Tags containing: "affiliate"

Retail media: the hot trend media execs can’t afford to ignore

February 2, 2023 Damian Radcliffe, Carolyn S. Chambers Professor in Journalism – University of Oregon

In the rapidly changing landscape of digital advertising, retail media is fast emerging as a powerful new force.

According to GroupM, global advertising revenues directed to retail companies already accounts for 18% of total digital advertising and 11% of total advertising spend. “We expect retail media advertising to increase roughly 60% by 2027,” GroupM’s 2022 E-Commerce & Retail Media Forecast noted back in September. Globally, that will make it a $168 billion market.

Another firm, Boston Consulting Group (BCG), estimates that by 2026, retail media will account for 25% of digital media spending.

These are big numbers. So, given media companies continued reliance on advertising revenue, any emerging player in this space is one to watch. Retail media is no exception.

Here’s what you need to know about its growth, potential impact on digital ad revenues, and what publishers stand to learn from this booming market.

What is retail media?

As Zenith explains, retail media refers to display and search advertising that appears on e-commerce websites and/or the online platforms of brick-and-mortar retailers.

Retail media networks (RMNs), such as those operated by Amazon, Walmart and Shopify, offer multiple opportunities to deliver targeted advertising. They also provide the means to deliver other forms of sponsored content to consumers, both on their own sites and increasingly off-site, too.

Why is it growing?

Retail media isn’t new. But it is in its ascendancy. GroupM estimates that global advertising revenue for retail-based companies was worth $88 billion in 2021, growing to $101 billion in 2022.

This uptake, eMarketer says, can be attributed to “the death of the third-party cookie–as well as retailers’ ability to leverage their first-party data on customers.”

Alongside this, we also must consider the continued impact of the pandemic in shifting consumer behaviors and driving more people to shop online. As e-commerce has grown, so has the desire of brands to be in spaces where we are increasingly spending more time. And money.

Not surprisingly, brands and manufacturers are using retail media to reach customers at the point of purchase, or when they are most likely to make a purchase decision. That’s often on e-commerce sites and on online shopping channels.

Threats

There are several clear challenges here for media companies. The first lies in the worry that retail media will further contribute to the cannibalization of publisher’s advertising revenues. As advertising markets continue to grow, there’s a very real concern that publishers will not get a bigger slice of this pie, as monies flow to other platforms and providers.

For agencies and brands, the volume of first-party data that retail media platforms have access to makes them highly appealing. It also makes them potentially difficult to compete with.

Alongside this, these platforms also offer the opportunity for both highly targeted ads and advertisements that may trigger trackable purchase decisions there and then.

Of course, publishers offer this functionality too, often packaged through – and around – compelling content. This can also inspire purchases, but the journey to transaction might be more complicated, or less immediate. For example, online shopping through an affiliate partnership might take you offsite to complete a purchase. In contrast, seamless, frictionless, transactions are the bread and butter of traditional e-commerce sites. Unlike on many publisher sites, transactions can be completed within their walled garden, without the need to visit a partner’s site.

New data from the Reuters Institute notes that nearly a quarter of media leaders in 53 countries around the world described e-commerce as an “important,” or “very important,” revenue stream for their company in the year ahead. As these media companies seek to grow their e-commerce revenues, the UX and targeting that retail media networks can potentially provide, may offer some stiff competition to these ambitions.

Lastly, we should also note that retailer’s media activity is not just about advertising. Some retailers are also investing in traditional content too. This includes time-honored staples such as in-store magazines through to live shopping experiences, developing relationships with influencers, and running their own in-house media companies, like Target’s Roundel.

*Image: Screengrab from a* *presentation* *by New York performance marketing firm* *Tinuiti*

Opportunities

As eMarketer explains, “the most important benefit that retail media offers brands is a closer relationship with retailers, followed by creative services, access to owned and operated media/properties, first-party sales data, and personalization opportunities through creative.”

That makes for a compelling case for many brands and advertisers. But, of course, some of those characteristics are applicable to media companies too. Moreover, retail media isn’t a sector that publishers are locked out of. Far from it. There are multiple possibilities for media companies to tap into this market.

