What is Retail Media?
Retail Media is a form of advertising that is already widely used by large retailers such as Amazon, Zalando, and Matas. They offer advertising space on their own channel, where brands have the opportunity to promote products in an lucrative placement.
If you search for a product on a site like Zalando, the first few results are often sponsored. Going a step further, you can also curate product feeds and recommendations based on users' interests or even market specific products on other platforms. Large retailers can thus become a kind of media house and earn huge sums from their customer insights.
In the US, Retail Media has grown significantly over the last four years, and eMarketer has adjusted their “Spending forecast” in this area, which they predict will grow by more than 20% per year until 2027.
The importance of Marketplaces changes search behavior
The new opportunities within Retail Media have arisen, among other things, because consumers increasingly use retailers' sites to search for products. Approximately half of all product searches no longer occur on Google.
Many are instead seraching on marketplaces such as Amazon, Zalando, and Matas.
And therefore it makes a lot of sense for brands to ensure that their products are exactly at the top of those searches.
A more effective advertising strategy
With the increasing focus on data security and privacy, tracking consumers across platforms has become more and more difficult. In January 2024, Google began phasing out third-party cookies, and we expect to see more similar initiatives in the coming years.
This makes online advertising more difficult because you can no longer target your audience with the same precision. Therefore, more brands are looking towards Retail Media as a highly effective alternative. Advertising spaces are moved closer to where the sale takes place and where the consumer is already in the market for that type of product.
Customer Data Platforms support Retail Media
The major advantage for retailers is the enormous amount of first-party data they have on their customers. If retailers manage to organize and use the data they have available, they can offer some very attractive advertising spaces on their platform.
There are more and more tech companies that have products that support the work with Retail Media, in the form of Customer Data Platforms and Merchandising Centers.
The Customer Data Platform provides a complete overview of the customer base by collecting data from all the offline and online sources available. This makes it easy to create very specific target groups, so advertisers get the best possible advertising spaces. Just as importantly, it is also easy to document the effect of the ads along the way.
Retail Media benefits retailers, brands, and consumers
Retail Media is a good idea for retailers because it allows them to generate extra revenue by selling advertising space on their digital platforms. At the same time, the relationship with their brands is enhanced because, with data-driven insights, they can provide a precise indication of how much they can get for their advertising dollars.
For brands that sell via marketplaces, retail media is extremely interesting because it allows for targeted marketing to an already engaged buyer group and increases visibility. Typically, with this form of advertising, you can also manage your budget more effectively.
In addition, Retail Media also benefits consumers. By creating more relevant shopping experiences, delivering tailored information and offers integrated into the purchasing process, it also results in greater customer satisfaction.
