AdRoll Blog

An Introduction to Retail Media

It’s no secret that everything is becoming more digitally-driven these days, including the way people shop. From 2016 to 2021, the number of online shoppers in the United States increased from 209.6 million to 230.5 million, making the U.S. one of the top ecommerce markets. Because of this, marketers and advertisers must continue to shift their focus to online marketing. The newest way to reach and engage online shoppers is retail media. This type of advertising helps businesses improve their ecommerce marketing and continue to engage and grow their customer base as they switch from in-person to online shopping. 

Read on to learn more about retail advertising and the various ways to apply this marketing strategy.

Why the Shift to Online Retail?

The shift to online retail was already happening. However, the start of the COVID-19 pandemic in early 2020 accelerated the process. In 2020, ecommerce sales increased by 45.5%. Because of this, retail brands needed to shift to digital marketing and advertising strategies to keep up with the trends. Retail media is the answer because it engages high-intent shoppers close to the point of purchase, increasing ad conversion rates and sales. 

What Is Retail Media?

Retail media refers to an advertisement placed on a retailer’s ecommerce website or app by the retailer or another brand within their network. The goal of retail advertising is to influence sales throughout the customer’s journey. These advertisements can be placed at the point of purchase, similar to in-store advertising at the checkout stand, the home page, search page, product pages, and more. 

Most retail advertising takes place by brands that directly sell products with specific retailers within the retailer’s sites and apps (think Amazon). However, other types of brands can utilize this digital marketing strategy as well. Brands whose products and services are directly linked to the market still find success with retail advertising. Even if a brand doesn’t sell products on a retailer’s site, retail advertising is effective if the consumer base is their target market.

What Are the Benefits of Retail Media Advertising?

Retail media advertising is an effective strategy because customers are more likely to purchase an item from an advertisement when they are already online shopping, rather than browsing social media sites or reading the news online. This new form of digital advertising is beneficial for retailers, consumers, advertisers, and brands alike. 

For retailers, retail media creates an additional revenue stream that is extremely valuable in this day and age when ecommerce is taking precedence over brick-and-mortar shopping.

Retail media advertising provides a convenient and straightforward way to shop for consumers, especially when the ads are relevant to their interests and purchase behavior.

For advertisers, retail media gives access to first-party data owned by the website owner. With this information, advertisers can personalize retail advertisements, which leads to increased conversion rates. This is essential as marketers everywhere prepare for a cookie-less future. Using first-party data to personalize ads is an effective alternative to third-party tracking

For brands, retail media offers a new way to get their products in front of their target market. Additionally, because retail advertisements happen close to the point of purchase, it is easier for brands to track sales and identify a more accurate ROI for their ads. 

Retail advertising is changing the course of online shopping. However, there are some setbacks, especially for small ecommerce businesses. Smaller companies may not have the time or resources to set up a retail media network infrastructure to use this strategy effectively.

How to Use Retail Media for Your Online Business

There are two ways to use retail advertising. First, you can develop a retail media network on your website. Some big brands that have capitalized on this early on are CVS, Walgreens, and Amazon. CVS calls their retail media network CVS Media Exchange; Walgreens calls their platform Walgreens Advertising Group; Amazon has Amazon Advertising. Each of these networks enables brands to place retail advertisements on their ecommerce platforms, sometimes with in-person and social advertising options.

The second way to capitalize on retail media is to place your advertisements on these networks to increase awareness and sales. If you cannot create an infrastructure to have your own network, you can advertise on big-name websites through their respective programs.

How to Set Up a Retail Media Network

Ecommerce stores with significant website traffic can benefit from having a retail media network on their site. If you’re interested in setting up your own retail media network, some companies offer support to make the process easier. These include Promote IQ and Quotient. You can easily set up a retail media network using one of these tools and increase revenue from brands who want to advertise on your website.

Retail Media Continues to Expand

To keep up with consumer behavior, companies and brands have begun using retail media to advertise their products to interested consumers. Although the COVID-19 pandemic brought about the need for retail media networks, online shopping remains strong, even as social distancing guidelines and stay-at-home orders lift. Because of this, there is a lot of room for retail advertising to grow and improve, providing more opportunities and increased transparency and control. Now is the time to start familiarizing yourself with the various retail media networks out there and the tools available to help you develop a network for your ecommerce store.

Wilson Lau

Wilson Lau

Wilson is the Sr. SEO Marketing Manager at AdRoll.