These Retailers Are Turning E-Commerce Websites into Media Networks
The line between retailer and media company is blurring. Physical retail brands like Target and Lowe’s have spent billions growing their online audiences over the past decade, and now they’re cashing in on those efforts by selling advertising through their e-commerce websites and physical stores.
Blame it on Amazon, which reportedly generates $30 billion a year through its advertising business, or Apple, which accelerated the changes in data privacy that are now creating more opportunities for media networks with closed-loop measurement. As retailers look for new sources of revenue, many are ramping up the ad selling sides of their businesses and expanding their partner programs to include more self-serve functions.
The next few months could mark a major turning point for the retail media industry. According to analysts, retail media networks are poised to increase revenue by 40% this year, thanks in large part to newer ad formats and expanded in-house sales teams. According to McKinsey, spending on retail media is expected to grow to $100 billion by 2026. GroupM estimates retail media spending growth will pass total digital advertising through 2027.
Sixty-four percent of CPG brands with advertising budgets greater than $100 million anticipate increasing their spend on retail media in 2023. According to Forbes research, three-quarters of brands already have budgets dedicated to retail media.
Despite some hesitation, 56% of marketers say they’re working with at least five retail media networks currently — and the majority expect to both use more and spend more within the next two years. As cautious advertisers look at ways to spend their budgets more wisely, on targeted, measurable media, these are five retailers with successful media networks to watch.
1. Kroger and Albertsons
Albertsons and Kroger were some of the first grocery chains to make a significant impact in the retail media space, which means a potential merger between the two companies could change the status quo for years to come. If their retail media networks combine, advertisers would see an incredible opportunity for massive reach, sales, and data assets. Earlier this year, Albertsons partnered with Omnicom Media Group on a solution to facilitate ad buys for CPG brands that want to target shoppers through connected TV streaming media. Under the agreement, Omnicom can “meld data” from its system with data from the Albertsons Media Collective retail media arm, providing additional opportunities for brands to target the 30+ million consumers who shop at Albertsons stores in the U.S.
2. Ahold Delhaize USA
Ahold Delhaize has a family of local brands in the U.S., including Stop & Shop and Peapod. The company is continuing to build out its ad tech ecosystem, including a new unified onsite/offsite platform the company launched with Citrus Ad and Epsilon in January. That platform—dubbed AD Retail Media—is designed as a one-stop shop for buying media and for ad measurement, giving Ahold Delhaize a way to serve social posts or online posts to customers along the path to purchase. Ahold Delhaize can serve customers with programmatic billboards on their way to physical stores, or in-store digital screens, and then use closed-loop measurement to help advertisers understand what media was most effective and what drove conversions, once shoppers convert.
Walmart’s success as a retail media network has been far from meteoric — but that could change in 2023. Despite rebranding its media network as Walmart Connect in 2021, the company’s annual revenue from retail media totaled just $2.1 billion as of last February, less than 2% of Walmart’s total annual revenue. Nevertheless, the company is persisting, and it continues to make improvements. Those improvements are what analysts are watching. Walmart Connect continues to add new API partners, and according to a report by Insider Intelligence, it’s implementing a “second-price auction” to improve return on ad spend. Walmart also integrated TikTok and Snap into its ad tech platform to offer advertisers a way to serve ads on those social platforms using Walmart Connect’s targeting. Walmart is forecasted to grow more than 40% in the coming year.
CVS Pharmacy introduced its media network as a way to sell advertising directly to CPG brands back in 2020. The CVS Media Exchange, or cMx, gives the pharmacy retailer’s CPG brand suppliers a way to reach CVS shoppers through a variety of digital platforms, including CVS.com, social media networks, programmatic displays, and off-site search engines. While the network was considered a success from the beginning, it’s continuing to grow, particularly in its offline capabilities. Today, advertisers can access offline channels, like in-store ads on digital displays. Importantly, CVS offers a number of ways for advertisers to track the success of those offline efforts, such as in-store measurement systems, as well as value-added metrics like brand health, sales lift, and growth of new buyers.
5. Lord & Taylor
Lord & Taylor isn’t a name we’ve come to associate with digital transformation or innovation, however the luxury fashion retailer is stepping things up in the retail media department, and it stands poised to become an important player in the space within the next 12 months. The company partnered with InMobi Commerce on its retail advertising network last year. The full-funnel platform includes shoppable videos linking product discovery from social platforms back to Lord & Taylor-owned channels. Creative ad placements, like a video in search engine results pages (SERP) layout, have analysts excited about the potential as shoppable video becomes even more mainstream in the coming year.