Retail Media: A Complete Guide for Retail Businesses

In a crowded marketplace, where privacy concerns dominate headlines and traditional advertising falters, how can you reach your target audience in a way that’s powerful but non-intrusive?

Enter retail media—the formidable force reshaping digital advertising. 

With Google and Apple restricting third-party data, and TV viewership on the decline, retail media networks (RMNs) offer you the perfect solution. By leveraging first-party data and expansive reach, RMNs connect you directly with your target buyers right when they’re ready to buy. 

In 2023, the RMN market soared to $45 billion, and is projected to surpass $100 billion by 2027. So, it’s no surprise that 64% of retail merchants plan to jump on the RMN bandwagon by the end of 2024. 

Seize this opportunity now. But first, understand how RMNs work, identify the best ones, and choose the right formats. 

What is a retail media network?

Retail media helps brands promote their products through sponsored ads, displays, or in-store promotions on retailers’ platforms. By tapping into the retailers’ first-party data, brands can deliver targeted advertising that resonates with their desired audience.

A retail media network (RMN) is a platform retailers use to manage these ads. For example, Walmart Connect, Walmart’s RMN, promotes products to shoppers through display and in-store ads, leveraging customer data for targeted success.

While retail media is a general concept, RMNs are specific platforms retailers offer to brands. Prominent retail media platforms are owned by digital marketplaces like Amazon and Shopify, mass merchandise retailers like Walmart and Target, and commerce intermediaries like Instacart.

How do RMNs work?

Retailers use their first-party customer data—including purchase history, browsing habits, and demographics—to help your brand reach the right audience at the right time. Customers share this information with retailers for personalized experiences, loyalty rewards, convenience, and better customer service.

When you join an RMN, you choose where your ads appear—on the retailer’s website, mobile app, or physical stores. You also decide what ads to run, like sponsored product listings or banner ads.

The retail media platform shows your ads to the right customers based on their first-party data and provides you reports on ad performance and sales generation. In return, the retailer gets a share of your advertising spend.

There are three main types of retail media advertising:

On-site advertising

These ads happen on the retailer’s website or mobile app. Amazon Ad’s is an example. These are sponsored product listings and display ads target customers based on their search queries, browsing history, and purchase behavior.

Off-site advertising

When retailers help brands reach customers beyond their own platforms by tapping into their customer data for targeted advertising on third-party websites, social media, or other digital channels. 

Kroger Precision Marketing leverages Kroger’s first-party data to serve ads on social media, streaming platforms, and other third-party websites.

In-store advertising

For retailers with physical stores, RMNs can include digital displays, signage, or product placement. Walmart Connect allows brands to place in-store advertising such as digital displays, self-checkout ads, or in-store demos in Walmart’s physical stores.

What are the benefits of retail media networks?

Here are some of the key advantages of RMNs and examples of businesses that have succeeded through them.

Increased revenue and profitability

When you opt for retail media, your brand can safely and non-intrusively connect with buyers at various touchpoints throughout their buying journey. Retail media’s strength lies in its ability to create a cohesive experience that significantly boosts purchase rates compared to isolated advertising formats. An impressive 85% of brands and agencies report that retail media drives strong upper-funnel brand awareness.

Nathan James, an ecommerce furniture brand, struggled with ad attribution and targeting. By joining Shopify Audiences, Shopify’s RMN, it leveraged Shopify’s first-party data to create highly relevant target audiences. 

This led to a more than twofold increase in purchase rate, a 176% increase in conversion ratio, and over $100,000 in incremental revenue. Shopify Audiences also helped create effective Facebook lookalike audiences, slashing customer acquisition costs by 52%.

Improved targeting and personalization

Retail media’s growth is due mainly to tighter privacy restrictions imposed by tech giants like Google and Apple. With third-party data tracking restricted, brands are compelled to switch to first- or second-party sources for personalized ads.

Studies show 73% of customers expect better personalization with technological advancements, and RMNs deliver just that. Retail media offers rich first-party consumer data and a customer base with high purchase intent. This data leads to better-optimized campaigns and excellent insights into consumer behavior due to the direct correlation between advertising and retail sales. Retailer data can consistently target and measure campaigns across various media channels (e.g., DOOH, CTV, Audio).

Skin care brand Bushbalm struggled with targeted advertising due to digital privacy restrictions. Its return on ad spend (ROAS) dropped more than 20% in a year, and ad attribution became unclear. To find new customers, Bushbalm started using Shopify Audiences. After three months of testing, Shopify Audiences consistently outperformed its usual campaigns.

Even though the cost per thousand impressions (CPM) was higher, Shopify Audiences brought in a higher-quality audience with stronger purchase intent, leading to a 42% increase in clickthrough rates, 24% higher ROAS, and a 120% increase in purchase rate.

Stronger retailer-brand partnerships

RMNs encourage stronger collaborations between retailers and brands like yours. Even if you don’t sell directly through a particular retailer (non-endemic brands), you can still benefit from their vast audience and logistics capabilities.

Companies like Amazon, Shopify, and eBay provide a ready-made audience of buyers and logistics to fulfill orders on your behalf, streamlining your operations and expanding your reach.

RMNs also provide retailers with a valuable additional revenue stream. Instacart witnessed its ad revenues surge, capturing more than 70% of US digital grocery sales in 2023. 

By establishing strong relationships with retailers through their media networks, you create new collaboration opportunities—like access to exclusive promotions.

Accurate closed-loop measurement and attribution

Closed-loop measurement and attribution set retail media networks apart from traditional advertising. You can directly link your advertising efforts to actual sales, clearly seeing your return on investment (ROI).

A study showed that 71% of retailers effectively conduct closed-loop measurements, helping with efficient customer targeting and analysis.

Happy Hippo, a Shopify Plus merchant selling kid-safe bath products, used Shopify Audiences to grow its brand. The initial campaign attributed 23% of sales to new customers obtained directly from Shopify.

This accurate closed-loop measurement and attribution helped Happy Hippo to use these audiences as a 1% seed for Facebook lookalike audiences, resulting in a 4.7 times return on ad spend, 86% new-to-brand customer rate, 72% lower acquisition costs, and a 200% increase in conversion rate.

Types of retail media ads (+ examples)

Retail media offers a variety of ad formats to reach target consumers everywhere they shop. Below are some of the most effective retail media ad types available.

1. Display ads

Display ads are banner advertisements placed on various parts of a website. They can include images, banners, text, or interactive elements designed to capture attention, promote your brand, and direct viewers to your online store. 

Display ads are perfect for reaching a broad audience, building brand awareness, and promoting new products.

Men’s apparel and footwear brands often partner with popular blogs like Shoegazing to feature display ads encouraging readers to click through to the seller’s website for more information or to make a purchase.

2. Sponsored product listings

Sponsored product listings are cost-per-click (CPC) ads featured in search results or category pages on marketplaces like Amazon and eBay. They prominently feature a seller’s product above organic listings. The aim is to increase sales and attract traffic to the sponsored seller’s product pages.

By sponsoring their pillow listings on Amazon, brands like Beckham Hotel Collection and Coop Home Goods make sure their products appear at the top of search results for keywords like “pillows,” increasing their visibility and driving sales.

3. Video ads

Video ads are short clips shown on websites, social media platforms, or video streaming services, providing a dynamic way to showcase products. These ads can play before, during, or after the main video content, promoting your product by telling a story that grabs attention and drives awareness, ultimately leading to conversions.

Using Shopify’s YouTube app, you can upload your store to your YouTube channel, letting viewers browse and purchase products directly from your videos and livestreams.

4. In-store digital ads

In-store digital ads are dynamic, eye-catching displays placed throughout brick-and-mortar stores, delivering targeted content to shoppers at pivotal moments in their buying journey.

eMarketer analyst Andrew Lipsman thinks that, as physical stores become more digital, in-store retail media will become more prominent across multiple surfaces, including shelves, in-store TV screens, video screens at gas pumps, checkout screens, in-store audio, and digital displays at electric vehicle charging stations. 

In November 2023, Tesco installed its 1,800th in-store screen across a total 420 stores, a significant increase from the 400 screens it had the previous March.

5. Interactive kiosks

Interactive kiosks are touchscreen devices placed in retail locations. They let customers browse products, get more information, and place orders directly from the kiosk. Interactive kiosks are becoming so popular that last year, Walmart increased third-party ads at its self-checkout kiosks, utilizing approximately 170,000 digital screens across locations.

6. Social media ads

Social media ads leverage platforms like Facebook, Instagram, and Pinterest to target specific demographics with tailored advertising content. Take this Instagram ad by clothing brand Saada, for example. These ads appear in the main Instagram feed as users scroll through the posts of accounts they follow. 

Every social media platform offers different advertising options. Shopify integrates with TikTok, Facebook, Instagram, and Pinterest to help you sell more through social commerce. 

