Marketers are prioritizing retail online advertising for its unique advantages. This approach places ads directly within retailer ecosystems, from websites to in-store screens. Retailers utilize valuable first-party data, connecting brands with high-intent shoppers at the final point of purchase. The growth of retail media is undeniable; projections show the sector will exceed $300 billion by 2030. This retail media boom is reshaping the advertising landscape.
Note: Even in-store, Esl Retail technology like an ESL Gateway AP allows for dynamic advertising on every ESL Price Tag and Electronic Shelf Labels.
This channel provides clear, closed-loop measurement, directly linking advertising spend to sales.
What Is Retail Online Advertising?
Retail online advertising is a form of digital advertising where brands pay to place ads on a retailer’s digital properties. This includes the retailer’s website, mobile app, and even in-store digital screens. It represents a fundamental shift from traditional advertising, moving marketing budgets directly into the commerce environment where transactions happen.
Defining the Core Concept
Understanding this channel begins with two foundational ideas: the retailer’s ecosystem and the digital shelf. These concepts explain where and why this form of advertising is so effective.
Advertising Within a Retailer’s Ecosystem
A retailer’s ecosystem is its complete network of customer touchpoints. This network contains valuable first-party data on shopper behavior, purchase history, and loyalty. Brands can leverage this data to run highly targeted campaigns. The goal is to reach consumers during their active shopping journey, influencing decisions at the most critical moments.
The Rise of the Digital Shelf
The digital shelf is the online equivalent of a physical store shelf. It is where your products are displayed on an e-commerce platform. Effective retail media ensures your products gain premium placement on this crowded shelf. Strong product visibility here is crucial. It directly impacts whether a customer discovers, considers, and purchases your item during an online shopping session.
Understanding Retail Media Networks (RMNs)
Retail Media Networks (RMNs) are the platforms that retailers build to sell advertising space. These networks are the engine of retail media, powered by rich shopper data and sophisticated ad-serving technology. The growth of online retail media networks is explosive, transforming them into a major pillar of the advertising industry.
The Technology Powering Retail Media Ads
RMNs operate on a foundation of data and technology. They use a retailer’s first-party data—information collected directly from customers with their consent—to create precise audience segments. Ad-serving platforms then deliver relevant retail media ads to these segments across the retailer’s properties. This technology enables closed-loop reporting, connecting ad exposure directly to a verified sale.
📈 The RMN Market Explosion: The retail media market is experiencing phenomenal growth. Projections show a significant increase in global ad spend, solidifying its position as a top-tier advertising channel for brands.
| Metric | Value | Year/Period |
|---|---|---|
| Global RMN ad spend | ~$30.0B | 2023 |
| Projected global RMN market | ~$179.5B | 2025 |
| Projected global RMN market | ~$56.97B | 2030 |
| CAGR (2024–2030) | ~10.5% | 2024-2030 |
| U.S. RMN ad spend | Tens of billions | N/A |
How RMNs Function as Walled Gardens
RMNs are often called “walled gardens.” This means the retailer’s data is used exclusively within its own ecosystem and is not shared with outside parties. This creates a secure, privacy-compliant environment for advertisers. Brands gain access to invaluable shopper insights for targeting without directly handling the raw data, while retailers maintain control.
Major global retailers have built formidable walled gardens:
- Amazon Advertising: The undisputed leader, Amazon’s RMN accounts for the majority of U.S. retail media ad spend and leverages unparalleled data from its massive ecommerce operations.
- Walmart Connect: A dominant player in North America, its network combines online and in-store shopper data for omnichannel campaigns.
- Mercado Libre Ads: The leading RMN in Latin America, it surpasses even Amazon in the region by using rich regional data across its vast marketplace.
- Tesco Media & Insight Platform (UK): This network uses deep insights from its Clubcard loyalty program to deliver highly personalized advertisements.
Common Ad Formats in Retail Media
Retail media advertising offers a diverse range of ad formats designed to meet different campaign objectives, from building awareness to driving immediate sales. These formats appear across the digital path to purchase.
Sponsored Product Listings
These are the most common types of ads on an ecommerce site. Sponsored products appear at the top of search results or on category pages, boosting visibility for specific items. They are keyword-targeted and function on a pay-per-click (PPC) basis, making them a performance-focused tool for increasing sales.
