Retail Media is Having a Data-Fueled Renaissance
Retailers are leveraging first-party data to deliver precision targeting and increase sales, while taking an increasingly large slice of the proverbial advertising revenue pie.
The digital advertising landscape is changing quickly.
As traditional DSPs like MediaMath collapse, Yahoo shutters their SSP, and advertisers continue to experience brand safety uncertainty. Spreading across social media channels like X, serving advertising content adjacent to pro-nazi content, and YouTube serving ads against content designed for children, retail media is having a renaissance!
What is retail media, anyway?
Retail media is the convergence of retailing and advertising. As retailing behemoth Amazon puts it, retail media “allows retailers to sell ad space on their digital channels to third-party brands[, which] can help brands reach a captive audience and build their digital marketing strategies.” But Amazon, a company known for its technological prowess and affinity for putting advertising on its myriad family of devices and services, isn’t alone in its thinking.
From Walmart to Target to Kroger and beyond, retailers are flexing the power of their brick-and-mortar and online audiences to become serious-players in digital marketing. And they are well positioned to do so, given the treasure trove of consumer data on which they’ve built their loyalty programs and e-commerce businesses.
Show me the money!
In 2022, Walmart Connect, the retail giant’s advertising division, generated $2.7 billion in revenue, up 41% year over year in Q4. While the number is impressive for anyone in the advertising industry not named Google or Meta, the company still sees tremendous growth potential, given that the $2.7 billion accounted for less than 1% of the company’s total annual revenue and that, globally, retail media is forecasted to reach over $120 billion in revenue in 2023 alone.
Meanwhile, Kroger, the number one grocery retailer in the United States by store count (2,700+ stores across 35 states), continues to make inroads in retail advertising through their Kroger Precision Marketing platform, leveraging the company’s loyalty card program data to help advertisers reach key audiences while reducing media waste.
The company has also recently launched a self-service media buying platform built in-house to enable easier campaign activation by advertisers.
“Retailers are creating the consumer-first future of advertising,” said Cara Pratt, Senior Vice President of Kroger Precision Marketing. “We know we need to remove friction from the retail media buying process. Building a new foundation of integrated technology empowers brands and agencies to maximize retail media’s potential. Together, we will deliver a more convenient, personalized, and inspirational shopping experience.”
Kroger’s retail advertising business will likely bolster by the pending merger with Albertsons, which operates ~2,300 stores nationwide and in markets such as Florida, where Kroger currently lacks a presence.
While sales slumps continue across the retail sector, companies like Target find that Roundel, the company’s in-house media company, is a bright spot of continued growth and profitability: “Year over year, it’s been a source of profitable growth for Target.”
It’s all about the data
And like their competitors, Target’s value proposition is all about data.
As marketers adapt to the loss of the remarketing cookie and as state governments clamp down on the wild, wild west free for all world where consumer privacy takes a backseat to advertisers, there’s never been a better time for retailers to prioritize investing in first-party data about their shoppers’ habits and preferences. After all, the more a retailer knows about their customers, the more effective they can be in serving up precisely targeted and relevant ads to drive sales on behalf of their advertisers — and diversifying their revenue streams simultaneously.
And retail media’s explosive growth isn’t showing any signs of slowing down. Instead, industry experts posit that retail media will overtake social media as the second-largest digital advertising channel in the world by 2028.
—
I’m Andrew Becks, a digital marketing and advertising entrepreneur and executive, co-founder of 301 Digital Media, and a member of the board of directors of TinyWow. The opinions expressed in this are mine and mine alone. Connect with me on LinkedIn.
