What’s in a name? Quite a bit actually. The ad industry has been hearing a lot about commerce media, but what does it really mean? What distinguishes it from retail media? Most importantly: Why should brands, agencies, retailers, and publishers care? Let’s start with the definition:
Commerce media is advertising that connects shoppers with products and services throughout the buying journey across both physical and digital touchpoints, linking advertising investment directly to transactions. – Source: The Ultimate Guide to Commerce Media
But while a succinct definition has its uses, it’s critical to understand the core principles behind the concept to fully appreciate what’s at stake. Here are 10 commerce media truths that underpin digital advertising’s hottest opportunity:
- Commerce media is a relatively new and evolving term. The concept gained popularity through the public release of Amazon’s advertising revenue of $31 billion in February 2022 with a promise of never-before access to commerce data for brands and a net-new revenue stream with high margins for retailers and commerce companies. Today, commerce media adoption is higher than ever, but the ecosystem has a long way to go to reap the full benefits.
- Commerce media is transaction adjacent. It includes all media that is connected and can be attributed to online and offline sales transactions, or that uses commerce data to enrich and optimize audience targeting. It allows brands to promote their products or services within a retailer’s, marketplace’s or large ecommerce brand’s platform or physical store, or across publisher properties on the open web.
- Commerce media doesn’t work without commerce data and AI. Commerce media targeting and audiences are built on commerce data (first-party, real-world customer journey / intent signals and transactions) to inform marketing decisions, improve targeting, create efficient, effective ads, and deliver richer consumer experiences. This is only possible with artificial intelligence (AI) that can analyze and apply commerce data to develop predictive models that improve recommendations and bidding. It can also help media owners enhance their own audiences for monetization purposes.
- Commerce media is a revenue multiplier for non-advertisers. McKinsey estimated an enterprise value of $1.3 trillion dollars in 2022, indicating that while publishers and retailers stand to take the lion’s share of profits, there are many types of businesses that can enjoy a piece of the pie, including advertisers, agencies, platforms, data, media, measurement, and other tech services that help commerce media operators develop and drive commerce outcomes, thereby multiplying their revenues.
- Commerce media’s biggest growth inhibitor is fragmentation. There is no one-size-fits-all approach to commerce media, and each type of commerce company (retailers, marketplaces, and large ecommerce brands) has its own unique way of selling ads, defining their audiences or data, and closed-loop policies. This can make it difficult for brands to reach their target audience and measure the ROI of their campaigns across these multi-commerce environments. Standardization and unification could be the single most valuable industry-wide endeavor to unlock more revenue for all.
- Commerce media includes but is not the same as retail media. Retailers are among the first movers into the commerce media arena, hence the popularity of retail media and interchangeability of the two terms. While retail media paved the way for commerce media, newcomers such as auto companies, airlines, hotels, home- and ride-sharing marketplaces will have their own unique abilities and data sets that go beyond retailers, as well as different types of transactions.
- Commerce media leverages insights beyond retail. Because it’s not just multi-retailer, but also multi-industry, commerce media has behavioral and transactional data sets from a wider scope of environments and audiences. These richer insights beyond retail can further improve targeting and personalization, and inform the larger marketing mix.
- Commerce media amplifies opportunity in the digital ecosystem. By connecting onsite point-of-sale and display experiences with offsite placements on the open web and in-store, commerce media expands the scope of traditional programmatic channels. It unlocks opportunities for non-endemic brands on retailer sites, enables publishers to deploy commerce-focused monetization strategies, and empowers both buy- and sell-side players to realize the true value of their first-party data.
- Commerce media is omnichannel and full-funnel. Commerce media is not just about reaching consumers at the point of purchase. It’s about reaching them across all channels, from online to offline, and throughout the entire purchase funnel – so long as those touchpoints can be attributable to sales or a transaction. This means that commerce media can be used to drive awareness, consideration, and conversion, all the way from the initial research stage to the final purchase.
- Commerce media is multi-format and multi-channel. To connect with consumers across the funnel, commerce media employs a variety of ad formats and channels beyond the sponsored product ads traditionally associated with retail media, including video, display, contextual, shoppable, CTV, digital out of home, SMS and more.
- (Bonus!) Commerce media is ALREADY a safe haven for post-cookie addressability and measurement. Because commerce media relies on first-party cookies and large pools of logged-in, authenticated users, it’s already future-proofed against third-party cookie deprecation. And because every conversion can tie back to a specific SKU and user, connecting media spend to ROAS ensures advertisers will be able to measure the impact of their investment and reallocate dollars accordingly.
To learn how brands, agencies, retailers, and publishers are making commerce media an integral part of their strategies, download our Great Defrag report:
