C-Suite Insider

4 new revenue streams you may be missing out on as a retailer

James Avery

As a retailer, you’re no doubt focused on growing product sales. This is important, but can sometimes lead to missing the forest for the trees, leaving other revenue streams untapped.

This is where retail media enters the picture.

Retail media enables you to monetize your digital spaces by letting vendors/partners promote their products throughout the customer’s shopping experience. It provides value both to you (in the form of high-margin ad revenue) and your partners (more product discoverability and sales). 

Retail media is a buzzword for a reason: ad spending on e-commerce sites grew by 38.8% in 2020. And it’s been wildly successful for brands like Walmart, Etsy, and Amazon. In fact, in 2021, Amazon’s digital ad revenue passed $20 billion, giving it profits it can invest elsewhere.

Launching a retail media ad business has many benefits. You already have relationships with brands and vendors, and an ad platform helps maintain and grow these partnerships. Ad revenue, moreover, is high-margin; this is capital you can invest into other parts of your business.

Below looks at four ad units that go into the average retail media platform. You could offer just one or all four; either way, all represent potential new revenue streams. 

  1. Sponsored Products
    Sponsored products involve sellers/vendors paying for their items to be promoted in relevant search results (or in the browsing experience). Pepsi, for instance, could pay to be the #1 product result for a search of “soft drinks”.  These ad units seamlessly integrate into search results, since they look like any other listing (except for the “sponsored” or “promoted” tag).

    Additionally, you could layer on your valuable customer data, enabling advertisers to target based on the first-party data you have. Pepsi, for example, could target anyone that has ever searched for “soft drinks”. With third-party cookies disappearing soon, the importance (and value) of first-party data is enormous.
    Slickdeals, for example, added personalized sponsored listings to their site and app. Their partners can now pay to promote deals using customer data like what the user had previously bought.

  2. Native Ads
    Similar to sponsored listings, native ads allow you to monetize in a user-friendly way. Forget tacky banner ads plastered across your homepage: native ads look like your surrounding content and unobtrusively promote your advertisers. Not only do these ads offer a better user experience, their eCPMs can be an order of magnitude higher than programmatic banner ads sourced through an ad network. Klarna, for example, recently incorporated native ads into their mobile app. These ads are high-value, blend in as the user scrolls, and are a key part of their growth strategy.
  3. Internal promotions
    Retail media lets you target customers as they actively shop. Think of it as the digital equivalent of in-store shopper marketing. As such, you can use your own platform to promote your services at the right time. Perhaps you have a special offer or want to upsell your loyalty membership. Using your customer data and unobtrusive ad placements, you can show this promotion at the right time, to the right users. This is exactly what Yelp does. They built their own system for displaying targeted marketing messages within their product, which has greatly increased engagement rates.
  4. In-Store Digital out of Home (DOOH)
    With digital out-of-home (DOOH) advertising, you can also take retail media into your physical stores. Whether it’s in-store signage or IoT displays (like a smart fridge), you can serve ads targeted by geography, location in store, weather, time of day, and more. These innovative DOOH ads can be lucrative, as advertisers are always on the lookout for engaging ad experiences. If you’re a convenience store, for instance, you could add digital screens to your cooler doors, so relevant brands such as Gatorade could buy full-screen takeovers. Another example is TouchTunes, who serves ads within their digital jukeboxes across North America and Europe. This drives high-margin revenue for them, and the interactive ads keep consumers engaged with the device.

Final Thoughts: Launching a retail media ad platform is a win-win-win. Retailers drive more revenue; customers get a tailored shopping experience, and advertisers can promote their products for more sales. Many large retailers have already launched their ad businesses, but it’s not too late for everyone else. You just have to know where to start.

Written by James Avery.
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James Avery
James Avery is the Founder and CEO of Kevel, which was launched in 2010 as Adzerk. James has over a decade of experience in the ad tech industry and is an expert in software coding and API technology. He is the Co-Founder of TekPub, which helped developers learn from high-quality screencasts. James is a seasoned entrepreneur and coder, who also wrote books for O'Reilly, Wrox, and Microsoft Press. Additionally, he serves as an advisor to startups including Blockthrough, Lazarus, and more through the TechStars MetLife Accelerator.

James Avery is an opinion columnist for the CEOWORLD magazine. Connect with him through LinkedIn.