Homepage and Category Banners
Display banners are placed in high-traffic locations like the homepage or main category pages. These ads are excellent for building brand awareness, announcing new product launches, or promoting special offers. They capture attention early in the shopping journey.
Off-Site Programmatic Ads
This advanced tactic uses a retailer’s first-party data to serve ads to shoppers on other websites, apps, and Connected TV (CTV) platforms. For example, a brand could target known customers of a specific retailer with video ads on a streaming service. This extends the reach of retail media beyond the retailer’s own properties.
In-Store Digital Displays
The digital transformation is also happening inside physical stores. In-store retail media includes ads on checkout screens, aisle-end displays, and smart shopping carts. This format bridges the gap between online and offline, allowing brands to influence shoppers at the final moment of decision.
Why Retail Media Is a Top Priority for Marketers
The rapid ascent of retail media is no accident. Marketers are strategically reallocating budgets to this channel because it directly solves some of the most pressing challenges in the modern advertising landscape. It offers a sustainable path forward in a privacy-first world, provides access to customers at the most crucial moment, and delivers unparalleled measurement clarity.
The Post-Cookie Advertising Solution
For years, digital advertising relied on third-party cookies to track users across the web. That era is ending, forcing a fundamental industry shift. Retail media has emerged as the leading solution.
The Decline of Third-Party Cookies
Web browsers like Google Chrome are phasing out support for third-party cookies. This change, driven by consumer demand for privacy, dismantles the traditional framework for audience targeting and retargeting. Many conventional digital advertising strategies that depend on cross-site tracking are becoming obsolete. Marketers need a new, reliable data source to effectively reach consumers.
Leveraging First-Party Retailer Data
Retail media provides a powerful alternative: first-party data. This is information that retailers collect directly from their customers with consent. It includes purchase history, search queries, and loyalty program activity. This data is accurate and highly valuable.
According to one industry expert, “retail data gives you real shopper behaviour in terms of what people are viewing and buying, and all the purchase intent and buying signals around that.” Early campaigns using this data have shown “far superior performance.”
For example, advanced methodologies like Vector’s VIP Audiences combine Amazon’s first-party retail data with AI modeling. This approach analyzes granular shopper insights, from product views to brand preferences, to build high-propensity audiences. The result is more personalized ad campaigns with significantly higher engagement and conversion rates.
Ensuring Privacy Compliance
First-party data operates within the retailer’s “walled garden.” This means the data is not shared or sold, and advertisers never handle the raw personal information of shoppers. This model inherently aligns with privacy regulations like GDPR and CCPA. It allows brands to benefit from deep audience insights in a secure, compliant environment, building a sustainable advertising strategy for the future.
Reaching High-Intent Shoppers
One of the greatest advantages of retail media is its proximity to the point of sale. It places brand messages in front of consumers who are not just browsing, but actively shopping with an intent to buy.
Targeting Consumers at the Point of Purchase
Unlike social media or general web browsing, consumers on a retailer’s site are in a transactional mindset. They are researching products, comparing prices, and adding items to their carts. Placing ads in this environment is the digital equivalent of securing premium shelf space in a physical store. Your brand can capture attention at the exact moment a purchasing decision is being made.
Influencing Final Buying Decisions
Strategic placement of retail media ads can effectively influence consideration and drive unplanned purchases. Research shows that consumers with low self-control are more susceptible to impulse buying online, especially when presented with targeted advertisements.
- A study on young adults found that a positive attitude toward targeted ads amplifies the effect of social media recommendations and product displays.
- This environment tempts consumers into making hasty purchase decisions.
- The convenience of online shopping further facilitates this behavior.
By presenting relevant products and promotions, retail media advertising can introduce new options and trigger impulse buys, directly increasing basket size and sales.
Achieving Closed-Loop Attribution
For decades, marketers struggled to definitively connect ad spend to in-store sales. Retail media finally closes this loop, offering clear, data-backed proof of performance.
Connecting Ad Views Directly to Sales
Closed-loop attribution is the ability to connect ad exposure directly to a verified purchase. Because the advertising and the transaction occur within the same retailer ecosystem, RMNs can track a shopper’s journey from seeing an ad to buying the product. This measurement is possible for both online and in-store sales.
