Among the many trends affecting the retail sector, one of the fastest growing is the emergence of retail media as an alternative to traditional search engine and social advertising. Zia Daniell Wigder, Chief Content Officer, Insider Intelligence, outlined the advantages of the retail media model and the considerations that retailers need to take into account.

Retail media – the sponsored results at the top of a web page for an online retailer like Amazon, eBay or any other selling platforms – is the third big wave of digital advertising. It has seen phenomenal growth. Search took fourteen years to go from $1 billion to $30 billion in the United States. Social advertising took eleven years. Retail media took only five years to reach this critical threshold.

The top five digital advertising players globally include two that are retail media driven: Amazon and Alibaba, breaking the Google / Facebook duopoly on digital advertising sales. Every retailer from the big digital marketplaces to the mass merchants are trying to capitalize on this trend to generate new, profitable revenue streams.

Retail media targets shoppers when they’re in a buying mindset. More importantly, as more consumers reject the use of cookies on websites, retail media allows the retailer to own the resulting data and target shoppers both on the site and outside the company’s own properties. This makes it incredibly powerful by directly tying together marketing and sales.

Retail media allows brands and retailers to effectively conversion for a specific ad placed on a specific site. It’s highly profitable, adding 10 to 15% to EBIT at a time when profitability is challenging for many retailers.

Brands and retailers in the Gulf can consider adding retail media to the mix through partnerships with other retailers to expand reach beyond their own retail platforms. But size alone won’t win over brands. You need to have great customer experience. Customers visiting a site don’t want to be inundated with ads.

Building a great experience for the brands and the marketers that promote their products on your retail media network is critical to building long-term engagement and profitable growth.