Tags containing: "retail media"

Advertising | Revenue | Supporter Spotlight

4 Improved monetization paths for publishers in 2025

December 16, 2024 Jason Kalin, Chief Business Officer – Nativo

In 2024, the publishing and broader digital landscapes faced seismic shifts, many of which were beyond publishers’ control. New privacy regulations, continued identifier loss, and Google’s indecision on third-party cookies have left publishers grappling with uncertainty when it comes to how they translate their audience relationships into meaningful, monetizable ad experiences. That uncertainty will follow the industry into the new year and beyond.

Yet, amid this turbulence, publishers can still chart their own course toward sustainable revenue growth. The key lies in leveraging new tools and strategies to improve monetization while still staying true to editorial missions. Let’s explore four promising opportunities for publishers in 2025.

Tapping into AI for better ad experiences

The implications of generative AI extend well beyond content. New capabilities are also changing the way publishers approach ad experiences. With AI-driven tools, publishers can enable their advertisers to create tailored creative that aligns with individual audience preferences, increasing engagement and commanding higher premiums.

Dynamic ad creative has long been an underused tool. Now, with advancements in AI, publishers have a growing array of options for implementing real-time adjustments to ad content. With OpenAI revamping Sora and other text-to-video AI tools hitting the market, generative AI will increasingly extend into the realm of video ad customization based on the surrounding content or the visitor’s interests.

Native advertising is also poised to benefit significantly from AI. By generating and testing multiple headline variations, optimizing ad copy, and ensuring contextual relevance, AI empowers publishers to elevate native ad performance. These tools not only boost returns for advertisers but also streamline content creation processes, making premium advertising formats more accessible for advertisers and lucrative for publishers.

Using predictive modeling to unlock new revenue

For publishers, any unique signals they are able to draw from their first-party data and pass along to buyers are key to growing revenue. The importance of being able to package this first-party data and pass it into the bidstream to DSPs cannot be overstated.

When it comes to deriving value from first-party data, the increased sophistication of predictive modeling represents a game-changer for publishers seeking more-sustainable revenue growth. Using their valuable first-party data, publishers can create sophisticated models that anticipate user behavior and use the insights from those models to improve both content and ad delivery.

One of predictive modeling’s most compelling applications lies in audience extension. By analyzing their existing audience’s attributes and behaviors, publishers can identify similar audiences beyond their platforms. These audiences can be targeted off-site, with a portion of the resulting ad revenue feeding back to publishers.

Additionally, combining first-party data with contextual and engagement signals allows publishers to predict ad performance with greater precision. This approach enhances the value of inventory by ensuring ads resonate with the intended audience, thereby driving higher yields.

Finally, beyond immediate monetization, predictive modeling helps publishers expand their audience base. By leveraging data to attract and retain new users, publishers not only grow their first-party data assets but also position themselves for longer-term revenue gains.

Building profitable commerce media partnerships

The paths of digital publishing and commerce media are becoming more deeply intertwined as we move into 2025—and that’s a good thing for both sides. Strategic partnerships between publishers and commerce platforms can unlock new revenue streams across the board while enhancing the consumer experience. It’s one of those notorious but rare win-win-win scenarios.

Consider the partnership between Best Buy and CNET, through which curated CNET editorial content complements the Best Buy shopper journey. By integrating expert reviews and recommendations into its platform, Best Buy offers a richer user experience without having to develop content capabilities internally. Meanwhile, advertisers can share ad spaces across Best Buy and CNET, “allowing them to see the impact of their advertising campaigns through a full-funnel, closed-loop media solution.” For CNET, this means new valuable audience insights and ad revenue are being unlocked simultaneously. This isn’t terribly dissimilar from the benefits Yahoo sought to unlock with its partnership with Lowe’s back in 2022.

Publishers are uniquely positioned to provide the educational and inspirational content commerce platforms need to engage customers at the top and mid-funnel stages of their journeys. By joining forces, publishers and commerce platforms can deliver cohesive advertising solutions that cater to performance-driven and branding objectives alike, while also aligning with the needs of their respective audiences.

Unlocking the underleveraged mid-funnel

All three of the previously mentioned opportunities point toward a broader pivot that publishers should be making in 2025: deepening their focus on monetizing the mid-funnel, where consideration is born. The mid-funnel represents a crucial, often-overlooked stage of the customer journey that is a natural fit for publishers looking to derive the greatest possible value from their audiences and content.

