Imagine a world where every advertisement speaks directly to your interests and needs. This is the promise of retail media in Australia, a rapidly evolving field that offers huge opportunities for both advertisers and retailers, says Peter Barry, PubMatic’s vice president, addressability and commerce, APAC.
A Win/Win
Retail media allows advertisers to engage with shoppers at a critical point in their purchasing journey, leading to higher engagement and response rates. By utilising shopper data, advertisers can deliver personalised and relevant ads, which significantly boosts engagement.
In turn, this also represents a revenue driver for retailers. By monetising the digital real estate of their website or platform through the sale of advertising space, they create a new revenue stream beyond traditional retail sales. In a sector in which margins can be thin, this promises a high-margin revenue line that can add directly to the bottom line.
Furthermore, retailers possess valuable first-party data about their shoppers. This data is a helpful tool for advertisers seeking to reach specific demographics and can be leveraged to attract premium buyers…. both onsite and offsite.
The Power of Onsite Advertising
Onsite advertising is not new. Retailers have been offering sponsored listings – a form of onsite advertising (think sponsored search) – for years. The popularity of these ad units speaks to their effectiveness. Less well known is the opportunity for retailers to offer additional opportunities for brands to reach consumers onsite by offering display and native ads – similar to those found on non-retail websites like news and lifestyle sites. These ad formats can be highly relevant and therefore effective due to sophisticated search, user or category targeting. They can also, under some circumstances, open up non endemic advertisers to retailers as an opportunity. These can often be from adjacent categories. For example, if a consumer buys a high value item like a laptop, they may be in the market for insurance. The key for retailers is to ensure the ad is shown at the right moment so as not to interrupt the user’s path to purchase.
This extends the opportunity for both advertisers and retailers – advertisers benefit from the improved targeting capabilities available on retail sites, ensuring their ad spend is more effective, and retailers become the recipients of budgets that usually sit outside of their purview i.e. branding budgets as opposed to trade or shopper marketing budgets.
Overall, onsite advertising has proven to be exceptionally effective. PubMatic recently commissioned a study by Inside Retail that found that ads on retail sites are approximately 50% more effective than those on social media platforms. This is largely due to the contextually relevant environment, where consumers are already in a shopping mindset, making them more receptive to products that meet their needs.
Offsite Audience Extension: Untapped Potential
While onsite advertising is powerful, there is an equally exciting and high-growth opportunity emerging in the form of audience extension, which accounts for the lion’s share of offsite ad spending. This strategy combines retailer audience data with the vast reach of non-retail sites on the open internet, unlocking enormous potential.
Given that advertising real estate on retail sites is finite, and the user experience must be protected at all costs to preserve the retailer’s core business, using retail media data offsite offers advertisers a means to extend their onsite campaigns by engaging consumers across a wide array of non-retail sites. For retailers, this represents an opportunity to build a media business underpinned by deep first-party data and further unlocks non-endemic and upper-funnel budgets.
Interestingly, PubMatic’s study found that not all offsite inventory is created equal. Non-retail sites perform far better than social media when it comes to delivering a shopper response to advertising. On average, non-retail sites on the open internet deliver an approximately 30 per cent increase in shopper response vs. social media sites. This may speak to the sophisticated targeting combined with premium environments in which these ads are served.
Converting the Opportunity
The rise of retail media in Australia is creating significant opportunities for both advertisers and retailers. Advertisers benefit from improved engagement and targeting capabilities, while retailers can unlock new revenue streams by monetising their media assets and audience data. The potential of offsite audience extension, in particular, promises to revolutionise the way advertisers reach their audiences, making the most of the deep understanding retailers have of their customers.
As with all new trends in our industry, the key will be working with the right partners and the right technology to unlock this opportunity.
PubMatic’s Convert has been built with this in mind. Bringing together monetisation and audience targeting into one platform, Convert allows retailers to monetise the valuable real estate and audience data on their websites and platforms as well as across PubMatic’s premium inventory, and also enables media buyers to execute high conversion and low wastage ad campaigns.
To find out more about how you can leverage Convert to make retail media work for you, get in touch.
