Demystifying the Retail Opportunity

Matt Conlin, Liquid CCO and founder, responsible for sales, marketing and partnerships. EY Entrepreneur of the Year, DMN 40 Under 40 2018.

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Trade media has been described as a “transformational advertising force” expected to generate more than $1.3 trillion in business value in the U.S. alone by 2026. Like any significant change in advertising, this latest wave has introduced new buzzwords.

The terms “trade media” and “retail media” are often used interchangeably, but at my agency, they represent two distinct marketing channels with unique capabilities, players, and strategies. To understand the nuances and possibilities of each, it’s necessary to first examine their origins.

Evolving Shopping Habits and the Power of Customer Data

For nearly two decades, consumers have been changing their online shopping behaviors. This trend has accelerated significantly during the pandemic and continues to impact the relationship between retailers and their customers. Now, Amazon’s rapid rise to the third-largest digital ad seller is inspiring retailers to seize new opportunities to monetize their digital assets and improve customer experiences.

From e-commerce to grocery, first-page customer data is the common denominator driving retail and commerce media experimentation. In addition to demographics, this data includes past purchases and page views during research and discovery phases. Combine this with contextual signals (like weather and holidays) and you get highly personalized offers with a clear attribution line in a brand-safe environment.

For all the talk in recent years about the loss of third-party cookies, it’s no coincidence that retailers are being called upon to leverage their data, insights and customer loyalty. They are the custodians of the greatest advertising opportunity since social media, and no one is better placed to help brands target shoppers with highly relevant content and offers.

Retail Media: Rethinking the Customer Journey

Retail media refers to any advertising outlet that targets a retailer’s audience using its first-party customer data. This is not necessarily a new concept. Endemic brands (brands that are native to the environment in which they are sold) have been reaching retailers’ audiences to sell their products since the beginning of advertising.

Take, for example, a well-known spice brand that has been selling its products in grocery stores for years and buys ad space in grocery store flyers to increase reach and exposure. Over the past 15 years, the growth of online shopping and access to customer data have changed the way we look at this model, adding a new level of sophistication. Through retail media advertising, the spice brand can reach shoppers directly with tailored offers on grocery store websites and apps.

While retail media is best known for its proximity to the point of purchase, it can extend beyond retailer-owned channels. With off-site placement, advertisers can leverage shopping data to reach consumers outside the online shopping environment, leveraging retailer customer data to deliver ads through third-party publishers, walled gardens, and connected TV.

For retailers, off-site placements attract advertising dollars from brands looking to connect with target audiences on the open web. This creates an opportunity for retailers to monetize customer data outside of their own platforms. While launching a media business may seem like uncharted territory for many retailers, third-party partners like CitrusAd or Epsilon can provide the technical support needed to manage first-party data and launch a retail media network. Once the technology foundation is solid, retailers can reinvest their ad revenue to further enhance the shopping experience.

Commerce Media: Expanding Scale and Reach

Like retail media, trade media allows brands to reach highly targeted audiences at scale based on their shopping habits. Here’s a key difference: While retail media relies on first-party data collected through a single retailer’s website, trade media is powered by shopper data from multiple retailers. This allows advertisers to target ads to a specific network of shoppers, rather than those who shop at a specific store.

Let’s revisit our spice brand example. With commerce media, a brand can leverage shopping data from different retailers (grocery stores, online marketplaces, etc.) to reach the same customers across platforms. This could include targeted ads on recipe sites, weather apps during grilling season, or even CTV ads on cooking shows.

Commerce media is more about understanding shoppers and their digital footprint, and less about the specific retailers who place ads or own the data. By aggregating audience data from multiple sources, commerce media creates a more holistic view of the consumer. It also offers the quality and scale advertisers need to engage audiences more effectively.

For retailers, commerce media offers the opportunity to monetize data and audiences and unlock new revenue streams without investing in building their own retail media networks. For advertisers, it offers the quality, scale and addressability needed to engage audiences more effectively across the digital ecosystem.

Increasing engagement beyond checkout

Retail media networks have traditionally empowered endemic brands to influence what shoppers add to their carts. But trade media is breaking that barrier. It’s not just for retailers—any company or publisher with an e-commerce component can leverage it. Think hotel chains, ridesharing platforms, and even online ticketing sites. Trade media empowers them to engage and monetize audiences by reaching consumers in new touchpoints beyond checkout.

For retailers looking to build strength in commerce media, we’ve found that post-purchase ads offer a quick and easy way to monetize otherwise untapped digital real estate. These ads appear on the “thank you” page immediately after a consumer completes a purchase, helping to streamline the checkout process without interrupting the sale. Demonstrating your ability to anticipate consumer needs (e.g., offering a travel deal to a customer who just bought concert tickets in another state) goes a long way toward building loyalty and increasing retention.

Balancing Revenue and Loyalty

As retail and trade media evolve, businesses are starting to see themselves as more than just Just e-commerce entities. While each approach has its subtle nuances, building an ad business allows retailers, media companies, and niche publishers to unlock additional revenue streams and generate new growth opportunities.

As retailers strive to maintain a competitive edge in the e-commerce landscape, maintaining a balance between generating revenue and maintaining a seamless customer experience is key. By thoughtfully implementing these strategies, retailers can leverage the power of data-driven advertising to unlock new revenue streams, improve the overall customer experience, and increase loyalty and engagement.

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