By analyzing behavioral patterns and preferences, AI and predictive modeling can empower publishers to target audiences in the mid-funnel—those who are aware of brands but have yet to establish their consideration set—with greater precision. Likewise, commerce media partnerships further enhance mid-funnel monetization opportunities by spotlighting and placing value on publishers’ ability to create engaging, informative content that complements commerce platforms’ transactional focus.

Finally, as an important new piece of the puzzle, emerging mid-funnel measurement tools are not providing unprecedented visibility into mid-funnel performance. These solutions allow publishers to easily quantify the impact of content-driven campaigns on brand consideration, pre- and post-campaign, offering insights that can inform campaign enhancements around this important metric of success.

As publishers navigate the evolving digital landscape in 2025, they’re more in control of their own destinies than it might sometimes seem. By embracing generative AI, predictive modeling, commerce media partnerships, and a deepened focus on the mid-funnel, publishers can unlock sustainable new or improved revenue streams. These strategies not only enhance monetization but also preserve publishers’ ability to produce the vital content that informs and enriches society. In this regard, the above strategies aren’t just opportunities—they’re responsibilities.

Advertising | Revenue | Supporter Spotlight

How publishers can unlock the commerce opportunity

November 29, 2023 Kevin Boyrivent, Director of Product Strategy, Supply Solutions – Criteo

Commerce media—advertising that connects shoppers with products and services throughout the buying journey across both physical and digital touchpoints—is on the rise.

Advertisers are set to spend $125.7 billion with retail media properties and networks in 2023 according to GroupM, growing to represent 15.4% of total ad spend by 2028—even surpassing TV. And that’s just a subset of the larger commerce media opportunity, which McKinsey puts at $1.3 trillion in enterprise value in the US by 2026, which includes $50 billion for publishers.

While it’s not immediately apparent on the surface, this trend spells big opportunity for non-retailer media owners, too. But what exactly is that commerce opportunity, and how can publishers start to take advantage of this shift in media buying?

The three strategies below—all being pursued by Commerce Media early adopters in the publisher space—highlight a potential path forward.

Strategy #1: Adopt a funnel mentality

Commerce media fuses data intelligence with digital advertising to reach consumers across their shopping journeys. As experts in attracting audiences, aggregating their attention, and securing their trust, publishers play a meaningful role in this process. Their properties represent critical stopping points at every stage of a buyer’s path to purchase. To capitalize on this opportunity, publishers need to start applying a funnel mentality to content planning and creation.

At the top of the funnel is product discovery—where consumers first learn about a new product or service offering. “Editor Finds” and “Today’s top picks” work well at driving upper funnel awareness, and because you already have your audience’s trust—they are a natural accelerator for advancing readers to the next funnel stage: consideration.

In the consideration stage, consumers are deciding whether they want to make a purchase, or, if they have already decided, weighing their options about which product to go with. Product reviews, comparisons, and unboxings are all effective at influencing consumers during this stage, providing them with more in-depth information to shape their decision-making and potentially even pushing them further down the funnel, to the purchase stage.

At this stage, highlighting time-based deals (e.g., “Best Prime Day Deals”) can create urgency for customers, reminding them about products they have had their eye on, but had not yet added to their cart. Similarly, bestowing credible and high-praise designations to products (e.g., “Our favorite Smart TV of 2023”) can give unsure shoppers the confidence they need to advance beyond window gazing to making a purchase.

Making sure you have content for all stages of the funnel is critical to building trust with users and attracting the audiences that advertisers and retailers are looking to engage. Many publishers also use this content (and in some cases build it purposefully) to power affiliate marketing programs, where they receive commissions from retailer partners for the sales generated from the traffic being sent to the retailer’s site.

Strategy #2: Convert commerce content into commerce data

As you build your commerce content library and start to attract more visitors, you will notice you are simultaneously generating a tremendous amount of incredibly rich commerce data. This data is collected based upon important buying signals such as which visitors are reading what content, clicking on which affiliate links, hunting for deals and more.

With the right collection and management tools in place, this data forms the seed of a first-party commerce data strategy. You can then segment this data in all sorts of ways to create value for advertisers. For example, users reading multiple reviews of different smart TVs are highly likely in-market for that product category. Users who consistently read content about Smart TVs, gaming consoles, and green autos are likely “high-tech enthusiasts,” as well as “high price point shoppers.”

