Every retailer needs an effective way to advertise their products to their target audience. For years, retailers have worked with ad agencies and publishers to reach their audience but with the rise of digital tools, brands can now personalize their interaction with their audience.
In recent years, Functional Retail Media Platforms and Agency Ad Tools have gained prominence due to their highly personalized ads. While both serve the purpose of optimizing advertising efforts, they are significantly different in their functionalities, target audience, and overall approach.
Traditionally, brands worked with agencies who developed advertising plans on their behalf. Agency-led ad strategy often relies on third-party data and targets users through demographics, interests, and keywords.
However, the advertising scenario is changing with the emergence of retail media which enables brands to target the audience using the retailer’s first-party data. Apart from this, the idea is also to make the advertisements blend in with the original content on the platform to make it less intrusive for the consumers.
In this article, we will explore these differences to help businesses make informed choices about which tool aligns better with their advertising goals and strategies.
Glossary of retail media concept you should know
Before we go into the depths of understanding retail media, here is a quick glance at some of the essential terminologies:
- Retail media: Retail media can be understood as a form of advertising and marketing which includes placing advertisements inside a retailer’s digital channels such as their website, app, or social media pages. It enables retailers to monetise on their online presence by
- Retail media ads: Refer to the specific ads such as display ads, search ads, sponsored ads which are placed on the digital channels for the buyers to see while they are browsing the e-commerce website.
- Retail media platform: Refers to the technology platform that enables the advertisers to buy the ad space, manage & deliver the ads, track their performance, and measure its results. Retailers can either build their own in-house platform or work with existing third-party solutions who can bring the essential expertise. For example, Walmart Connect by the retailer giant is a powerful retail media platform that connects advertisers with its huge consumer base.
- Retail media network (RMN): RMN refers to the broader network that connects multiple retailers and advertisers. The network helps advertisers get access to the wider audience and more diverse retail partners.
How retail media platforms are helping businesses
Retail media has been increasingly gaining attention among the e-commerce businesses because of its unique proposition. For its success, the key lies in the fact that the strategy operates on the idea of assisting the customer while they are making purchase decisions with subtle product suggestions and not direct and unrelated advertisement.
For example, let’s take a look at the screenshot below:
Here the sponsored ads are so well blended with the main frame content and shows targeted products based on the search that it doesn’t disrupt the purchase flow of the buyer rather helps them choose a well matched product out of the multiple options.
Another reason behind the growing popularity of retail media also lies in the fact that it targets customers at the point of purchase and thus has the potential to influence a buyer’s purchase decision.
For e-commerce brands looking to enable retail media advertisements, these are the following benefits that can be unlocked:
- Monetizing the digital shelf space: Functional retail media platforms enable retailers to capitalize their digital shelf space on their e-commerce website or apps by lending them to brands for digital advertisements. Advertisers may bid for the ad space and this serves as an additional source of revenue for retailers.
- Targeted advertising: Retail media allows advertisers to target their audience by leveraging data related to user behavior, search queries, and product categories. This level of granularity in targeting ensures that ads reach the most relevant audiences.
- Leverage retailers first party data: Today, personalisation in advertisements is considered to be the most important aspect that drives conversions. As retailers hold rich consumer data including purchase history, preferences, and shopping behavior, functional retail media platforms allow advertisers to tap into this data for more personalized and effective ad targeting.
- Connect retailers with advertisers: Functional Retail Media Platforms build a direct connection between advertisers and retailers. Advertisers bid on ad space within the retailer’s digital shelves, and when a user clicks on the sponsored product listing, the retailer and the advertising partner share the revenue generated from that click.
Why the shift from traditional media to retail media network
Industry data reveals that the growth of RMNs could represent as much as $100 billion in ad spending by 2026 in the US. In fact, in a Mckinsey survey, about 70% of advertisers have responded that they have recorded better performance with RMNs than other channels and almost 82% advertisers say that they will continue to increase their RMN spending.
The concept of retail media is indeed relatively new but it has come a long way since e-commerce giant Amazon began its retail media journey after launching its first network in 2012. Post that, many other retailers including Walmart, Target among others have launched their own networks.
In fact, recent CNBC reports revealed that retail giant Walmart saw a 30% growth in its global ads and Walmart Connect, its U.S. ads business, swelled by 40%.
Offering targeted ads is a crucial part of retail advertising and that is one of the major reasons driving the shift from third-party agencies to retail media platforms. Other reasons propelling its growth, include:
Complex consumer behavior
While making any purchase, the process starting from the trigger to decision making involves a lot of complexities. As products and services become more easily available for buyers online, consumers spend more time researching the product they are looking to purchase and comparing it with their competitors. Here is where retail media advertisements are majorly leveraged by brands to ensure that their products are at the top of the buyer’s mind. Leveraging retail media helps bridge the gap between the purchase trigger and buying decision by assisting the buyer to get hold of the best possible options for the product they are searching for.