Successful brand partnerships demonstrate this power. For instance, Waterpik used Walmart Connect audience data to launch shoppable streaming ads on Roku.
- This campaign allowed viewers to add products to their Walmart cart directly from the TV ad.
- The initiative successfully connected upper-funnel ad views to lower-funnel conversions.
- It exceeded Roku’s benchmark for incremental reach by 1.5 times and boosted in-funnel conversion rates by 1.67 times.
Proving Direct Return on Investment
This ability to connect ads to sales allows for precise calculation of Return on Ad Spend (ROAS). Marketers can see exactly how much revenue each campaign generates, justifying their advertising budgets with hard data. A common industry benchmark for ROAS is 4:1, or $4 in revenue for every $1 spent on retail online advertising. However, this figure varies widely.
| Product Type | Typical Price | Potential ROAS |
|---|---|---|
| High-Value Items | >$1,000 | 10:1 or higher |
| Low-Margin Products | ~$10 | 2:1 to 3:1 |
Ultimately, the ability of retail media advertising to prove its direct impact on the bottom line makes it an indispensable part of the modern marketing mix.
The Key Players in the Retail Media Advertising Ecosystem
The retail media ecosystem operates on a symbiotic relationship between three core participants: the brands who advertise, the retailers who own the media space, and the consumers who provide the data and audience. Understanding the role and motivation of each player is essential for navigating this landscape.
The Brands (Advertisers)
Brands are the demand side of the equation. They fund campaigns to connect with consumers and drive business outcomes. They generally fall into two categories.
CPG and Endemic Brands
Endemic brands are those whose products are naturally sold by the retailer, such as a cereal brand advertising at a grocery store. For these companies, the goals of retail media for brands include boosting sales, protecting market share, and achieving a high return on investment. However, they often face significant challenges:
- Limited control over campaign execution due to strict retailer guidelines.
- Difficulty extracting insights from complex and varied data sets.
- Delayed reporting that hinders timely campaign optimization.
Non-Endemic Brands
Non-endemic brands sell products or services not typically found in the retailer’s inventory. For example, a financial services company might advertise on a home improvement store’s website to reach new homeowners. Their goal is to leverage the retailer’s rich audience data to reach a highly relevant consumer segment based on lifestyle and purchase behavior.
The Retailers (Media Owners)
Retailers represent the supply side, transforming their digital and physical properties into valuable media channels. This has created a significant new revenue stream.
Grocery and Mass Merchandisers
Large retailers have become media powerhouses. They leverage vast amounts of shopper data to build formidable advertising networks. The growth of retail media for retailers is a major profit center, with leading networks reporting substantial gains.
| Retail Media Network | Recent Growth Statistic |
|---|---|
| Walmart Connect | 28% year-over-year growth in Q3 |
| Kroger Precision Marketing | Projected 20% growth for the full year |
Specialty and Niche Retailers
Specialty retailers like Sephora or Best Buy offer access to highly specific, passionate audiences. They leverage their deep, first-party data to enable sophisticated advertising tactics. These include personalized product recommendations, interactive video tutorials, and ads that feature user-generated content like reviews to build trust and drive conversions.
The Consumers (The Audience)
Consumers are at the center of the entire system. Their behavior generates the valuable data that makes retail media advertising effective.
The Role of Shopper Behavior Data
Every search, click, and purchase provides a signal of intent. Retailers collect this first-party data with consent, creating detailed profiles of their shoppers. This information allows brands to move beyond broad demographics and target consumers based on actual, recent buying behavior.
Enhancing the Customer Experience
Effective retail media must enhance, not disrupt, the shopping journey. While consumers are open to relevant offers, the delivery method is critical. A study on personalized ads found that the advertising channel itself is the most significant attribute influencing consumer adoption. It also revealed that traditional banner ads were the least preferred format, highlighting the need for more integrated and helpful ad experiences.
How to Activate Retail Media Campaigns
Activating retail media advertising campaigns involves choosing the right buying method for your brand’s objectives. Brands can purchase media directly from a retailer’s network or use programmatic technology for broader reach and efficiency. Each path offers distinct advantages for reaching shoppers.
