Retail media has become a marketing staple for B2B2C companies. But what exactly is it and how does it fit into the marketing mix? Kiki-Adina Husmann is sharing her opinion on the topic.

Kiki, before we start, could you explain what Retail Media is?

As the name suggests, it is media that uses ad inventory from a retailer's own platform. A typical example is “Sponsored Product” search ads or onsite and offsite banners you purchase from, for example, Amazon. The big value proposition of this type of media is that it allows you to leverage a retailer's own 1st party data to target in-market shoppers.

Is Retail Media a niche?

The Retail Media landscape is already very developed in the United States but Europe is experiencing rapid growth in this domain at the moment. It is most dominant in the Beauty, Fashion, and Electronics industry and equals roughly the market size of print ads today. That may not sound too impressive at first, but we already know it will accelerate drastically over the next years. Retailers like Media/Saturn, Otto, eBay, and many others keep expanding their own Retail Media offerings and players like Criteo help smaller players enter the space quickly as well. 1st party shopper data is also becoming an even more crucial marketing tool as 3rd party cookies disappear.

Which marketing funnel stages can you cover best with Retail media?

Without a doubt lower-funnel consideration and conversion because shoppers visiting retailer websites already show a high buying intent. Sponsored product ads are by far the most popular type of retail media and yield very high return on ad spend. However, awareness formats are also slowly gaining traction as retailers introduce ad innovations incl. video formats. But if your objective is to deliver an authentic brand message, a commercial retailer environment may not be a marketer’s first choice compared to own channels.

Why is Retail media so effective?

No one knows their shoppers better than retailers who have tons of data. It allows them to target the right consumer with the right product at the right time. They generate huge amounts of traffic every day which gives advertisers significant reach and plenty of opportunities to create custom segments. Historical shopper behavior data allows them to cross- and upsell and use competitor insights to their advantage. Many retailers also have a wide array of interesting ad inventory opportunities ranging from CRM to display, incl. social media, to app notifications, and so forth.

Can Retail media stand alone, or does it need support from other digital marketing channels?

It should definitely be used as a complimentary digital marketing channel. While it is great for lower-funnel conversion, it is not ideal for branding. Retailer audiences cannot substitute your own channels and 1st party data, which is where you nurture brand lovers and loyalty. Also, the Retail Media market is still developing and EU retailers are dragging behind the speed of innovation we see in the US.

Aren’t you worried to overpay the platform, which earns money twice?

Yes and no. Yes, because many retailers are overcharging if we compare benchmarks for CPMs and CPCs across other platforms like social media or Google. Pricing also wildly differs across retailers. However, Amazon has the most advanced ad serving platform and performance-driven pricing model, so I expect newcomers to be forced to get more in line with Amazon over time. And no (I’m not worried to overpay) because frankly, I am happy to invest my budget as long as I see such great returns driven by top-notch targeting opportunities. Of course this holds especially true for B2B2C companies that lack own 1st party shopper data and either do not have a DTC shop at all or heavily rely on retail distributors. Last but not least, if you don't play the retail media game, you may soon find yourself in a sorry situation. Chances are that other players will capture your share of search and snag your audiences away right at the point of sale. It's a little bit like the stick and the carrot – advertisers will be forced to invest in the long run and bigger companies with higher brand budgets will certainly hold the advantage.

About the expert:

Kiki-Adina Husmann is a marketing professional with many years of experience in digital marketing & eCommerce in the FMCG and toy industries. Kiki, thank you so much for your insights. To our community – feel free to connect with Kiki on LinkedIn!