Decline in third party cookies
Third-party cookies also often known as tracking cookies used for targeted advertisement purposes. However, concerns around data privacy and security compliances led to its fall. Moreover, The European Union’s General Data Protection Regulation (GDPR) made it mandatory for adtech companies, advertisers to seek consent from users regarding third-party cookies which led to further decline in its usage. Decline in usage of third-party cookies has left advertisers with no direct data about the consumers. Hence, the retail media platform serves as a great alternative as it helps advertisers create targeted ads based on the first-party data collected by the retailers. You can find more information on retail media is a boon for the cookieless world in our blog.
Profit margins a priority for retailers
Rise of e-commerce has indeed opened up an avenue for digital growth for retailers but this growth does not necessarily translate into profit growth. With uncertainty in the markets, the focus in widening profit margins is now more than ever.
Functional Retail Media Platforms Vs Agency Ad Tools : The difference you should know
Let us understand the difference between the retail media platform and agency ad tools in more detail so that you can make the best decision for your advertising needs.
| Feature | Functional Retail Media Platforms | Agency Ad Tools |
|---|---|---|
|
Focus |
Retail media platforms help retailers to manage and deliver their retail media campaigns using a single platform. |
Agency ad tools are geared towards managing its clients' digital advertising campaigns across multiple platforms. |
|
Data |
Have access to first-party data from the retailer's own website and app, as well as third-party data. |
Rely on the data that is provided by the client along with third-party data. |
|
Targeting |
Offers a variety of targeting options including demographics, purchase history but most important it allows targeting based on customer behavior. |
Offer demographics, interests, and keywords based targeting but lack direct connection with customer data. |
|
Measurement |
Provides detailed reporting on campaign performance, including impressions, clicks, conversions, and sales under one platform. |
Agencies shared detailed reporting on campaign performance with their clients. |
|
Pricing |
Involves charging a fee based on the amount of ad spend. |
Involves charging a fee based on the number of hours worked. |
|
Examples |
FCC Ad Manager, Amazon Advertising, Walmart Connect, Target AdWorks |
Google Ads, Facebook Ads, LinkedIn Ads |
How FCC’s retail media platform is built for scale
Now that we understand how retail media platform’s impact, it is important to find the right solution to enable this form of advertisements. For e-commerce and retail brands looking to enable a seamless sponsored ad strategy, Ads Manager by Flipkart Cloud Commerce, offers a one stop solution to businesses for building a complete ads ecosystem. Using FCC’s platform, businesses can build ads in any existing format including video ads, rich media and static among others.
The FCC’s ad manager offers seamless user experience with its intuitive interface, advanced targeting capabilities, real-time campaign optimization, detailed performance analytics, and access to a massive customer base. It allows brands to leverage all existing ad formats including video ads, rich media and static with its one-stop solution.
Brands tapping into retail media using FCC’s Ad Manager will be able to get access to:
1. Personalized targeting: Ads appear to be a hassle and a distraction even when it does not serve the end consumer’s needs. Imagine if the buyer is looking to purchase cookware but the retailer website bombards them with ads about buying apparel. Such disconnected advertisements can hamper the buyer’s shopping experience.
FCC’s retail media platform is much appreciated among its users for its advanced targeting enabling brands to deliver relevant ads to the right customers at the right time. For FCC, the aim is to maintain a balanced organic visibility with paid media and also ensure that the paid media is highly relevant to the shopper’s mission.
2. Self-serve: Retail media might often need to work with an Ad-Ops team to figure and determine the Nitty-gritties of the advertisement campaigns. However, FCC’s Ad Manager has been designed in a way to eliminate the need for ad-ops wherever possible. With FCC, the aim is to reduce the need for the brand to run a parallel team for enabling retail media. It automates the ad-ops cycles as much as possible.
3. Audience Manager & AI Powered Relevance Models: Artificial intelligence-powered algorithms can track audience activity in the real time most effective advertisement quickly. Flipkart’s platform is built on a sound data foundation that offers you optimisation based on relevance, user history, search queries and knows how to rank these features for the best optimisation.
4. Contextual targeting: Contextual targeting includes an advertising technique where ads displayed are based on a website’s content. FCC enables Product Contextual Ads (PCAs) which targets users based on their buying intent instead of browser cookies. The platform allows brands to utilise the search bars and tap into every search query to create targeted ads for the consumers.
In the busy world, consumers are often characterized with increased disposable income but limited time span. What is important is to catch the attention of the users to not only bring more business but also meet the user needs. Understanding the difference between retail media platforms vs agency ad tools is the first step to choose the strategy that works best for you.
For those looking to build a robust retail media strategy, Flipkart Cloud Commerce will always be ready to take your business to the next level. Book a free demo today!