Retail Media 11 min read

What Is Retail Media: A Guide With Basics and Benefits

Retail media ads are advertisements at or close to the point of sale, whether brick-and-mortar stores or e-commerce websites.

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Perion Marketing

Published on

08th Oct 2024

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Driven by the increase in online shopping, this advertising model helps brands influence customers at the moment of purchase. 

Let’s discover what retail media is and how to use it to boost brand exposure.

Key Highlights: 

  • Retail media advertising may include a variety of ad placements, including in-store, digital-in-store, on-site, and off-site locations. It integrates Customer Relationship Management (CRM) systems and digital touchpoints to create a cohesive advertising experience.
  • A retail media network is a platform owned by retailers that allows brands to display ads within their ecosystem. This includes digital ads on websites and apps, leveraging first-party data to target consumers.
  • Real-world applications include endcap screens, self-scan devices, point-of-sale ads, and screens on fridge/freezer doors, all designed to engage shoppers and drive conversions at purchase points.
  • Retail media delivers personalized experiences and precise ad attribution. It allows brands to directly connect ad spending with sales outcomes, boosting sales and improving retailer margins.

 

The Retail Media Ecosystem

Retail Media-crm

 

Retail websites such as Amazon might be the most well-known, but they are not by any means the only methods. The Interactive Advertising Bureau (IAB) categorizes retail media into five segments, as follows: 

CRM

Customer-relations management media ads are popular and effective as they reach directly to the consumer’s inbox. These retail media ads include direct mail, email, coupons, and loyalty programs. 

In-store

These retail media ads are offered inside brick-and-mortar stores. For instance, DOOH screens, TVs, ATMs, and point-of-sale screens. This type of ad is usually bought directly from the retailer, but programmatic-buying opportunities are also available. 

Digital in-store

This type of retail media involves digital content inside physical stores that enhances the shopping experience and engages customers in real time. Retailers use digital in-store to deliver targeted content at key points in their shopping journey. For example, digital screens, interactive displays, or signs, radio ads, and in-store digital-out-of-home. 

On-site

This type of advertising is sold on the retailer’s digital properties. For instance, on retailer websites, such as supermarkets, or online shopping marketplaces like eBay or Amazon. It usually includes campaign optimization and accurate targeting. 

Typical formats include sponsored product ads, display banners, email-targeted coupons, and sponsored search results. These formats are usually bought on a cost-per-click (CPC) or cost-per-mille (CPM). 

Off-site

This method uses retailer data to buy ad inventory outside of online retailer platforms. For instance, display, video, social, connected TV (CTV), or digital-out-of-home (DOOH). 

 

Off-site retail media is usually bought and managed directly by retailers, or from agencies and platforms. 

Leverage retail media and increase conversions with Perion 

 

What is a Retail Media Network?

A retail media network is an advertising system that includes various digital channels offered by a retail company to third-party brands. In this model, retailers enable advertisers to buy ad spots in both channels owned by the retailer and channels owned by third-party media companies. 

 

Retail media networks have increased in recent years. What was once the domain of a few premium companies such as Amazon, Walmart Media Group, and Target, today is a market full of retailers, fulfilment companies, and technology companies competing for the customer’s attention.

 

Some statistics (Statista Research Department, 2024), that show how the retail media advertising landscape has developed are: 

 

  • Retail media advertising spending represents 21% of global digital advertising spending. 
  • The global digital retail media ad spend growth is 10% 
  • Global digital retail media cost-per-click (CPC) is $1.1

 

Retail media networks are versatile, offering an array of features for advertisers, from data monetization, to social media buying and addressable TV. The following chart shows the most commonly offered features. 

 

Retail media networks offer several benefits for brands and customers. While they help brands connect with relevant shoppers, they also help shoppers find relevant products.

How do Retail Media Ad Transactions Work?

The versatility of retail media means brands have several options for purchasing retail media ads. Including, but not limited to: 

Direct

The brand approaches a retailer/marketplace that owns a retail media network. For example, Amazon.com. Walmart, or Target. This method can include owned property or channels, like a website or application, off-site, such as social, in-store ad space, or even connected TV (CTV) advertising

Via demand-side platforms 

These buy-side platforms provide access to multiple retail properties via programmatic ad exchanges. Multi-retailer buy-side platforms may include digital shopfronts, retail sites or applications, and also connected TV. Examples include Target, Kroger, and Disney+. 

