The Rise of Retail Media: How Marketers and eCommerce Sites will Benefit

Putting his own spin on an ages-old quote, legendary writer Stephen King once said, “Sooner or later, everything old is new again.” That is especially true in the world of advertising, where traditional trade marketing tactics have been digitally transformed. And the latest trend in this ongoing evolution is the rise of retail media networks.

Introducing Retail Media

The concept of trade marketing has been around for decades. From paying supermarkets for their best shelf space to sponsorships and TV ads, trade marketing tactics have been the go-to for brands that want to increase visibility and sales. However, the reality is that traditional trade marketing is predominantly a “spray and pray” endeavor. That is because creating a campaign that is precision-targeted, customizable and easily measured using traditional trade marketing tactics is difficult at best.

That’s why more and more brands are complimenting traditional trade marketing with retail media. But what is retail media? Simply put, retail media is when eCommerce sites and online marketplaces sell their web real estate to brands and advertisers.

What Makes Retail Media So Effective?

The biggest advantages for brands that utilize retail media are that campaigns can be completely customized, highly targeted and easily measured. Product promotions can be designed around specific customer personas, preferences, interests and online shopping behaviors. This makes it easier for brands to reach potential customers at a pivotal moment in the purchasing journey—when browsing products or adding items to their cart. And with the phasing out of third-party cookies, the first-party data that eCommerce sites and online marketplaces own is now the purest form of digital marketing gold.

Many eCommerce sites and online marketplaces also offer robust analytics tools, which allow marketers to track their campaigns’ performance, understand their customers better and optimize their targeting strategies. This data can then be used to help brands retarget and re-engage with shoppers. It also enables businesses to evaluate and monitor customer behavior tailored to the customer’s spending habits, which can be used to improve customer lifetime value. This is impossible with traditional trade marketing, which relies heavily on polls, research and other indirect methods.

What’s In It for eCommerce Sites and Online Marketplaces?

On the flip side, for eCommerce sites and online marketplaces, the upside for providing targeted retail media opportunities to marketers is massive. The biggest plus is that website owners can generate additional revenue at no extra cost.

Amazon is a great example. It is one of the most successful eCommerce platforms for monetizing real estate. Their advertising business brought in $10.68 billion in sales in the second quarter of 2023, which was a 22% jump from the previous year during the same period.

Another example of an eCommerce app that has found success in offering retail media opportunities is Instacart. In its IPO filing, the company stated that “advertising and other revenue” accounted for 28% of its total revenue in the first half of 2023, rising 24% year over year to $406 million.

According to ChannelSight, the top 10 companies operating in the space include Amazon, eBay, Criteo, Walmart, Wayfair, Home Depot, Kroger, Instacart, ePRICE and Roundel. Some of the marketing opportunities these sites offer include display advertising, featured product listings, sponsored content, reviews, coupons, email blasts and other promotions.

So, What’s Next

With the rise of eCommerce platforms and marketplaces and the phasing out of cookies and third-party data, the growth of retail media shows no signs of slowing down. Retail media provides a personalized experience and allows businesses to target their audiences in a way that traditional advertising methods can’t. And by reaching the right people at the right time, brands experience better engagement and conversions. Because of that, the demand for retail media real estate will be enormous, inspiring a new breed of companies facilitating this process to emerge.