What are the best retail media networks?

Now that you understand the benefits and formats offered by retail media, here are some of the top retail media network examples that can take your business to the next level. 

Amazon Ads

As the undisputed leader in retail media advertising, Amazon Ads stands as the go-to choice for brands aiming to maximize their reach and impact. With a mighty 75.2% market share in the US retail media advertising market in 2023, Amazon Ads is swiftly closing the gap between itself and digital advertising giants like Google and Meta.

With such dominance, it’s no surprise the platform offers a variety of advertising options—sponsored products, brands, and display ads—helping you reach your target audiences across various touch points on Amazon and its offsite partners. With more than 180 million Prime members expected in the US by 2024 and 50% of shoppers beginning their searches on Amazon, it’s a platform no retailer can afford to ignore.

Amazon’s vast first-party customer data, its Fulfillment by Amazon (FBA) program, and an expanding network of fulfillment centers empower brands of all sizes to compete effectively.

Walmart Connect

Walmart Connect offers search, display, and in-store advertising. It seamlessly integrates in-store and online shopping with features like in-app product location, checkout guidance, and web-based reviews on physical shelves.

Walmart Connect generated revenues of $3 billion in 2023 and grew by 24% in Q1 2024. The RMN has big expansion plans for the near future. Walmart’s high fill-from-store rate, fast shipping, and partnerships with TikTok, Roku, and Meta enhance audience targeting and campaign measurement, making it a top choice for brands looking for growth.

Shopify Audiences

Since its launch in mid-2022, Shopify Audiences has quickly become a powerful retail media network for ecommerce brands on Shopify Plus. Offering a comprehensive solution, it helps merchants find high-intent buyers and optimize ad performance across major platforms. Since joining Shopify Audiences, merchants have lowered their cost per acquisition by up to 50%.

Using commerce insights and machine learning, Shopify Audiences creates targeted lists of potential buyers, helping brands reach the most relevant customers. 

What sets Shopify Audiences apart is its ability to leverage millions of commerce intent signals from across the Shopify ecosystem. This rich data allows it to generate audience lists with unparalleled precision, tailored to specific funnel stages and ad platforms.

With its latest v2.2 release, merchants can potentially double the size of their retargeting audiences by using the Retargeting Boost lists. Shopify Audiences integrates with Meta, Google, Pinterest, TikTok, Snapchat, and Criteo.

For ecommerce brands in the US and Canada seeking to expand their direct-to-consumer business and efficiently reach high-intent buyers, Shopify Audiences is your answer.

Learn how Shopify Audiences helped brands like BlenderBottle, L’AMARUE, and Kate Hewko. 

Retail media network trends: What’s next?

Take a look at some key projections and trends highlighting the growing dominance of retail media marketing and see how you can take advantage of them.

Retail media ad spend growth

By 2027, more than one in four US digital ad dollars will go to retail media advertising, with ad spend projected to more than double from 2023 numbers, reaching $109.4 billion.

Sixty-five percent of companies plan to bring in third-party consultancies to bolster their retail media marketing by the end of 2024. This investment will help retailers gather data and optimize their ad strategies.

Omnichannel attribution

Retail media has the potential to help brands achieve omnichannel sales attribution and gain a clearer picture of marketing performance across in-store and online channels. According to an eMarketer forecast, US omnichannel retail media ad spend is projected to total $59.98 billion in 2024, marking a 28.6% year-over-year (YoY) growth.

Growth of streaming video and connected TV

Retailers are expanding into streaming video and connected TV (CTV), targeting and nurturing consumer relationships with personalized advertising. Walmart’s acquisition of VIZIO exemplifies this trend, opening new avenues for Walmart Connect to reach consumers through tailored ads.

Rise of dynamic and agile content

Brands can leverage dynamic creative optimization (DCO) technology to automatically generate and optimize ad creative variations based on user data, context, and performance goals. Utilizing data-driven insights to tailor content, such as dynamically including personalized elements, can significantly improve engagement and conversion rates.

Use retail media advertising to grow your sales

Retail media isn’t just a passing trend; it’s a powerful advertising approach that’s here to stay. That’s fantastic news for you as a store owner, because it means you can connect with your ideal customers at the perfect moment when they’re ready to buy without being intrusive or annoying. 

But you need a tailored advertising strategy designed specifically for your business to make the most of retail media. If you’re an ecommerce merchant in the US or Canada, Shopify Audiences might be your best choice. 

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