Though it’s opportune, retail media remains somewhat nascent. It’s not as mature as other forms of advertising that have established options and ad-buying ecosystems (social, search, online display, etc.). It’s rather fragmented and siloed into individual ad networks per retailer – from Walmart to Lowes.
Before continuing, what is retail media? For those unfamiliar, it’s when retailers become outlets for brand advertising. They do this by utilizing all the high-intent and lower-funnel activity in and around their stores for various flavors of product promotion. That can include product demos, digital display ads, etc.
Retail media benefits include revenue diversification for retailers while integrating advertising in places that are contextually natural – near products themselves. These attributes have caused the space to grow to 200+ retail media networks globally, as Microsoft’s retail media lead told Localogy recently.
Avenues to Monetize
Speaking of Microsoft, it recently made moves to consolodate the retail media ad-buying landscape, and to counteract some of the fragmentation noted above. Specifically, it formed a deal with Criteo to bring more direct retail media opportunities to the 500,000 advertisers in its Microsoft Advertising business.
To that end, Criteo works with 225 retailers for its core commerce offering. By plugging in Microsoft Advertising, it opens a channel for more brand marketers and thus more avenues to monetize. If considering the buy and sell sides of the ad ecosystem, this deal brings Criteo access to the buy side.
Microsoft meanwhile gets more access to the sell side, which is a boon for its platform. By offering its advertisers retail media – in addition to a range of digital channels – it becomes a more attractive platform. To be fair, Microsoft already established a presence in retail media… this just extends it.
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Relative Advantages
Beyond benefits for Microsoft and Criteo, this deal will advantage advertisers themselves. By having a more unified platform to run campaigns across a larger universe of retailers, they can better sink their teeth into retail media. This continues to be a land grab, given retail media’s relative advantages.
Those advantages include exposure to high-intent shoppers, as noted. Because ads run in store aisles, it’s a lower-funnel play in terms of influencing shoppers while they’re inherently in a spending mode. Retail media’s performance metrics mirror these dynamics, given high return on ad spend metrics.
Retail media also rides the tailwinds of another trend: privacy reform. Because retailers are monetizing the physical and digital spaces under their own roofs – and utilizing customer data to do so – it’s a first-party data play. Ad placements can be highly targeted, highly contextual, and highly privacy-safe.
