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The very basics of retail media

Updated: Jan 12, 2023

One of advertising's biggest growth stories of 2022 was the rapid rise of retail media and it shows no signs of slowing down as retailers look for every penny of revenue amid a turbulent economic environment. If you're just getting started in the ecommerce space, this article gives you the very basics of retail media networks.

The 101:

Retail media is an advertising model where brands can advertise their products directly on a retailer's website, such as Amazon, Target, Lowes, or Walmart. This allows brands to reach customers who are already interested in purchasing products and are actively browsing the retailer's website. By advertising on Amazon, brands can increase the visibility of their products and drive more sales, while Amazon can earn additional revenue from the advertising. We are continuing to see an increase of brands using Amazon as a brand building platform, much high up the funnel.

Revenue beyond the product:

One of the reasons why retail media is a huge focus for retailers is the increase in revenue that it allows them to diversify their revenue streams beyond just the sale of products. As a result, they can earn additional revenue from advertising without having to rely solely on the sale of products. Additionally, Amazon's vast amount of customer data and purchase history allows brands to target specific audiences and increase the effectiveness of the advertisements. This allows brands to reach a highly engaged and relevant audience which increases the chances of conversion. As we enter, 2023, Amazon has been pulling back on spending focusing on decreasing certain expenses such as employee head count and shutting down programs.

Increased competition:

One of the main reasons companies are increasing their budget for retail media is the increasing competition in the e-commerce market. As more and more companies enter the e-commerce market, it becomes harder for individual companies to stand out and attract customers. By advertising on a retailer's website, e-commerce companies can increase their visibility and reach more potential customers.

Retailer's media platforms allows brands to create sponsored products, sponsored brands, sponsored display, and video ads.

  • Sponsored products, allows brands to advertise their products on search results, product pages and in the shopping cart, which increases the chances that customers will purchase their products.

  • Sponsored brands allows brands to advertise their own brand on search results and product pages, which helps them to increase brand awareness.

  • Sponsored Display, allows brands to advertise their products on the homepage and other pages on Amazon.

All these options give brands different ways to advertise their products and increase their revenue.

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