3 reasons why brand advertisers should invest more in retail media in 2024
The extortionate growth of retail media is providing opportunities for brands to engage consumers at various stages of the sales funnel, says Taranjeet Singh (managing director, enterprise, APAC). For brands to capitalize, here are three reasons brands need to invest more in the channel next year.
Consumers today often go from awareness to click in a few seconds, requiring marketers to brand as they sell and sell as they brand.
An ideological shift from brand KPIs like reach and frequency to commerce outcomes like volume and margin has led to blurring budget lines, with marketers now needing to drive sales from mid- or upper-funnel media. In a McKinsey survey, 45% of CFOs said, “the reason marketing proposals had been declined or not fully funded in the past was that they didn’t demonstrate a clear line to value.”
At the same time, the continued merging of online and offline is requiring more connected, unified strategies and a demolition of silos between teams.
In other words, branding and performance are now merging into a new animal: brandformance.
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Along with this change, retail media has swelled into digital advertising’s third wave, capturing attention and budgets with highly measurable, high return performance thanks to the closed-loop reporting that it enables.
According to eMarketer, in 2024, more than $1 of every $6 spent on digital ads in the US will go toward retail media. And a McKinsey study showed that 73% of advertisers anticipate spending more on RMNs (retail media networks) in the next 12 months. Though it began as a lower funnel strategy, retail media is quickly evolving to help advertisers meet awareness and consideration objectives.
Brands that need to build accountable awareness should think seriously about investing more in retail media and seeing it as part of their core channel lineup. Here are three reasons why.
1. The onsite and offsite opportunity
The ability to activate retailer data on and beyond their properties opens the door to full funnel campaigns and more scale.
As retail media comes into trend, it begins with onsite ad placements such as sponsored product ads on search, category, and product detail pages. These highly relevant ads, delivered right at the digital point of sale excel at driving conversions and return on ad spend (ROAS). In fact, some of our clients have seen triple-digit ROAS. To influence consideration and brand awareness, retailers such as Best Buy in the US are also offering display and video ads on higher traffic pages like the home page or a brand feature page that marry a brand message along with product-specific content.
But brand advertisers looking to move up the funnel to drive awareness, while being tied to actual commerce outcomes, need more scale and flexibility than onsite alone can offer. That’s why the next evolution of retail media is focused heavily on the expansion to offsite.
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With retail media offsite, retailers make their data and audiences available for brands to activate across the open web via display, OLV, and CTV ads. This makes larger-scale awareness efforts possible, while also continuing to be measurable to sales at the product level. There is increasing momentum for offsite, with eMarketer reporting that US offsite digital ad spend is predicted to increase by 38% this year, two times faster than the rest of retail media.
The power of onsite + offsite combined
There is a synergistic effect when retail media offsite is layered on top of retail media onsite. A retail media strategy that combines both onsite and offsite can help brands increase sales. A test with our own client showed that shoppers who are exposed to both ad types are five times more likely to convert on the retailer’s site, compared to those who only saw a sponsored ad. Exposure to both onsite and offsite ads also led to a 55% increase in CTR and 337% increase in revenue per user.
Retailer first-party data enables brands to reach audiences at all stages without relying on third-party signals, at scale and across the open internet. By packaging audiences such as category and brand browsers or seasonal purchasers with a variety of ad formats, including video and display, it’s possible to engage consumers from awareness through purchase.
Retailer first-party data provides a more comprehensive view of shoppers, for more relevant and efficient targeting that is focused on those most likely to buy.
2. Closed-loop measurement
Proving the effectiveness of retail media is easy because every ad dollar across the full funnel can be tied to real sales.
A large part of retail media’s allure is its ability to measure the impact of campaigns down to product-level sales. Traditionally, that has meant focusing on KPIs such as return on ad spend (ROAS) or cost of sales (COS).
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As part of its evolution, retail media KPIs are now moving up the funnel to include things like incrementality, share of voice (SOV), and brand lift. Now, marketers can close the loop and understand a true return on their investment. Whether they're trying to build brand recognition, drive product consideration, or maximize sales, brands can analyze and optimize campaigns so that they thrive.
3. More creative ad formats
Expanded options give brands more artistic license and new ways to engage consumers.
The shift up the funnel and offsite has necessitated the addition of ad formats that enable more creative freedom. For brands to connect with audiences and tell their story, the traditional static, template-based ads simply won’t do.
Brands can now flex their creative muscles and still reap the benefits of retail media with a variety of engaging formats, including:
- Onsite display: Brands can mix storytelling with features that encourage a purchase, like real-time pricing and add-to-cart buttons.
- Shoppable video: The new kid on the block, shoppable videos marry a video ad with product details and add to cart functionality—the best of both worlds.
- Video (OLV): Nothing beats video for making an emotional connection. Brands can now repurpose video assets or create bespoke video ads for retail media to attract audiences.
- In-store: Some retail media solutions also enable brands to buy in-store media, such as audio and point of sale digital ads, for holistic omnichannel campaigns.
How to start sizing your retail media investment
With improvements aimed at helping brands tackle the journey from top to bottom, investing into retail media makes sense.
Consider these
- Ride on the synergistic effect of onsite and offsite together: Sponsored products plus display plus offsite deliver better performance and more returns. (Expert tip: 1/3 offsite, 2/3 onsite is a good split to start with.)
- Are other channels declining in performance? Decreasing performance or opaque measurement in these channels could precipitate a shift of funds to retail media.
- Consider a test and learn budget, where bigger changes can lead to bigger improvements. (Expert tip: 10% of your total budget is a standard benchmark for a test and learn budget.)
Scale retail media with Commerce Max. The all-in-one self-service demand-side platform to access leading retail media inventory, brand-safe open internet supply, and closed-loop measurement.
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