The Rise of Retail Media: What it is and Why it Matters

Shopping is going digital, and at a rapid rate: more than 77% of US consumers shop online today, and by 2027, the share of online retail spending is expected to grow by 15%. With this shift comes a critical need for merchants to adapt accordingly, and re-prioritize how they are showing up and interacting with consumers online. Through retail media, brands and retailers are doing just that.

RETAIL MEDIA IS THE FUTURE OF ADVERTISING

Retail media is a type of advertising that allows brands to promote their products directly within a retailer’s owned (on-site) properties and paid (off-site) media, using customer data to connect with consumers and promote their products throughout the buyer journey. By serving relevant content at key moments, brands and retailers drive more sales, build stronger loyalty, and streamline the path-to-purchase.

With major platforms like Amazon, Walmart, and Target leading the way, Boston Consulting Group estimates that the commerce media market will grow by 25% per year to $100 billion over the next five years and will account for over 25% of total digital media spending by 2026.

TYPES OF RETAIL MEDIA

On-site Sponsored Listings

A native sponsored listing is a paid advertisement designed to seamlessly blend into the look and feel of a retailer's website or app, matching the style, layout, and tone of organic product listings. Unlike traditional ads, native sponsored listings are crafted to be non-intrusive, appearing as if they are a natural part of the shopping experience while subtly indicating they are sponsored.

This integration allows brands to promote their products effectively without disrupting the customer journey, creating a smooth and cohesive browsing experience that feels informative rather than promotional.

On-site Display or Video

An on-site display or video ad is a visual advertisement that appears within a retailer’s website or app, often taking the form of banners, pop-ups, or embedded videos that stand out more prominently than standard product listings. Because of their high visibility, these ads catch shoppers’ attention more easily, offering brands an impactful way to showcase products, promotions, or brand messages.

Display and video ads benefit from larger formats and dynamic visuals, making them highly engaging and effective at creating awareness, especially for new products or limited-time offers.

Off-site Display or Video

An off-site display or video retail media ad is a visual advertisement that a retailer places on external websites, social media platforms, or other digital channels outside of its own ecosystem, targeting shoppers based on first-party data. These ads allow brands to reach potential customers who have previously visited the retailer’s website or shown interest in similar products, engaging them on sites they frequent beyond the retailer’s platform.

By serving display or video ads in high-traffic external spaces, brands gain broader reach and visibility, reminding shoppers of products they may want while extending the brand’s presence across the web. This approach keeps products top-of-mind and can lead customers back to the retailer’s site to complete their purchase, enhancing the likelihood of conversions.

BENEFITS FOR BRANDS

Retail media ads offer brands a range of benefits that enhance visibility, engagement, and conversions with high-intent shoppers.

1. High Intent Audience: Ads are shown to shoppers who are already actively browsing or searching for products, increasing the likelihood of conversions.
2. Access to First-Party Data: Retail media networks use retailers' data to target ads, allowing brands to create personalized, relevant ads based on real shopping behaviors and preferences.
3. Proximity to Purchase: Retail media places ads near the point of sale, where shoppers are often ready to buy, helping brands drive sales more directly than traditional awareness-focused ads.
4. Enhanced Measurement and Insights: Retail media platforms typically provide detailed performance data, helping brands track campaign success and adjust strategies for maximum ROI.
5. Broader Reach: Off-site retail media expands a brand’s reach by showing ads on external sites, helping brands stay top-of-mind for potential customers across the web.

BENEFITS FOR RETAILERS

Retail media provides retailers with several key benefits, enhancing both their revenue potential and customer experience.

1. New Revenue Stream: Retailers can monetize their digital platforms by selling ad space to brands, turning their website, app, and off-site data assets into profitable revenue sources.
2. Enhanced Customer Experience: By integrating relevant, personalized ads, retailers can offer a more tailored shopping experience that aligns with customer interests.
3. Data-Driven Insights: Retail media allows retailers to leverage and refine their first-party data, gaining valuable insights into customer behaviors and preferences that inform broader business and marketing strategies.
4. Increased Traffic and Sales: Strategic ad placements can drive more traffic, both to the retailer’s own site and back to advertised products.
5. Strengthened Brand Partnerships: Offering ad opportunities enhances relationships with brands, allowing retailers to collaborate on co-marketing campaigns, attract exclusive products, and improve long-term vendor partnerships.

EMBRACE THE DIGITAL EVOLUTION OF RETAIL

As the retail landscape continues to evolve towards digital platforms, retail media emerges as a crucial strategy for brands and retailers alike. Through personalization, retail media is closing the gap between the 1-on-1 customer service that’s available in-store and making it easier, and faster, than ever for consumers to find and purchase the products they’re looking for. The effects go beyond driving sales at the point-of-purchase and build a dynamic, long-lasting relationship between the brand, retailer, and customer.

If you’re ready to take your digital presence to the next level and maximize long-term business outcomes, activate a custom retail media solution with Surfside today.