What is driving the growth of retail media? Share via

It is a well-known fact that the pandemic has accelerated the growth of e-commerce by at least a couple of years and has managed to get millions of new shoppers into the online shopping fold. And as the acceptance and propensity of consumers to shop at online stores increased, brands have started to leverage the ad placement opportunity on the retailer’s website to grab more eyeballs.

Retail media or advertisements placed on a retailer’s website to influence the customers buying decision at the point of purchase have seen its adoption going through the roof amidst the pandemic as in-store interactions have seen a hit in these times, and brands want to reach out their consumers wherever they are. For retailers, retail media creates an additional revenue stream in the already thin margin e-commerce business.

This is an effective mode of advertisement for brands as the shopper is in the purchase mode and the intent to shop is high. Moreover, the advertisements in the retail media can be displayed on the home page, category page, search page, and product detail page, which enables the brands to reach potential shoppers during the various stages of their shopping journey.

According to global management consulting firm BCG, big retailers are already racing towards a $100 billion high-margin annual revenue prize in retail media, as it helps them to make better use of their customer’s data to help create better targeting and content. Additionally, as per some estimates, the same report suggested that Amazon has already grabbed as much as $26 billion in 2021 revenue while other major retailers like Walmart, Target, and Kroger are moving fast to establish their positions.

Experts believe that companies already implementing the personalization program can benefit extensively through retail media, which acts as a high-profit extension of their efforts.

Growth Drivers

Digital marketing is going through seismic changes in the way brands are adopting it, as stricter consumer privacy laws and talks of third-party cookies coming to an end are forcing companies to look for better ways to reach out to prospective customers efficiently. In addition, a high level of personalization and getting noticed in the crowded marketplaces have also posed a great challenge for brands in the evolving e-commerce advertising space.

And in this changing scenario, retail media has come to the forefront because of big retailers’ ability to access tons of first-party data and recognize those who have converted after seeing the ad. Furthermore, the capability of tracking down the spending to the SKU level has also added to the growing popularity of retail media among digital brand marketers. Ritelo, the retail media platform by ArabyAds, ensures SKU level and category level mapping to establish contextual relevance.

According to eMarketer predictions, retail media will continue to disrupt traditional advertising due to third-party data deprecation, connected television’s rise, and linear television’s subsequent decline. In addition, a 2020 Forrester report predicted that retailers in the United States with more than 50 million monthly visitors on their websites would launch their own retail media networks.

On the one hand, retail media is creating a new revenue stream for retailers; on the other hand, it benefits the consumers and brands by improving the customer experience and increasing the brand’s visibility, which helps increase sales.

Future of Retail Media

Digital marketers are bullish about the growth of retail media and its influence on the brand’s revenue and visibility in the coming years. As of now, this medium has not picked up significantly outside of the United States, but various countries are expected to lap up this opportunity in a big way as the e-commerce penetration gets deeper in their geographies.

But retailers will have to maintain a healthy balance between ad revenue and customer experience to keep the effectiveness of this advertising medium intact. In addition, retailers should also form a deeper relationship with the brands advertising on their platform by providing them with real insights and helping them reach their objectives efficiently.  Moreover, as this technology is still evolving, and everyone is figuring out the correct way to maximize the output from this channel, retailers should undertake continuous training programs for all its stakeholders to understand the best practices and assist their partners in the best possible manner.

Ritelo, the retail media platform by ArabyAds, helps build scalable brand-funded media businesses for retailers, where they can utilize the power of Ritelo’s DSP to generate revenue from offsite outreach across multiple locations and channels.