Buying Directly from Retailer Networks
Buying directly means working with a single retailer’s media network. This approach provides unparalleled access to that retailer’s specific audience and first-party data. It is the most common starting point for brands entering the retail media space.
Using Self-Service Platforms
Most major retailers offer self-service advertising platforms. These portals allow brands to create, manage, and monitor their own campaigns within the retailer’s ecosystem. Advertisers can log in, set budgets, select targeting parameters, and launch advertisements directly. This method gives brands significant control and direct access to performance data from a single source.
Examples: Amazon Advertising, Walmart Connect, and Target’s Roundel
The largest retailers have developed sophisticated platforms that dominate the market.
- Amazon Advertising is the industry leader, offering a comprehensive suite of tools for sponsored products, display, and video ads across its massive e-commerce site.
- Walmart Connect leverages its immense online and in-store footprint, enabling brands to reach millions of shoppers across their omnichannel journey.
- Target’s Roundel differentiates itself by using its rich guest data to power campaigns both on Target.com and across hundreds of external publisher sites.
Buying Programmatically
Programmatic buying uses automation to purchase retail media ads across multiple networks. This method offers scale and efficiency, allowing brands to manage their advertising from a centralized platform. It is ideal for advertisers looking to expand beyond a single retailer.
The Role of Demand-Side Platforms (DSPs)
Demand-Side Platforms (DSPs) are the software used to buy advertising in an automated fashion. Brands or their agencies use a DSP to access inventory from numerous RMNs and other publishers. The DSP handles the bidding process and ad placement based on the campaign’s targeting criteria, streamlining the entire workflow.
Benefits of a Programmatic Approach
Using a DSP for retail media provides several key advantages for managing complex advertising campaigns. This technology empowers advertisers with greater efficiency and control.
- Real-time bidding and automation: DSPs automate the buying process. This ensures advertisers stay within budget and saves time by eliminating manual negotiations.
- Broad selection of inventory: Advertisers can access a wide range of ad inventory from multiple suppliers through a single platform.
- Advanced user targeting: DSPs process data to refine campaigns and audience targeting. They ensure ads reach the right users at the optimal time.
- Reporting and analytics: DSPs offer a centralized dashboard to consolidate performance data. This allows advertisers to analyze information and optimize their campaigns effectively.
Integrating Retail Data into Broader Campaigns
The true power of programmatic retail media is the ability to use valuable retailer data for off-site campaigns. Brands can use a retailer’s first-party audience segments to target those same shoppers on other websites, apps, and connected TV platforms. This extends the reach of high-intent audiences far beyond the retailer’s digital properties.
How Success Is Measured in Retail Online Advertising
Measuring success in retail online advertising requires a multi-layered approach. Marketers use a combination of metrics to evaluate everything from initial brand exposure to the ultimate sales impact. These key performance indicators (KPIs) are typically grouped by their position in the marketing funnel.
Top-of-Funnel Metrics
These metrics gauge awareness and engagement at the beginning of the customer journey. They help marketers understand how many people are seeing their campaigns.
Impressions and Reach
Impressions represent the total number of times an ad is displayed on a screen. Reach is the number of unique individuals who saw the ad. Together, these metrics provide a foundational measure of a campaign’s overall visibility and audience size.
Click-Through Rate (CTR)
CTR measures the percentage of impressions that result in a click. It is a primary indicator of ad relevance and creative effectiveness. Performance varies significantly by format; while general display banner ads might have a CTR around 0.51%, highly personalized ads that use shopper data can perform over 2.30% better than non-personalized versions.
Bottom-of-Funnel Performance KPIs
These KPIs directly connect advertising efforts to sales outcomes. They are essential for proving the financial value of a campaign.
Return on Ad Spend (ROAS)
ROAS is the most critical metric for measuring profitability. It calculates the amount of revenue generated for every dollar spent on advertising. This KPI provides a clear, direct measure of a campaign’s financial return.
Conversion Rate
The conversion rate is the percentage of users who take a desired action, such as making a purchase, after clicking on an ad. It indicates how effectively your ads and product pages persuade shoppers to buy.
