strong>Merkle.<\/p>\nAnd even with Amazon taking the lion\u2019s share of retail media dollars, there\u2019s still plenty of money to go around.\u00a0Forrester estimates\u00a0that\u00a0one-quarter\u00a0<\/strong>of retailers are already generating more than\u00a0$100 million\u00a0in revenue from their media networks, and that is likely to grow significantly as these companies continue to build out their offering and work to close the gap with Amazon.\u00a0<\/p>\nAmong the major media networks today are:<\/p>\n
Other Companies with Retail Media Offerings<\/strong><\/h2>\n(Editor\u2019s note: This is by no means a comprehensive list as new retail media networks are launching regularly)<\/em><\/p>\nBack to top<\/p>\n
Top Retail Media Solutions<\/strong><\/h2>\nWhile some companies have preferred to build their retail media network in-house, there are now a vast range of tech companies and consultancies aimed at serving this growing sector with retail media solutions.<\/p>\n
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Image courtesy Instacart<\/figcaption><\/figure>\n<\/div>\nOne interesting offering is Carrot Ads from Instacart. The online grocery marketplace runs one of the most prominent retail media networks in the space today, and now it\u2019s white-labeling its tech to help retailers develop their own retail media programs. Instacart is also bringing advertising capabilities to its Caper Carts, smart shopping caddies that retailers can deploy in their stores.<\/p>\n
\u201cWe\u2019re extending Instacart\u2019s advertising technology, products, services and talent to our retail partners to leverage on their owned and operated ecommerce sites,\u201d explained Ryan Mayward, Head of the Ads Business at Instacart. \u201cBuilding an advertising business is a significant investment that requires time, talent and technology expertise. When retailers leverage Carrot Ads, they can tap into the depth of Instacart\u2019s ad technology and ad sales talent without standing up their own teams.\u201d<\/p>\n
Build In-House or Work with a Partner?<\/strong><\/h2>\nAs to the decision of whether to build in-house or with a partner, Jordan Witmer, who has led retail media strategy at a number of brands, including The Hershey Company and now at J&J, offered this analogy: \u201cThe size of your property is going to factor in to what you do when you strike oil. If I\u2019ve got a half-acre, I probably don\u2019t have enough scale to build a company around it. The best thing for me will be to bring somebody in to extract it and sell it for me. Now if I own 3,000 acres, like a Walmart, and I discover a well of oil, it probably makes sense for me to build a whole company and own the whole thing.\u201d<\/p>\n
Finding the Right Retail Media Solutions<\/strong><\/h2>\nAccording to Dustin Cochart, Director of Insights at\u00a0Dollar General\u2019s\u00a0DG Media Network, finding the right partners at each level is absolutely crucial to success. For example, Dollar General works with\u00a0Bridge\u00a0for first-party identity resolution,\u00a0LiveRamp\u00a0to match those customer IDs to other platforms like\u00a0The Trade Desk, and other solutions to \u201cstitch those customer IDs to specific POS data,\u201d Cochart shared during a session at the 2023 RICE conference. The retailer also recently teamed up with Criteo for onsite sponsored ads and other demand-side offerings. <\/p>\n
\u201cIt\u2019s extremely important to be as prescriptive as possible with the data, and almost bring in different stakeholders at every point so that you have multiple sets of eyes evaluating how the data will come to life, because a retail media network\u2019s core value proposition is its audiences and its measurement,\u201d said Cochart.<\/p>\n
To this end,\u00a0Uber\u00a0recently\u00a0teamed up with Omnicom Media Group\u00a0in a data collaboration partnership aimed at offering \u201chighly valuable insights to make media plans better, innovate measurement and optimize on incrementality\u201d for advertisers on its burgeoning media network. <\/p>\n
\u201cWith\u00a0130 million\u00a0monthly active platform users globally,\u00a0the power of Uber\u2019s advertising offering is how we are able to understand consumers\u2019 next destination in real time and reach them with relevant messages that align to immediate intention,\u201d said Mark Grether, VP and General Manager for Uber\u2019s advertising division in a statement. \u201cAs we look to the future of mobility and retail media, this new partnership taps into OMG\u2019s vast data and partnerships, enabling us to take on a new level of precision in intelligent targeting, insights and activation for\u00a0advertisers.\u201d<\/p>\n
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Types of Retail Media<\/strong><\/h2>\nThere are three broad types of retail media offerings:<\/p>\n
\nOn-site <\/strong>\u2014 advertising that is placed within a retailer\u2019s own digital ecosystem, such as on its website, app and emails;<\/li>\nOff-site<\/strong> \u2014 advertising that is placed in third-party channels, such as social media networks, other websites or connected TV platforms, based on a retailer\u2019s customer data and insights; and<\/li>\nIn store ads <\/strong>\u2014 advertising placed within a retailer\u2019s physical environment, such as on screens in-store or audio ads that play over store speakers. Sampling programs also can serve as a form of in-store retail media.<\/li>\n<\/ul>\nBack to top<\/p>\n
On-site vs. Off-site Retail Media<\/strong><\/h2>\nWhile the bulk of retail media thus far has been dominated by fairly basic website-based offerings \u2014 sponsored search, display ads, promoted listings, etc. on a retailer\u2019s own digital channels \u2014 the true power of retail media comes in connecting retailer first party data with other channels, including stores and third-party platforms like social media and connected TV.<\/p>\n
\u201cThis year we\u2019re going to see a significant amount of dollars going into off-site activations, with CTV and social commerce in particular seeing a big resurgence, where you\u2019re able to buy that audience in this off-site environment and still have closed-loop measurement,\u201d predicted Jeffrey Bustos, VP of Measurement, Addressability and Data at the Interactive Advertising Bureau (IAB).<\/p>\n