Knowing how commerce advertisers want to buy should inform how you shape your data strategy. In addition to wanting granular product category interest and in-market data, they are also always on the lookout for reliable data on life events (e.g., “new homeowners,” “new baby,” “recent retiree); brand preferences (e.g., Nike loyalists); purchase frequency; and shopping habits (e.g., deal-based shopper, frequent online buyer).

Such granular first-party audience signals collected on the publisher side are already considered more accurate and relevant than similar third-party data and will only become more in-demand with the deprecation of third-party cookies. Publishers with direct sales teams should be leveraging this data for deals-based selling as well as offsite reach plays, leveraging audience extension programs and tools.

Strategy #3: Think like a retailer

Once you have started to invest serious energy and resources into leveraging your unique editorial voice and trusted expertise to create high-value commerce content, you will begin to attract more visitors in a purchase mindset. Combine that with a growing and increasingly rich commerce data asset, and, in some cases, it may make sense to start acting like a retailer in your own right.

For some publishers, that mean building editorial-powered storefronts off your main digital properties. There, you can aggregate top editor picks, fan favorites, and best sellers for direct purchase by your site visitors. Others can embed relevant links within their commerce content and leverage their growing commerce data insights to drive in-market audiences to their storefront to create a flywheel effect.

Pushing that concept even further, some publishers might start to embed storefronts at the product level within individual article pages, newsletter communications, or social posts, which brings one-click purchase possibilities to consumers at every touchpoint and stage of the funnel.

Publishers who command serious trust from their readers may decide to parlay their editorial influence into curatorial prowess, in the form of product recommendation and discovery subscription services. Birchbox might have invented this category, but media owners are its rightful heir. They can leverage their trusted editorial perspective to hand-pick and distribute innovative, new, and best-of-breed products to consumers constantly in search of their next obsession. This is as applicable to beauty products as it is to kitchen utensils, books, video games, cooking spices, socks, and fragrances.

Publishers have been merchandisers for a long time, even if they did not know what that function meant in a retail context. Thanks to an acceleration in digital shopping comfort and technology, now they can be both influencer and retailer.

The commerce opportunity

For publishers looking to bridge the gap between media and commerce, building a commerce strategy that spans content creation, data collection and segmentation, product merchandising, retailer engagement, and user experience, will be key.

The relationship between media and commerce has historically lacked a clear strategic connection. Viewing commerce in isolation neglects the huge synergistic potential of content, data, and user experiences. This limitation has traditionally prevented publishers from securing a strong footing in this segment of the digital advertising ecosystem—but things are changing.

The new chapter ahead presents a wealth of opportunities for publishers. By focusing on the convergence of content and experiences through a commerce lens, publishers can forge meaningful and long-lasting relationships with advertisers and retailers alike.

Advertising | Featured Post | Revenue

Retail media: Friend, foe, or something in between?

August 31, 2023 Theresa Cramer – Independent Journalist

Brands have paid for premium product placement in stores as long as there have been stores. Whether it’s book publishers paying to get their books turned face-out on the shelves or your favorite cookie company splurging for an end-cap display in the supermarket, companies are used to paying for placement. But now, like so much else, that trend has gone digital.

Retail media networks [RMNs] are not exactly new, but they are growing in popularity, especially with U.S. advertisers, where interest has traditionally lagged. As more shoppers move from brick-and-mortar stores to e-commerce, retailers are looking for new ways to engage buyers and advertisers on the web. That’s led to retailers becoming their own ad networks, charging advertisers to promote products on their sites — and this has the potential to impact revenue for media companies.

Sizing the retail media market

According to Bain & Company, “Retail media is expected to be a $61 billion business by 2024—double its 2021 numbers.” This increased spending is indicative of an overall shift toward digital ad spending, says Bain: “In 2019, about 50% of ad spending went to digital campaigns, and by the close of 2021, about two-thirds of US advertising was digital.” But that’s not the end of the story.

While digital ad spending in the U.S. has been on the rise for years, retail media has not traditionally been a big draw. In fact, historically, retail media advertising has been a much bigger player in China. Now, however, interest is growing stateside. Not only is it growing faster than China’s spending, but it’s got more room to grow, according to Insider Intelligence.