Customer Acquisition Cost (CAC)
CAC measures the total cost to acquire a new customer. This metric helps marketers understand the efficiency of their campaigns in driving new business and is crucial for evaluating long-term profitability.
Advanced Measurement Metrics
Sophisticated marketers look beyond basic KPIs to understand the true, incremental impact of their campaigns. These advanced metrics help prove that sales would not have occurred without the ad spend.
New-to-Brand (NTB) Customers
This metric tracks the number of purchasers who are buying from your brand for the first time. NTB analysis is vital for demonstrating that your campaigns are driving sustainable brand growth, not just sales from existing loyal customers.
Category Share and Share of Voice (SOV)
Category share measures your brand’s sales as a percentage of total sales within its product category on a retailer’s site. Share of Voice (SOV) measures your brand’s advertising presence relative to competitors. Tracking these helps gauge market dominance.
Incrementality and Lift Analysis
Incrementality is the gold standard for measurement because it isolates the sales caused directly by your ads. It answers the question: “Did the ad cause the sale, or would it have happened anyway?”
This is achieved by comparing matched groups of shoppers. One group is exposed to ads (the test group), while a similar group is not (the control group). The difference in sales between the two groups represents the true incremental lift.
This test-versus-control methodology helps marketers prove the true value of their investment by separating campaign-driven sales from organic purchasing behavior.
Getting Started with Your Retail Media Strategy
Launching a successful retail media strategy requires careful planning and preparation. Brands must first evaluate their internal readiness before allocating a budget. This process involves auditing digital assets, defining clear goals, and choosing the right partners.
Auditing Your Brand’s Readiness
Success begins before you spend your first advertising dollar. A thorough brand readiness audit ensures your advertising traffic is sent to product pages that are primed to convert.
Assessing Product Detail Page Quality
Your product detail pages (PDPs) are your digital storefront. They must be fully optimized to maximize conversions. Strong product visibility depends on high-quality content.
A comprehensive PDP analysis reviews key elements to improve performance. This includes optimizing product titles for search, using high-resolution imagery and video, generating positive customer reviews, and developing enhanced A+ content. Fixing these issues is critical before running ads.
Analyzing Inventory and Supply Chain
Advertising a product that is out of stock wastes money and creates a poor customer experience. Brands must ensure they have ample inventory levels to meet the anticipated demand from a campaign. It is also essential to have fast, reliable fulfillment options in place to satisfy shopper expectations.
Setting Clear Campaign Objectives
Your campaign goals will dictate your strategy, ad formats, and measurement approach. Objectives should be specific and tied directly to business outcomes.
Aligning Goals with Business Outcomes
Brands use this channel to achieve a variety of business objectives. Your primary goal will shape your entire campaign. Common objectives include:
- Increasing brand visibility and recognition.
- Driving sales of specific products.
- Reactivating customers who have not purchased recently.
- Launching a new product successfully.
- Growing market share against key competitors.
Choosing the Right KPIs to Track
Once you define your goals, you must select the right Key Performance Indicators (KPIs) to measure success. A campaign focused on visibility will track impressions and reach. A campaign designed to drive sales will prioritize Return on Ad Spend (ROAS) and conversion rate.
Selecting the Right Retail Partners
Not all retail media networks are created equal. Selecting the right retailers is a crucial strategic decision that impacts your campaign’s reach and effectiveness.
Evaluating Retailer Audience and Reach
First, assess the retailer’s customer base. You must ensure its audience aligns with your brand’s target demographic. Evaluate the size and scale of the network to confirm it can deliver the reach your campaign requires.
Comparing RMN Capabilities and Costs
When evaluating partners, consider their technological and data offerings. A strong retail media partner provides transparent reporting and a user-friendly platform. Key evaluation criteria include:
- Data and Analytics: The platform should offer clear reporting and access to critical data points.
- Technology Platform: The system must be easy to use and integrate with your existing tools.
- Pricing and Fees: Compare different cost models (e.g., CPC, CPM) to find the best fit for your budget.
The Future of Retail Media Advertising
The landscape of retail media advertising is evolving at a rapid pace. Key trends are reshaping industry practices, while new strategic imperatives are emerging for brands that want to maintain a competitive edge. Understanding these developments is crucial for preparing a future-proof marketing strategy.
