Retail media ambitions fuel marketplace expansion

The expansion of US retail ecommerce and the intertwined growth of marketplaces and retail media represent more than just numbers. They signify a profound evolution in how brands connect with consumers, offering insights into the future of shopping, advertising, and digital engagement.

A graph showing us retail marketplace ecommerce sales from 2023 to 2027

As we navigate the post-pandemic landscape, one thing is crystal clear: the ecommerce revolution is far from over. According to a recent article by Sky Canaves, while the explosive growth of the pandemic era may have plateaued, the trajectory for US ecommerce and marketplaces is set on a remarkable path of expansion, with a projected increase of $588 billion over the next five years. Interestingly, marketplaces are expected to claim nearly 40% of this growth.


What does this signal for the future of retail ecommerce? A definitive shift towards more integrated, marketplace-centric models where brands are not just participants but active architects of consumer experience. Giants like Walmart have led the charge, rapidly scaling their third-party sales platforms, alongside others like Macy’s, Kohl’s, and The Kroger Co., each adopting unique strategies to harness this growth.


Retail Media: The Fuel Powering Marketplace Expansion

The nexus between retail media and marketplace expansion is where the future of digital advertising is being rewritten. Retail media, the fastest-growing segment in digital advertising, is not just a revenue stream but a strategic tool for marketplaces. By leveraging their digital platforms, retailers are not just facilitating transactions; they're creating ecosystems where advertising is as much a part of the shopping experience as the products themselves.


Amazon may lead the pack, capturing a significant share of US retail media ad spend, but Walmart's ad revenue growth tells a story of emerging dynamics and opportunities within this space. With ad revenues expected to surpass $3 billion in 2023, Walmart’s investment in an open marketplace and enhanced ad targeting is setting a new benchmark.


This era also sees other players like eBay and Etsy carving out their niches, with innovative approaches to seller engagement and advertising. Even Macy’s, in partnership with The Trade Desk, is expanding the horizons of retail media to encompass a wider array of ad formats and channels, leveraging rich customer data to power more targeted and effective campaigns.



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Two Oversimplified Approaches to Show Up on Amazon Search

February 28, 2024
Most brands with an established customer base will consider launching on Amazon at some point. And why not?! With over 310 million active users, it’s the most popular e-commerce marketplace in the U.S. AND chances are a lot of your customers frequent Amazon already for online shopping and may even be wondering if your brand has a presence there. For brands that don’t have an Amazon storefront, two things can happen if a customer searches for your products on their search engine: Customers who can’t find your brand on Amazon will return to your website and purchase. Worst case scenario: They end up buying a competing product from Amazon instead. To battle these issues, the Pilothouse Amazon team sees a lot of brands take these two approaches when selling on Amazon: 1. Focusing on branded keywords Build it, brand it, and forget it. A lot of DTC brands will create an Amazon storefront, target only branded keywords in their ad campaigns, and then leave it at that. To do this, you’ll need to build an optimized Amazon listing, send in some inventory, and add some advertising dollars on branded keywords so you show up first in search results. Branded campaigns are a great way for your existing customers to find you with ease — Just make sure your competitors aren’t stealing away your customers! This can be a viable option for brands at a decent scale who don’t have the bandwidth to take a more comprehensive approach to Amazon selling. While this can add some profit to your bottom line, with this approach your Amazon revenue will only ever be as large as your branded presence. This means you're: ✅ Only targeting customers who are aware of your brand and products ❌ Not acquiring brand new customers 2. Focusing on generic keywords Now let’s talk about generic keyword advertising. A generic term is a non-branded term. For example, if you are selling a Nike Pegasus Trail Runner, “trail runner” would be a generic term and “Nike trail runner” would be a branded term.. Ranking well for generic keywords is a major win since these shoppers are net new customers for your brand with a strong intent to purchase. This approach is an investment at first but has the potential to result in huge gains. Here are two ways to achieve growth: Slow Profitable Growth In addition to branded campaigns that generate a high return, generic campaigns are built slowly and consistently on long tail low volume keywords that generate a profitable ACOS (Advertising Cost of Sale). Minimal budget is invested into ranking (high volume generic terms) in order to maintain a target-ACOS that is profitable to the brand. Fast Unprofitable Growth Allocate the bulk of your budget to campaigns that are designed to generate rank and combine this with an aggressive discounting and pricing strategy to boost CVR. Purposely running the account below a profitable Total Advertising Cost of Sale is the fastest way to achieve sales volume. Once volume and rank is achieved, the account is shifted to a profitable position. This is a cash investment approach and can generate great results, (provided the business is in a position to invest). Ultimately how and when you approach Amazon depends on the current goals of the business, the current cash scenario, and the long term goals for the Amazon channel.
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Cookies are going away in 2024, but the ad industry can’t seem to kick the habit

February 28, 2024
As 2024 approaches, the digital advertising world stands on the brink of a significant transformation. The anticipated phase-out of cookies by Google has been a topic of discussion and speculation for years, yet the ad industry seems to be in a holding pattern, with many clinging to old habits as the deadline looms closer. Despite Google's history of delaying its timeline, the move towards a cookieless future is inevitable. Data from 33Across shows that all 10 industries tracked continue to rely heavily on cookies for programmatic ad buys, suggesting a slow adaptation to alternative identity solutions. This resistance to change could spell trouble, as the deprecation of cookies will not only affect tracking but will also necessitate a shift in how we approach digital advertising strategies. The Reality of Transition The transition is set to trigger a consolidation in the identity provider market, with a current oversaturation of services unlikely to be sustainable in a post-cookie environment. This consolidation could lead to a stronger, albeit smaller, group of providers emerging to lead the way in the new era of digital advertising. Apple's Move into Advertising Interestingly, Apple's foray into advertising appears to be gaining traction, with the company making moves to establish its own demand-side platform (DSP). This development is not only indicative of Apple's ambitions in the advertising space but also highlights the evolving landscape where privacy and advertising strategies need to coexist more harmoniously. The Path Forward As professionals in the marketing and publishing industries, the time is now to pivot and prepare. Embracing new technologies, exploring alternative tracking methods, and fostering a deeper understanding of consumer privacy will be key to thriving in this new reality. The journey towards a cookieless future may be fraught with uncertainty, but it also offers an opportunity to innovate and redefine the boundaries of digital advertising.
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