An Answer for the Problem of Third Party Cookies<\/strong><\/h2>\nThis is the true promise of retail media \u2014 using retailer first party data (and capture ad spend) to target ads across the web. A number of the early entrants in retail media already are doing this effectively:<\/p>\n
\nNordstrom shared at NRF 2023 that off-site now makes up 60% of its advertising business;<\/li>\n In late 2022, Lowe\u2019s announced an integration with Yahoo\u2019s demand-side platform (DSP) to enable off-site experiences for the brands advertising through its media network;<\/li>\n In early 2023, Albertsons became the first retailer to utilize Pinterest\u2019s new integration with LiveRamp, which allows Albertsons to join its data with Pinterest platform data in a privacy-safe clean room and thus offer its advertisers closed-loop reporting on Pinterest campaigns;<\/li>\n Walmart has teamed up with a whole host of platforms, including TikTok, Snap, Roku and Firework, to enable off-site, video-based advertising; and<\/li>\n Kroger has partnered with Magnite to expand its offering into CTV.\u00a0<\/li>\n<\/ul>\nThe ROAS on Retail Media Ad Spend<\/strong><\/h2>\n\u201cWe\u2019ve done studies where we\u2019ve executed media buys in the off-site programmatic space against our first-party data versus against a standard third-party data segment, and we\u2019ve seen 150% difference in sales performance between the two,\u201d Kroger Precision Marketing\u2019s Michael Schuh. \u201cPeople are sometimes hesitant to invest in retail media ad spend because it\u2019s a little more expensive, but what we\u2019re proving out is that it pays for itself twice over because there\u2019s that much higher relevancy for the audience.\u201d<\/p>\n
Kroger Precision Marketing is one of the more advanced players in off-site, with an offering that now includes co-branded off-site media, programmatic and relationships with major platforms and publishers including Roku, Pinterest and Meredith. The opportunity to connect with Kroger customers while they\u2019re perusing a recipe on Allrecipes<\/em>, for example, can be particularly powerful for brands.<\/p>\nHere\u2019s another example from J&J\u2019s Jordan Witmer: \u201cThe intersection of product and audience with Target and Pinterest, for example, makes a lot of sense because Target\u2019s guest over-indexes in being influenced by social,\u201d he said. \u201cWhen we run direct buys on Pinterest, and then Roundel [Target\u2019s retail media network] buys on Pinterest, the Target audience is so much more valuable and effective for us that I actually get better ROIs out of Roundel Pinterest than I do going direct, even though it costs me twice as much [in retail media ad spend].\u201d<\/p>\n
Other Examples of Off-Site Retail Media Ad Campaigns<\/strong><\/h2>\nAnd Google<\/strong> is getting in the mix as well with the March 2024 debut of its new off-site retail media solution, which Lowe\u2019s<\/strong> will be among the first to try out.<\/p>\nThis kind of enhanced relevancy and closed-loop visibility on the open web is having a huge impact not just on where brands spend their money but how they build their campaigns. \u201cWhen you bring in all this off-site opportunity, it changes the way we\u2019ve been building brand awareness,\u201d explained the IAB\u2019s Jefferey Bustos. \u201cBefore, you had your upper-funnel video or social campaigns to drive awareness, and then you had to do a brand lift study or some sort of MTA [multi-touch attribution] map at the end to understand how your sales were going. Now with retail media off-site within CTV or social, you literally have the capability to run upper-funnel media and immediately understand how consumers are reacting and engaging with your brand.\u201d<\/p>\n
CTV in particular is generating a lot of excitement in advertising circles, both as a standalone channel and for the potential of integrations with the retail media industry. Some even dub this convergence \u201cthe next frontier\u201d of digital ad spend.<\/p>\n
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The New Arena: In-Store Retail Media<\/strong><\/h2>\n\n
While it might seem like all eyes are on digital, advanced retail media networks are looking to another area to grow their offering \u2014 physical stores. \u201cSmart marketers are looking to run full-funnel marketing and advertising campaigns, so everything from TV and brand awareness campaigns all the way through the end of the path to purchase, which is the store \u2014 the last mile of advertising, so to say,\u201d said Insider Intelligence<\/em>\u2019s Andrew Lipsman.<\/p>\nIt\u2019s worth noting that the $45 billion in U.S. retail media spending in 2023 projected by Insider Intelligence<\/em> only accounts for online media, which is why Lipsman thinks physical stores are the next big media channel \u2014 especially since 70% to 85% of sales still happen in stores, depending on the category.<\/p>\nHow to Reach Relevant Audiences In Store<\/strong><\/h2>\n\n
Cooler Screens\u2019 digital media displays.<\/figcaption><\/figure>\n<\/div>\n\u201cThere\u2019s only one Amazon \u2014 nobody else has the online reach that Amazon has,\u201d said Lindell Bennett, a former\u00a0Amazon Advertising\u00a0executive who is now Chief Revenue Officer at the in-store media company\u00a0Cooler Screens. \u201cBut Amazon doesn\u2019t have the physical footprint of Walmart or Kroger or Costco. [Those retailers] have more people coming to their physical brick-and-mortars than their online channels, so all of these other [retail media] players besides Amazon have to go in-store at some point.\u201d<\/p>\n
Once a store begins to digitize, the places where retail media could be offered to reach relevant audiences multiply, although Lipsman is careful to note that \u201cthere is a CX consideration. Any retailer is going to have to be very careful to make sure that they don\u2019t overwhelm consumers.\u201d Among the potential surfaces that could be turned into advertising platforms are front-of-store signage, TV walls, end caps, drop-down screens between the aisles, smart shelf labels and the screens on smart carts.<\/p>\n
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