Nonretail merchants

Companies that aren’t retailers, such as hotel chains, or travel agencies, can also offer retail media ads through owned property, off-site, or out-of-home. 

 

the Paths to Purchasing Retail Media

 

Examples of Retail Media

 While on-site retail media offers consumers the comfort of online shopping, retail media broads outside websites and apps. Let’s see some examples: 

In-Store Retail Media 

This approach leverages digital and physical touchpoints within the retail environment to enhance shopper engagement and brand visibility. Let’s review some examples of retail media in stores. 

 

  • Endcap screens

These screens are strategically positioned at the end of store aisles, where they naturally draw customer attention. Endcap screens display dynamic content such as product advertisements, promotional videos, and interactive content. Brands can leverage endcap screens to highlight new products, showcase limited-time offers, or provide informative content about their products. 

 

  • Self-scan devices

Self-scan devices are self-service platforms that allow customers to scan products themselves for a quick checkout process. These devices can display targeted ads and promotions related to the products being scanned, encouraging upsells or presenting complementary products. 

 

  • Point of Sale (POS) ads

Point-of-sale ads are displayed at checkout counters and payment terminals where customers make their purchases. These ads can include last-minute offers, cross-sell opportunities or loyalty program promotions.  

 

  • Screens on fridge/freezer doors

Some stores leverage cooler screen doors to present product information and advertisements in real time. These screens enhance the shopping experience by making it more interactive and informative. Cooler screens help brands expand their in-store media presence. 

 

Digital-out-of-home 

brands-advertise

 

Although not limited to in-store advertising, digital-out-of-home (DOOH) is a key example of retail media at its best. DOOH includes digital billboards in public places and interactive and digital screens. 

 

Created to maximize the impact of DOOH ads, Perion’s Hivestack platform helps brands advertise on screens located in and around retailers. By doing this, it helps create a consistent experience for shoppers and allows marketers to reach them at different touchpoints across the shopper journey. 

 

For instance, GSK, a leading pharmaceutical company for the Asian market, wanted to execute a programmatical digital-out-of-home (DOOH) campaign to promote shingles prevention and encourage doctor consultations among the general population in Hong Kong. 

Perion Hivestack

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Using Perion’s Hivestack demand-side platform (DSP), the campaign leveraged various DOOH screen environments, including digital billboards, the HK metro, clinic centers, and the ChargeSpot stations across the island. The campaign involved exposing users to DOOH ads and retargeting them over three weeks. The campaign generated 6.5 million impressions and achieved a 7x higher CTR compared to other channels. 

Learn more about what Perion retail media can do for you by requesting our demo

Why Brands are Investing Heavily in Retail Media Today?

The benefits of retail media appeal to advertisers and publishers, causing US retail media ad spending to grow steadily over the past few years. According to the Emarketer forecast, US retail media ad spend is projected to make up 21.8% of the total US media ad spend by 2025.  

 

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So, why do brands find retail media so attractive? Retail media is considered the “third big wave of digital advertising” because of its ability to deliver personalized purchasing experiences and precise ad attribution. 

Digital advertising had three big waves, starting with the breakthrough of Search in 2002, followed by the revolution in Social, in 2008. Retail media started in 2016, connecting digital advertising with retail, and supporting the growth in e-commerce.

US retail media ad

Benefits of Retail Media for Brands

Brands benefit from the direct connection that retail media offers with consumers. In this cookieless era, retail media allows advertisers to leverage first-party data to offer products to consumers with purchase intent. This characteristic situates retail media advertising above other types of advertising. 

 

  • Retail media enables personalized advertising thanks to first-data management. 
  • It offers accurate ad attribution, enabling brands to connect ad spending with sales.
  • Retail media links ad impressions to actual sales data. This enables brands to understand which ads drive sales and measure campaign ROI. 
  • It increases brand sales by encouraging customers to make purchases, leading to higher conversion rates and boosting revenue. 
  • It improves retailer margins. Retail media can significantly improve retailer margins by optimizing real estate monetization. 

 

How Do You Measure the Success of Retail Media Campaigns?

