Retailers Are Moving Their Ad Businesses Beyond Their Websites: Analysis

  • 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 of the limited search and display capabilities on their own sites and increasing that volume the risk of angering buyers.

It is extremely important to seize this new opportunity now that more retailers are getting into ad sales. Research firm Forrester predicts that over the next two years, offsite ads will be the only growing ad format for retailers, accounting for 26% of retailers’ ad revenue by 2024, up from 18% this year. Offsite ads also give retailers an opportunity to get a larger share of programmatic and social media advertising budgets.

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Insider Intelligence, owned by Insider, expects retailers’ offsite advertising revenue to grow from $5 billion this year to $8.5 billion in 2024.

The need to capture this growth is why Walmart allows advertisers to use its shopper data to power TikTok, Snap, and Roku ads; why Best Buy offers more targeted ads on publishers’ websites; and why Kroger is partnering with adtech companies to run ads on streaming TV apps.

Of course, many adtech companies are also scrambling to cater to this burgeoning segment of retail media. On September 20, French adtech company Criteo launched 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 advertising opens up new programmatic advertising budgets for retailers. Publicis’ own company, CitrusAd, also launched a similar platform in June.

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But when they engage in offsite ad sales, retailers risk undermining the main attraction of their ad sales business. While these retailers claim their data allows for better targeting and evidence that ads have increased sales compared to non-retail platforms and adtech firms, the performance of the ads they sell off-site is unlikely to consistent with the performance of their onsite ads.

Retailers can directly measure whether someone has purchased something after seeing an ad on their websites because consumers are logged into an account associated with information such as an email address and credit card. This accurate measurement is why Meta, Amazon, and Google have become so important to advertisers.

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But companies that sell ads through their own websites have trouble proving that ads got someone to do something. The imminent death of third-party cookies will make it harder for a retailer to connect a data-backed ad they’re selling to an action on a website they don’t own.

Because match rates for programmatic advertising are typically low, retailers will struggle to provide advertisers with granular targeting and accurate measurements, said Harry Kargman, CEO of adtech Kargo.

Ad buying firm GroupM also warned in a recent report that using retailer data to place ads on other properties carries “the risk of commercialization,” meaning retailers’ offsite ads will not be a unique proposition for advertisers.

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