- Retailers are making more deals with adtech companies and platforms to sell ads.
- They hope to get bigger budgets from programmatic and social media budgets.
- But retailers face the same problems as publishers with the death of third-party cookies.
The latest North Star for retail advertisers like Walmart and Best Buy is to use their data to sell ads beyond their own e-commerce sites because the search and display opportunities on their own websites is limited, and increasing that volume risks annoying shoppers.
It’s extremely important to snatch this new opportunity now, as more retailers leap into ad sales. Research firm Forrester predicts offsite ads will be the only growing retail ad format over the next two years, and will represent 26% of retailers’ ad revenue by 2024, up from 18% this year. Offsite ads also give retailers to chance to grab a bigger cut of programmatic and social media ad budgets.
Insider Intelligence, which is owned by Insider, expects for retailers’ offsite ad revenue to grow from $5 billion this year to $8.5 billion in 2024.
The need to capture this growth is why Walmart will let advertisers use its shopper data to power TikTok, Snap, and Roku ads; why Best Buy is offering more targeted ads on publishers’ websites; and why Kroger is working with adtech companies to power ads on streaming TV apps.
To be sure, many adtech firms are also racing to service this burgeoning area of retail media. On Sept. 20, French adtech firm Criteo rolled out a new demand-side platform that handles both onsite and offsite ad sales for retailers. Brian Gleason, the company’s chief revenue officer, said offsite ads open up new programmatic ad budgets for retailers. Publicis-owned CitrusAd had also launched a similar platform in June.
But in pursuing offsite ad sales, retailers risk undermining the main draw of their ad-selling business. While these retailers claim their data allows better audience targeting and proof that ads drove sales compared to non-retail platforms and adtech firms, the performance of ads they sell offsite is unlikely to match the performance of their onsite ads.
Retailers can directly measure if someone bought something after seeing an ad on their websites because consumers are logged into an account connected with information like an email address and credit card. This precise measurement is why Meta, Amazon, and Google became so important to advertisers.
But companies that sell ads off their own sites have difficulty proving that ads drove someone to do something. The impending death of third-party cookies will make it harder for a retailer to connect a data-powered ad that they sell to an action on a site that they don’t own.
Because match rates for programmatic advertising are typically low, retailers will struggle to provide granular targeting and precise measurement to advertisers, said Harry Kargman, CEO of adtech firm Kargo.
Ad-buying firm GroupM also recently warned that using retailer data to power ads on other properties “risks commoditization” in a report, meaning that retailers’ offsite ads won’t be a unique offering for advertisers.