Most of these ads appear on retailers’ own e-commerce websites, so selling ads offsite is the best chance for retailers to grow those ad budgets. It’s also highly competitive, because many retailers are trying to claim those opportunities.
Offsite ads currently make up about 15% of retail media spend and are expected to make $11 billion this year, according to Insider Intelligence, increasing to $24 billion by 2027.
To get that spend, retailers are accelerating their partnerships with adtech companies to sell offsite ads and increase their scale, said Andrew Lipsman, an independent retail media analyst and consultant.
Instacart is partnered with Roku to sell targeted streaming TV ads. Walmart is testing selling ads in NBCUniversal’s live sports content. Kroger works with adtech firms like Magnite, PubMatic, and OpenX to sell streaming ads targeted with retail data.
“Brands have too many options today — to the extent that you can provide scale, you’re going to get an appropriate amount of ad spend,” Lipsman said.
Retailers are riding the death of cookies and streaming TV
By increasing the audiences that see their ads, retailers are betting they can seize two major opportunities. First, they expect that the death of third-party cookies this year will drive demand for their data to target and measure ads.
“When cookies come out of the marketplace, where retail media shines is that we all offer large audiences of real people doing real things,” said Kristi Argyilan, SVP of retail media at Albertsons Companies.
Second, if retailers can offer more scale, it will unlock the holy grail of advertising: brands’ TV budgets.
Argyilan expects to see retail data involved in more TV deals as big media companies like NBCUniversal and Disney make their ad space available to be bought programmatically in this year’s TV upfront sales presentations.
The idea is to flip how TV ads have long been targeted. Previously, advertisers would target ads to large demographics — like women between the ages of 25 and 54. Using retail data, they can target specific groups — like moms who buy specific products at the grocery store every week.
But Cara Pratt, SVP of Kroger Precision Marketing, said a lot of work still needs to be done to convince marketers who advertise on linear TV to use retail data when planning campaigns.
Retailers also face challenges as they try to sell offsite ads integrating their data in ways advertisers can use, said Lipsman.
For example, these data-sharing deals usually require retailers and media companies to use data clean rooms to find data that can be matched and used for running and measuring ad campaigns.
“This is new territory for a lot of retailers,” he said. “This opens up a whole new world of complexity — it’s a multi-year challenge to understand all the value in full-funnel campaigns.”
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