How retail media is disrupting the AdTech space Share via

With the rapid rise of e-commerce in the past couple of years, retailers have started to focus on creating an additional revenue channel for their businesses in the form of retail media. Retail media refers to the retailers’ advertising platform on their website, apps, or any other digital platform within their network. The meteoric rise of e-commerce has helped big retailers to gain access to top-quality first-party data that brands can use to advertise their products on the marketplaces to their potential customers.

Some of the best examples of retailers who have started their retail media networks and have performed exceptionally well are the likes of Amazon, Walmart, Walgreens, and Kroger. While Amazon began working on the revenue stream almost a decade back and is the leader in the retail advertising space, other prominent retailers have started to scale up their investments aggressively, seeing its bright future. As a result, it will be no surprise to see many more retailers across the globe joining the retail media space in the coming times and making use of their first-party data to help brands increase their market share while creating a robust revenue stream for themselves.

Moreover, retail media has proved beneficial for retailers and has positively impacted consumers, brands, and advertisers. The latest research report showing that more than half of the consumers have started to search for products on marketplaces rather than the search engines shows the growing significance of this channel. Let us look at how retail media has benefited the stakeholders in the entire AdTech ecosystem.

Advantages for Retailers

Retail media’s most significant advantage to retailers is opening an additional revenue stream. This is particularly important because e-commerce across the globe is a very thin-margined business, and the revenue generated from advertising provides the much-needed cushion to the marketplaces. Even the profit margins generated from the CPG businesses have narrowed over the last many months, putting a big dent in the bottom line of these retailers.

According to BCG, retail media is poised to become a USD 100 billion opportunity for retailers, and hence this s the best time for the companies to chalk out their strategy to enter this space and benefit from the early mover’s advantage.

Advantage for Brands

As third-party cookie tracking is nearing its end and increased data security and privacy laws are coming into effect, retail media is solving the first-party data problem of the brands. Since brands do not have scalable first-party data and rely heavily on third-party data, which will cease to exist shortly, they have started to advertise more on the online marketplaces, taking advantage of the retailer’s solid understanding of the consumer. The retailers know the brand’s customers more than the brand itself. They have access to data on the consumer’s interest, purchase behavior, brand preferences, shopping frequency, and much more, which is a gold mine for the brands trying to tap those customers.

Additionally, retail media provides brands with highly personalized targeting capabilities, effective ways to measure the ROI on their ad spending, and flexibility to track down spending to the SKU level, making this channel popular with the organizations.

Advantage for Consumers

As we have already discussed, retail media helps retailers leverage additional revenue streams, which benefits the shoppers as it allows marketplaces to offer better price control to customers. As a result, retailers will absorb some costs and pass on the benefits to the consumers, keep the traffic intact on their website, and acquire vital first-party data for the advertising business. Apart from better price control, retailers can improve the customer experience through retail media by providing better product suggestions and helping them make appropriate purchase decisions.

Although there have been some significant benefits that retail media provides to retailers and brands alike but this space is still evolving, and many other marketplaces are figuring out a way to embark on this journey. At present, this business model has been taken up only by the big retailers as they have access to a large amount of first-party data and is seen as making them more powerful while creating an uneven playing field for small retailers. But many digital marketing experts believe that the adoption of retail media will only increase in the aftermath of the pandemic. Most importantly, it is expected to disrupt the marketing and advertising space with all the uncertainty surrounding the future of data privacy and security.