Retail Media: What Advantages Does the New Business Model Offer Retailers? [5 Reading Tips]

Retail Media Reading Tips — Source: Pexels/Karolina Grambowska

Ads on trains, banners in weather apps or digital billboards on the way to the next appointment – advertising messages are simply overlooked or even perceived as annoying in everyday life. When customers visit an online shop or a retail store, however, they already have the intention to buy something and are much more receptive to offers.

Marketplaces such as Amazon, ABOUT YOU, OTTO and Zalando are taking advantage of this opportunity and are offering companies advertising space on their platforms.

This business model is called retail media – and it creates new jobs, departments and even entire companies.

Retail Media: Win-Win for Online Platforms and Advertisers

According to CNBC (Consumer News and Business Channel), Amazon’s advertising revenue was over 21.5 billion US dollars last year and is estimated to reach 26.1 billion US dollars in 2021. Advertising on online platforms is worthwhile not only for platform operators, who increase their revenue by offering advertising space, but also for those who use these offers to place their brand message.

Especially manufacturers and retailers with low brand awareness can increase their visibility this way. If users search for a certain product online, sponsored ads can be displayed in a targeted manner.

Moreover, online platform operators know their customers. Based on their purchase history, paid ads can be automatically displayed to relevant customers. After all, data is also the key to success in retail media.

Retail Media Has Many Facets

Retail media offers various options for reaching potential customers at the right time. Everyone is probably familiar with sponsored products that appear at the top of search results or traditional video and banner ads that are displayed when a website is called up. In this case, however, display ads do not link to the manufacturer’s website, but to the corresponding product or a subpage in the visited online shop.

This is because »brand shops«, which use a shop-in-shop concept to offer manufacturer brands their own subpage in a higher-level online shop, provide products from other vendors with their own platform. In the DEPOT decor shop, for example, there is a subpage for the room fragrance brand ipuro. The toy retailer myToys.de also features top brands such as STABILO, Scout and tiptoi in individual categories, for example »Lernen & Wohnen« (»Learning & Living«).

However, shopping platforms also use modern marketing approaches. Subtle advertising via branded content, which uses appealing content to promote brands or offers rather subliminally, and native advertising, which is optimally integrated into existing content, evoke positive associations and convey trust.

Influencer marketing can also be part of retail media strategies. Zalando Marketing Services, for example, created the start-up Collabary, which provides a platform that brings together influencers and brands.