Trends Shaping the Industry
Several major trends are defining the next chapter of retail media. These shifts focus on creating a more unified, intelligent, and integrated advertising ecosystem.
Standardization of Metrics
The industry is moving toward standardized measurement. Organizations like the IAB and MRC are developing comprehensive guidelines to create consistency. Collin Colburn of the IAB notes the goal is to ensure the industry “speaks the same language” with common definitions for formats and impressions. This effort helps connect digital campaigns to real-world sales. These guidelines cover critical areas like viewability, incrementality, and in-store digital measurements, allowing for more reliable performance comparisons across different platforms.
AI and Automation in Campaign Management
Artificial intelligence (AI) and automation are becoming central to campaign execution. These technologies process vast amounts of shopper data to optimize ad targeting, bidding strategies, and creative personalization in real time. AI-powered platforms enable marketers to manage complex campaigns more efficiently, improve performance, and uncover new audience opportunities with minimal manual intervention.
The Growth of In-Store Retail Media
The digital transformation is extending into physical stores. In-store retail media includes advertising on checkout screens, smart carts, and electronic shelf labels. This trend bridges the gap between online and offline shopping, allowing brands to influence customers at the final point of decision. It creates a truly omnichannel experience for consumers.
Preparing for What’s Next
Brands must adapt their internal structures and external relationships to succeed in this evolving environment. Proactive preparation involves building new capabilities and strengthening partnerships.
Building In-House Expertise
Many brands are building in-house teams to manage their retail media efforts. This process requires a strategic approach.
- Define Your Goals and Resources: Start by setting clear objectives with measurable KPIs. Then, take inventory of your current budget, technology, and qualified employees.
- Find Your Optimal Team Structure: Decide between a fully in-house team or a hybrid model with agency support. Your industry and cost considerations will influence this choice.
- Recruit the Right People: Identify the talent needed for key roles like planners, buyers, and data analysts. The unique skill set required makes recruitment a critical challenge.
Fostering Stronger Retailer Partnerships
Success in retail media depends on strong, collaborative relationships with retailers. Brands should move beyond a simple transactional relationship to become true partners. This involves sharing insights, co-developing campaign strategies, and working together to enhance the customer experience. Deeper partnerships unlock access to better data, beta testing opportunities, and more favorable terms.
Retail online advertising is now essential. It offers a privacy-compliant way to use powerful first-party data for effective ads. This channel provides unparalleled access to customers at the most critical stage of their buying journey. The ability to prove direct ROI makes retail media advertising a non-negotiable part of the modern marketing mix. Marketers who master these ads will gain a significant and sustainable competitive advantage in the evolving advertising landscape.
FAQ
What is the main difference between retail media and traditional digital advertising?
Retail media places ads directly on retailer websites and apps. It uses the retailer’s first-party shopper data. Traditional digital advertising often relies on third-party cookies to track users across many different websites. This makes retail media more precise and privacy-compliant.
Why is first-party data so important in retail media?
First-party data is information collected directly from shoppers with their consent. This data includes actual purchase history and search behavior. It allows for highly relevant and effective ad targeting without invading user privacy, which is crucial as third-party cookies disappear.
What is a Retail Media Network (RMN)?
A Retail Media Network (RMN) is an advertising platform created by a retailer. It allows brands to buy ad space on the retailer’s digital properties. Major examples include Amazon Advertising and Walmart Connect. These networks power the entire retail media ecosystem.
Can brands that don’t sell products at a retailer still advertise there?
Yes. These are called non-endemic brands. For example, a car insurance company could advertise on a home improvement retailer’s website. They do this to reach specific audiences, like new homeowners, by leveraging the retailer’s valuable shopper data.
What is closed-loop attribution?
Closed-loop attribution directly connects ad exposure to a confirmed sale within the same retail ecosystem. Because the ad and the purchase happen on one platform, marketers can precisely measure the sales generated by their campaigns and calculate a clear return on investment.
What is the most important metric in retail media?
Return on Ad Spend (ROAS) is often considered the most critical metric. It measures the total revenue generated for every dollar spent on advertising. This KPI directly proves the financial impact and profitability of a campaign, justifying the marketing investment.