There are a few factors at play here, says Li Lu, Research Director at Digiday Media. First, Lu says, retail media has become a more robust channel, and companies like Omnicom make it easier to get more information as retailers build out their networks. But they say there is another factor at work here: the loss of the third-party cookie.

Digital publishers know the story well: As third-party cookies go the way of the Dodo and the web becomes a more privacy-conscious place, first-party data is imperative. And RMNs have first-party data in spades. Retailers like Amazon, Walmart, and Target are close to the customer at the point of checkout and know the kinds of products an individual user is searching for and often what they may have bought in the past. This makes it easier for advertisers to target users based on their personal preferences and positions retailers as excellent partners when it comes to driving actual sales.

In fact, Lu says, the KPIs are really what’s driving a lot of this change. Retail media traffics in actual sales, while on social media, success is often measured in impressions or clicks. “You’re so close to the customer at their checkout point,” Lu says of retail media networks. People there are “shopping with a purpose in mind.” Naturally, they are further up the funnel and ready to make a purchase.

It’s also important to note that revenue from RMNs is a completely new and discrete income stream, not just a replacement for flagging in-store opportunities. McKinsey reports, “Our research suggests that more than 80 percent of spend flowing into retail media networks is incremental and comes from all sources, including net new spend and reinvestment of brand and performance budgets. So for retailers, RMNs provide an incremental source of high-margin revenue, and substitution for shopper or co-op marketing can be managed.”

Who is leading the retail media pack?

Of course, not all online retailers are created equal — and ad spend can tell us a lot about who the leaders are. Lu says that Digiday’s research found “Amazon was the most popular media retail partner.” A whopping 76% of respondents said they partnered with Amazon, and that Walmart and Target came in next, with more than 30% saying they partnered with these retail giants. Other research backs this up.

Still, Amazon’s dominance is sure to wane eventually, according to Lu. As other retail media networks improve their search capabilities — search is currently one of Amazon’s biggest benefits over other options — and new competitors emerge, advertisers are bound to shift their spending priorities. In fact, delivery apps like Instacart are already becoming a destination for some brands — and are even driving some of the growth in a post-pandemic world where people have gotten used to shopping online, even for things like groceries.

Increasingly, price is also a problem. Lu says Digiday’s research revealed that the cost of retail media placements was a concern. From CPC models to actual conversions, they are all getting pricier. Lu says, “Advertisers may start diversifying if it gets too expensive and can’t scale.”

Content and commerce is the way forward

Publishers may have yet another competitor to deal with when it comes to vying for dwindling ad dollars, but hope is not lost. On top of the price concerns that Lu mentioned, ANA found that “A major concern expressed repeatedly throughout the study was that although [retail media networks] are being credited for driving brand sales, they have not yet convinced advertisers of their ability to drive brand growth. We found that 67 percent of our respondents cited ‘to drive conversion’ as their most important objective with RMNs, while only 7 percent cited ‘to drive awareness.’” This presents an opportunity for publishers.

While RMNs may have an advantage when it comes to down-funnel actions, publishers can still leverage their first-party data to help drive awareness. But publishers also have some potential to become a commerce-driven partner for brand advertisers as well.

Last December, just after Black Friday and Cyber Monday, Digiday reported, “Hearst Magazines’ total product sales increased by 50% year-over-year” and “Foundry’s U.S.-based brands saw a 57% increase year-over-year in the total dollar amount they generated for retailers through sales.”

Embracing commerce media may just be publishers’ best bet to help win some of those RMN dollars; while retailers may have an advantage for funneling consumers who are already close to purchasing toward advertisers, publishers may be able to reach people who are still contemplating a purchase. From review seekers to people looking for gift ideas to browsers who are open to discovering new products, media companies can compete if they are willing to embrace new, commerce-driven strategies.

Advertising | Featured Post

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.

Perspectives | Revenue | Supporter Spotlight

How publishers can ride the retail media wave

July 11, 2022 Gavin Dunaway, Product Marketing – The Media Trust

It ain’t hype anymore—retail media is real, and it is spectacular. eMarketer calls retail media the “third wave of digital advertising,” with U.S. ad spend expected to hit $41 billion in 2022. Boston Consulting Group predicts retail media will account for 25% of digital media spending by 2026.

