• May 20, 2024

U.S. Shoppers Favor Retailer-Owned Ads

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More than half (54 percent) of U.S. consumers prefer to buy items advertised by trusted retailers, and 55 percent are more likely to try out new brands recommended by retailers where they regularly shop, highlighting the growing importance of retailer-owned advertising platforms, especially retail media networks (RMNs), according to Intellias, a software engineering and digital consulting firm.

At the same time, 52 percent of consumers ignore traditional digital ads and 50 percent ignore traditional search ads, presenting a unique opportunity for retailers to leverage their own direct-to-consumer channels, a separate study by ADvendio found.

The Intellias study also found that a quarter of consumers are now influenced to buy products advertised to them on retailers’ websites, and a further 15 percent are persuaded to buy items after being served ads on retailers’ apps. This compares to just 13 percent who are swayed to purchase products after seeing ads on third-party marketplaces and 14 percent who are influenced to buy after seeing ads on social media.

With U.S. retailers growing their RMNs and exploring how they can deliver omnichannel engagement opportunities across their owned digital and store networks, Insider Intelligence suggests that revenue from retail media will surpass TV advertising by 2028, while WARC estimates retail media ad revenue will top $124 billion this year.

“There’s no denying the sizable opportunity RMNs present in enhancing shopper engagement and enabling retailers to connect third-party brands and advertisers with conversion-ready audiences. This becomes even more effective when retailers connect data from across their digital and in-store channels and overlay this with loyalty program insights to offer hyper-segmentation. By tapping these predisposed-to-purchase customers, retailers can deliver greater engagement and campaign performance that significantly increases return on ad spend,” says Alexander Goncharuk, vice president of global retail at Intellias.

Samantha Giaver, head of growth at ADvendio, notes that retailers are “riding the crest of the latest digital advertising wave, with RMNs presenting a sizable opportunity for them to drive new revenues from third-party brands and advertisers.”

She cautions, though, for this to be sustainable, “retailers will need to remember that the unique selling point of RMNs is that they open up connections to conversion-ready shoppers. And that relies on these networks not just being made of sizable target audiences, but of retailers’ valued customers, so upholding advertising experiences in shopping journeys delivered through RMNs will be a key consideration.”

Highlighting the push toward RMNs is the expected eradication of third-party cookies for online transactions and diminishing returns from and higher costs for other more traditional advertising channels. This includes TV advertising, which Insider Intelligence predicts will be overtaken by RMNs by 2028.

This strategy seems to be proving effective, with a third of retailers in the ADvendio poll saying they see better engagement rates through RMNs compared to social media ads and 31 percent getting better conversion rates via RMNs compared to paid search campaigns.

“Growth in retail media will continue, and brands will get smarter with their dollars. Brands are starting to seek proof of performance, [which means] we’ll see winners and flatliners [within the RMN space],” said Jeffrey Bustos, vice president of measurement addressability data at IAB, in a statement.

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