When launching a retail media campaign, it is important to get a deep understanding of how the campaign is performing. Retail e-commerce sales are growing, projected to reach $8 billion by 2026 and brands rely on retail media marketing to drive sales. 

 

Below you can find five tried-and-tested metrics for measuring ROI in retail media marketing. 

statista

Image source

 

  • Conversion rate

It is the main metric to measure the campaign’s effect on sales. The higher the conversion rate, the better the campaign performance. 

 

To calculate the conversion rate, you use this formula: 

 

Conversion rate = (Number of Conversions/Number of Visitors) x 100

 

The result is a percentage.  

 

  • Customer Acquisition Cost (COC)

This metric measures the amount of money the brand spent on acquiring a new customer with the campaign. 

 

To calculate customer acquisition costs, you use this formula: 

 

CAC = (Total Sales + Marketing Expenses) / Number of New Customers Acquired

 

  • Average Order Value (AOV)

AOV measures the average amount the customer spends in a single transaction. Brands use this metric to assess how effective are upselling and cross-selling activities. 

 

The formula for average order value is:

 

AOV = Total Revenue/Number of Orders

 

  • Return on Ad Spend (ROAS)

This metric calculates the revenue for every dollar spent on the campaign. It tells brands how profitable the campaign is.

 

The formula to calculate the return on ad spend (ROAS) is: 

 

ROAS = (Revenue from Ad Campaign/ Cost of Ad Campaign) x 100

 

  • Customer Lifetime Value (CLV)

CLV assesses the revenue generated by a customer over their journey with the business. It helps assess the long-term value of a customer. 

 

To calculate CLV, you use this formula: 

 

CLV = Customer Value x Average Customer Lifespan

Shift to Online Media Advertising with Perion 

Perion’s retail media services are designed for retailers and CPG brands and provide highly personalized experiences via cross-screen dynamic creatives by leveraging first-party data. perion.com offers comprehensive retail media services designed to enhance brand visibility and drive sales. Our platform leverages advanced data analytics and first-party data to create personalized advertising experiences, ensuring that brands connect with their target audience effectively. By offering precise ad attribution, we enable brands to directly link ad spending with sales outcomes, maximizing return on investment.

Discover the possibilities of digital advertising by contacting us

 

FAQs

What are the advantages of retail media for brands?

Retail media offers several advantages for brands, including: 

  • First-party data utilization: Retail media leverages first-party data to create highly personalized advertising campaigns, improving targeting accuracy and customer engagement. 
  • Precise ad attribution: Brands can directly link ad spending to sales outcomes, providing clearer insights into return on investment. 
  • Increased sales: Drives higher conversion rates and boosts sales.
  • Improved brand visibility: Retail media sets ads in prominent placements on retail websites, locations, and apps, enhancing brand visibility. 

 

What is the best retail media advertising solution?

The answer will depend on the brand’s needs. There are platforms led by retail websites such as Amazon, Google, or Walmart. Brands looking for a comprehensive solution may find a better option in Perion’s offerings. Perion analyses user signals and contextual data to deliver the right ad at the right time. Cross-screen and advanced audience segmentation enhance the performance of the campaigns. 

What is the difference between shopper marketing and retail media?

Shopper marketing involves strategies and tactics aimed at influencing customers at the point of purchase, often within a physical retail environment. It includes in-store promotions, product displays, and packaging strategies designed to drive conversion and loyalty. 

 

Retail media integrates digital advertising opportunities on a retailer’s digital properties, like their website, app, or other online platforms. It focuses on leveraging data to target customers with personalized ads during their online shopping journey. 

How is retail media different from traditional media?

Retail media differs from traditional media in several critical aspects: 

Retail media

Traditional media

Targeting and personalisation

Uses first-party data to deliver personalized ads.

Involves broader, less targeted advertising methods.

Measurement and attribution

Offers precise measurement and attribution capabilities.

Often struggles with attribution

Digital integration

It is inherently digital but integrates with physical channels.

Involves mainly offline channels.

What is in-store retail media?

The term in-store retail media refers to advertising and promotional activities that occur within a physical retail environment. This can include digital displays, interactive kiosks, shelf signage, and in-store audio or video advertising. In-store retail media aims to engage shoppers, influence purchase decisions, and enhance the overall shopping experience by delivering relevant messages at the point of sale.

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