For example, Grocery Dive notes that retailers are increasingly looking to add shoppable video, live streams, and other multimedia content on their sites. Some do this in-house and have large creative teams. However, this increasing demand for content presents opportunities for creative and publishing partners. They might range from start-ups like Firework – a video commerce solutions provider – through to the content studios at large publishers such as The New York Times’ T Brand Studios and Bloomberg Media Studios.

Yahoo! meanwhile has created a tech stack to support RMN’s run by Lowe’s and Marriott, which inc l udes enabling ad buyers to use anonymized data to target customers using Marriott’s app and websites. In the future, that will come to TVs in their hotel rooms too. It will be interesting to see if additional content layers – such as local news, weather and sports – will be added to these spaces in the future, so that consumers are served content related to where they are staying from trusted publishing partners.

There are also opportunities to double-down on some of the partnerships between retailers and media brands. Walmart has already partnered with BuzzFeed to offer Tasty branded kitchenware and shoppable recipes. Inspired by a recipe idea, users could have the items needed to create it added to an online basket, picking up the items later in the store or having them delivered to their homes.

But given that retailers are also offering food inspiration on their own sites, that model could be flipped on its head in which case, RMNs would send traffic to publishers’ sites (e.g. NYT Cooking) to continue their journey.

*Thanksgiving-themed shoppable videos on Safeway’s website,* *via* *Grocery Dive*

Lastly, it’s worth noting that some retail media providers offer offsite, often co-branded ads. This means that some of RMN’s ad dollars may still flow towards media companies. In fact, they already are, according to Gavin Dunaway from The Media Trust.

As he explained to DCN readers last summer, “When retailers buy off property, they need high-quality inventory in well-lit spaces.” That might mean marquee publishers with large audiences, or more targeted niche outlets. Within that, the ability to offer contextual ads, and to do so in a less crowded space than a typical online shopping space, is potentially very appealing.

Moreover, given concerns about brand safety, quality publishers can also be a safer bet for retailers and their advertisers, than some of the vagaries of the programmatic marketplace. That too makes them attractive for RMNs and their advertisers.

Looking ahead

The rise of retail media represents a significant shift in the advertising landscape and one that publishers cannot afford to ignore.

Retail media is expected to exceed $50 billion in the United States in 2023 alone. That represents 20% of total U.S. digital ad spend, AdWeek reports. It is daunting to face another major competitor in the digital ad marketplace. However, it’s an area that publishers should consider exploring and learning from. With companies like Amazon and Walmart already generating substantial advertising revenue, media companies should be paying close attention to the strategies of these companies, if they are not already.

As part of this, trends such as shoppable videos and the intersection of retail media and connected TV (another advertising channel that is also growing rapidly) are worth watching.

And, if nothing else, the emergence of retail media highlights the importance of a strong first-party data strategy, and the potential power it holds with advertisers and consumers alike. This once again reinforces the need for publishers to ensure that they do not get left behind when we move to a cookie-less world.

Areas that retail media are already majoring in – first-party data, shoppable video, sponsored content, and contextual ads designed to spark purchases – should be reviewed with this new competition in mind. There is also much to learn from their efforts in these arenas, as well as opportunities to partner with RMNs on everything from e-commerce strategies to ad inventory.

As the retail media market continues to expand and evolve, it looks set to play a growing role in the advertising industry and in shaping consumer habits. Subsequently, it’s a space that publishers must pay attention to by continuing to revisit and check out. After all, just because you’ve seen one retail media network, it doesn’t mean seen the mall.

Advertising | Perspectives | Supporter Spotlight

Holiday blues? 7 tips to boost affiliate and advertising revenue

November 21, 2022 Rebecca Cole, Director of Content and Communications – Sovrn

We’re in the busiest — and traditionally, the most profitable — weeks of the year for retailers and publishers alike. And while we’ve seen plenty of unusual conditions over the past few years, the 2022 shopping season is creating a whole new set of challenges.

Publishers can typically rely on strategic diversification to broaden their earning opportunities and mitigate the effects of economic uncertainty. However, the current market conditions are wreaking havoc on two of the most common income streams for publishers: programmatic advertising and affiliate marketing.