The channel has arguably revived Criteo’s fortunes as the third-party cookie dwindles into irrelevance. Walmart, Target, Kroger, Best Buy, Home Depot, Gap, CVS—it seems like every other week another major retailer carts out a brand-spanking-new retail media network.

All that ad spend sure sounds great for retailers. But what about publishers? Are retailers siphoning spend away from the already beleaguered publisher set?

Quite the opposite, in fact. The retail media revolution is helping line the pockets of premium publishers.

Cautious journey to digital advertising

In a nutshell, retail media is when retailers offer advertising access to their customers on-property (or off-property). It’s not a new concept by any means, but it’s been mainly relegated to advertiser campaigns in actual brick and mortar stores. (Think about specialty brand displays at department stores or supermarkets.)

While retailers’ online traffic grew with the rise of ecommerce, many were reluctant to plunge into digital advertising because of their hyper focus on user experience. A 2006 Amazon study famously found that every 100ms in extra load time cost 1% in sales; a 2017 Akamai followup suggested that every 100ms of latency cut conversions by 7%.

Unfortunately, digital advertising has a bad reputation for latency, as well as other factors that ruin user experience: gauche creative, code that breaks a page, open doors to device-infecting malware, etc. All those issues can arise before programmatic enters the picture. With bad user experience being detrimental to online sales, digital advertising simply wasn’t worth the risk for most retailers.

Yet they no doubt had their eye on Amazon’s flourishing ad business. There should be an asterisk by eMarketer’s $41 billion in 2022 US ad spend figure: about 78% of that goes to Amazon. However, the $9 billion left over is nothing to sneeze at, and you may have noticed Amazon does a fair deal of third-party media buying.

U.S. retail mainstays like Walmart, Target, and Kroger have been ramping up their digital retail media operations for the last five years. And then came the Covid pandemic: Suddenly consumers weren’t in stores; they were flooding websites and apps and racking up online orders. The opportunity to monetize this traffic was just too good to pass up, especially as major retail brands had proven that integrating ads wouldn’t necessarily harm user experience.

Advertiser appeal

Retailers have the kind of high-quality audience data that make advertisers swoon. Through tools like loyalty programs, many retailers boast comprehensive customer profiles that can be used for precise targeting. Retailers are stocking up on data scientists to drive customer insights and behavioral trends, and for many advertisers measurement goes all the way to point of sale.

In addition, retail sites and apps are a data oasis in the increasingly untargetable mobile ecosystem. The presence of emails and other deterministic identifiers make retailers ideal partners for identity solutions like LiveRamp and LiveIntent in finding audiences on third-party properties.

On-property advertising is really only the jump-off point. The huge gains are in audience extension, or when retailers start finding their customers on third-party sites and apps.

Quality quest

That’s where premium publishers come in. When asked at the IAB Annual Leadership Meeting in January if she felt that retail media networks were a threat to revenue, BET EVP and CMO Kimberly Evans Paige replied, no—we’re partnering with them.

Advertising revenue is incremental for retailers. Therefore, advertising must be accretive to the core revenue business. On-property, this means high-quality, brand-safe ads that don’t cause latency. Landing pages can’t send customers to competitor sites and only authorized vendors can be allowed through the pipes, lest data leakage become a concern.

Going off-property is not just extending the audience, but also the retailer brand. During an AdMonsters Ops session in June, Christine Foster, Vice President, Media Operations at Kroger mentioned that a great deal of their offsite ads are actually co-branded. So, retailers with big advertiser budgets in tow may be reticent about appearing adjacent low-quality ads, scam ads, or ads with questionable content, which could range from gambling to marijuana to even crypto.

When retailers buy off property, they need high-quality inventory in well-lit spaces. To ensure brand safety—both their own and advertisers’—retailers are pursuing guaranteed direct deals with premium publishers as well as private marketplace arrangements. Certainly, major publisher brands with massive traffic are already benefiting. But there’s definitely room out there for niche publishers with ties to specialized retailers.

Lifting all boats

The excitement around retail media stems from the fact it’s beneficial for just about every party in the digital media ecosystem: Advertisers reach key audiences with confidence; ad tech companies like Criteo and CitrusAds develop new business; publishers gain revenue; and of course retailers are able to further monetize their customer data.

Publishers of all sizes need to investigate retail media opportunities. However, they also need to understand that their ability to rake in revenue here greatly depends on the quality of their environments.