Retail media is just the starting point, signalling a shift toward the broader trend of commerce media.
Source: © 123rf
123rf Retail media is just the starting point, signalling a shift toward the broader trend of commerce media
Daniel Levy, co-founder and co-CEO of data-powered AdTech platform Flow, says, “This shift isn’t just a fad, it’s a strategic move addressing the limitations of traditional advertising.”
Commerce media is an approach to advertising that leverages data from various e-commerce and digital platforms (not just retailer-owned channels) to connect brands with consumers throughout their purchasing journey.
“This new approach links ads directly to sales by pinpointing audiences better, offering new insights about them, and creating more meaningful experiences for consumers,” says Levy.
“It also opens the door for any sort of commercial enterprise to own a media channel within their business.”
Why brands will pay businesses for quality data
As consumer behaviour grows more complex, brands need to prioritise meaningful engagement over sheer reach. Brands are increasingly shifting their digital ad budgets towards platforms that deliver measurable, data-driven results.
That’s where the opportunity of commerce media lies.
It entails using first-party data to target and personalise ads both on and off a brand’s website, across multiple online platforms like social media, marketplaces, and search engines.
Companies of all types now have the chance to harness first-party insights from their own audiences and monetise that data to unlock new revenue.
“In essence,” says Levy, “commerce media allows businesses to go beyond their core offerings, creating new ways of earning revenue by connecting brands with high-intent, first-party audiences.”
3 reasons why commerce media are gaining momentum
The demand for high-ROI, data-driven targeting continues to grow as brands fine-tune their digital ad strategies. Retail and commerce media are gaining momentum because:
- Brands are prioritising first-party data
With digital advertising becoming more competitive, brands want high-quality data to reach audiences who are more likely to convert.
Hyper-targeted audiences are proven to boost performance, with the average click-through rate for retargeted ads ten times higher than ads that are not retargeted.
Conversion rates have also been found to increase by 50% when using custom audiences and first-party data.
- Retail media spending is set to surge
This type of advertising uses a retailer’s digital platforms, (websites, apps, or in-store screens) to show ads to shoppers and it is booming worldwide. Walmart is a standout example: in 2022, its retail media network, Walmart Connect generated $2.7bn in ad revenue.
This success showcases the substantial earning potential within the sector.
Global retail media spending is projected to increase by nearly $100 billion by 2025, placing businesses with relevant audience data in a prime position to capture ad spend.
Early adopters in local markets can gain an edge by securing budgets that might otherwise go to traditional channels.
- Diverse opportunities in adjacent industries
Companies with valuable first-party data can attract brands within their own sector, as well as in related industries. This cross-industry approach broadens revenue possibilities.
For instance, an audience of mothers purchasing children’s clothing could appeal to a travel company offering family holiday packages, while an audience of first-time homeowners could attract interest from short-term insurers.
3 ways to unlock the power of commerce media
For businesses ready to earn from their audience data, the commerce media model offers powerful benefits.
- Unlimited ad inventory through off-site ads
With the vast ad inventory available on social media, businesses aren’t limited to offering ads solely on their own site or app. Instead, they can share their audiences with sellers through off-site advertising.
- Increased website traffic
By expanding ad inventory, businesses ultimately drive more traffic back to their own website. Targeted ads backed by first-party data boost relevance, encourage clicks and turn social media users into active site visitors.
- Higher profit margins
Compared to traditional revenue streams, commerce media channels can yield higher gross profit margins, as they require minimal upfront investment. You’re simply leveraging existing audience data to generate new revenue.
Don’t let your data’s potential go untapped
Commerce media opens doors for businesses with valuable data by enabling them to join a rapidly growing, data-driven market.
“Data monetisation platforms help companies turn audience data into new revenue,” says Levy.