Advertising: Our research found year-over-year programmatic ad rates were down across the board in Q3 2022. In the US, CPMs were down 15%-20% versus 2021. The drop was even sharper in the UK, where the death of Queen Elizabeth in September prompted many brands to pause their ad campaigns.

Affiliate: During the same period, affiliate conversion rates in the U.S. were 25% lower than 2021 and a full 50% below 2020 levels. Earnings per click were similarly affected, as inflation continues to shrink consumer wallets.

7 tips to maximize revenue through year-end

Despite these challenging conditions, there’s still a wealth of opportunity for smart publishers this holiday season. After all, Deloitte is projecting a 4%-6% increase in holiday retail sales for 2022.

The keys to success this year? Start by understanding the current market conditions, then optimize your advertising and commerce efforts to help capture every revenue opportunity.

Here are seven tips to get you started:

1. Embrace the extended shopping season

Don’t bank on Black Friday alone to capture the best affiliate revenue opportunities. Nearly three quarters of consumers believe the best deals will come throughout November; Walmart’s month-long shopping event is a good example. Additionally, Adobe predicts discounts will continue through year-end — so keep your content fresh throughout the extended shopping season to bring your readers back again and again.

2. Leverage price floors in programmatic bidding

To maximize the value of your ad inventory, you need to optimize your pricing strategy. But first, you must understand the factors that buyers use to shape their bidding strategy — including ad attributes, page attributes, and user attributes. While each individual buyer will weigh these factors differently, knowing which variables they consider will help you set an appropriate price floor.

3. Focus on promotions

Discounts are expected to hit record highs in 2022 as retailers attempt to offload surplus inventory and attract consumer spending. With brands deliberately lowering prices and consumers looking for deals, you’ll likely find more affiliate success by offering popular products at reduced prices rather than specialty items or limited-edition merchandise.

4. Maintain high ad quality scores

Don’t dilute ad quality for the sake of increased frequency.Adding more ad units to the page or employing aggressive refresh practices will impact the rates you can earn, both short-term and long-term, as buyers will price down your inventory. Even worse, you could find your side blacklisted from future campaigns.

5. Test different commerce strategies

With constantly changing market conditions, it’s hard to predict what will resonate with readers this season. Experiment with different content strategies and be prepared to pivot quickly when you find something that works. Test a variety of content elements, including link placement, product photos, and content length. And give your audience convenient, flexible ways to shop — like shopping galleries and price comparisons — to make holiday buying as painless as possible.

6. Grow ad deal revenue

If you have existing relationships with ad buyers, leverage them to maximize revenue. Ask demand partners which audience segments, context, and inventory most appeal to them, and then package up deals to hit their objectives. If you don’t have direct buyer relationships, talk to your SSP partners. Make sure they add you to all applicable deals based on either their own measurement criteria or signals you can send from your site.

7. Keep up with ever-changing affiliate deals

This year, merchants will be pulling out all the stops to entice consumers to buy, so deals will change often during this critical time. Make sure you have up-to-date information on all the latest promotions, deals, and coupons to optimize your affiliate efforts this holiday season.

The takeaway

Whether your monetization strategy is focused on advertising, affiliate marketing, or some combination of tactics, the 2022 shopping season offers plenty of opportunities — if you know where to look. Stay nimble and keep on eye on the data to maximize your revenue opportunities. Here’s to a successful holiday season and a profitable New Year!

About the Author

Rebecca Cole is Vice President of Marketing for Sovrn, a publishing technology platform that provides advertising tools, technologies, and services for content creators to build their businesses, remain independent, and thrive on the Open Web. Rebecca has more than two decades of experience driving increased attention through purpose-driven content. She has held communications positions in tech, energy, and consumer brands and was a journalist and editor. Rebecca has an undergraduate degree from The University of Iowa and a master’s degree in journalism from The University of Colorado Boulder.

Audience trust drives Wirecutter’s affiliate strategy

June 30, 2022 Carol Brzozowski – Independent Journalist

Leilani Han
Executive Director of Commerce, Wirecutter

Affiliate marketing is a dynamic endeavor, with myriad factors driving strategic decisions on how to sustain a healthy revenue stream while maintaining consumer trust.

In this Q & A, Leilani Han, Wirecutter’s executive director of commerce, shares her insights on strategies driving Wirecutter’s success.

DCN: There appears to be a renewed or intensified interest in affiliate marketing as a revenue diversification strategy. How do you see it?

Han: There’s always been a keen interest in affiliate marketing, but the space has certainly evolved with who was investing in the channel over the last 10 years. In our space, we’ve seen many media companies realize this was a smart strategy for engaging with your audience more deeply while providing a service to them that could evolve into a revenue stream.

This coincided with an evolution in the consumers’ relationship with their shopping journey. Affiliate has the unique capabilities of encompassing all channels so that it fits in perfectly with social media, the internet, and being able to provide greater value to people’s lives.

Wirecutter has been at the forefront of this trend, as we helped to prove to others this model could scale successfully. Today, millions of readers turn to Wirecutter’s advice for inspiration and making smarter shopping decisions.

DCN: What is your company’s approach to affiliate marketing, content/commerce mix, video, social?

Han: Our recommendations – and affiliate marketing – have always been at the core of our business since its 2011 launch. While we’re technically classified as commerce content, we don’t separate our work into content or commerce. We are simply focused on providing the best service journalism to our readers.

Compared to competitors, we are not in the business of worshiping products. We are in the business of helping users find out what is worth paying for and what is the best product for the price. We employ a journalistic, methodical process to uncover the right information.

We make a recommendation – not just a review. We communicate in a way that is relatable and direct – not academic. Wirecutter cuts the time and stress of shopping by providing direct and actionable buying advice.

We knew if we took care of the reader experience and prioritized their trust in us above all else, the monetization follows. That’s an indication we’re hitting the mark on being helpful to them. That’s a balance we have to strike to serve our readers and our ability to monetize. Our team does a great job of finding that balance.

As digital innovation has evolved over the years, so have the channels through which we can reach our audiences. We view video and social media as another way to introduce new readers to our advice while reaching them in the moment in the spaces where they’re organically spending their time.

DCN: What are the driving factors underscoring where to put the efforts?

Han: Our core mission is to serve our readers with helpful advice and earn their trust. Our recommendations are at the center of our efforts. We try to be thoughtful about how we engage with our audiences and whether we’re successful in meeting their needs.

We aim to be as impartial as possible from any business interests. Our approach is being transparent through every point of the user experience.

The affiliate model aligns well with our reader service mission because we do not earn commissions if we are not successful in earning trust and making the right recommendations. A successful affiliate business is a clear indicator we are doing right by the reader. The data helps inform us whether we’re meeting the mark on what readers need advice on and what to buy.

Learn more about the Wirecutter’s policy.

DCN: How do you mitigate the inherent challenges?

Han: One of the biggest challenges at the beginning is figuring out what resonates with your readers, how you can gain traction with them to return and click through to purchase, and then scaling that in a way that honors your service for your readers. While affiliate marketing can be a very meaningful revenue stream, it is not as turnkey as some other channels. It requires time, effort, and a lot of testing to eventually find the sweet spot of your editorial voice and how to monetize effectively.

Another challenge is in how to strike the right balance between sources that are key drivers of your business and ensuring you’re diversified enough to withstand changes that are outside of your control.

One example of this for Wirecutter is organic search and the ever-changing algorithms that can impact how much traffic is coming to your site.

Last fall, we launched a subscription product because we know that our journalism is worth paying for and we are focused on deepening our relationship with our readers. This allows us to reach these readers directly and lessen our reliance on other traffic sources to bring readers back to Wirecutter. So far, we are seeing positive results that confirm our belief that Wirecutter’s service journalism is a meaningful resource in people’s lives.

Despite our priority to grow our subscriber base, we are continuing to focus on our affiliate business as well. Our affiliate business model remains unchanged. If you click a link on our site and buy something we recommend, we may receive a commission.

As always, our writers and editors are never made aware of any business relationships we have with retailers. We’ll continue to make picks independent of all business and financial interests. Those things will never change: helping readers make the right buying decisions will always come first.

The change happening with browser updates and privacy regulations is also top of mind for many publishers and what the deprecation of cookies means for the industry. Many of the major affiliate networks have been addressing this by updating their tracking technology to help mitigate any losses from these changes, while Wirecutter has proprietary technology that has also helped us to mitigate any loss.