In today’s digital and data-driven market, the burgeoning interest in retail media is hardly surprising. It’s projected to become a $130 billion industry by 2025, with estimates ranging from $2 billion to $3 billion in Australia alone by 2026. Recently, there’s been increasing buzz around “commerce media.” Although not yet common in industry jargon, it’s viewed by some as a competitor to, or even an enhancement of, retail media. However, this portrayal doesn’t fully capture the entire story.

In this discussion, we’ll delve into what these terms mean and how they differ. Retail Media strategically places ads on a retailer’s e-commerce site or app to influence customers at the point of purchase, much like physical in-store displays. This model boosts brand visibility on the digital stage, extending beyond traditional retail boundaries through networks that include third-party digital channels.

Performance Marketing focuses on driving conversions such as clicks and sales at the bottom of the funnel by leveraging third-party cookies and behavioural data. Conversely, Brand Marketing targets top-funnel objectives like brand awareness and maximising ad reach, utilising demographic and behavioural data.

Commerce Media merges these approaches for full-funnel marketing goals, using extensive first-party data and a variety of ad formats, from video to sponsored product ads, with precise campaign measurement. It expands beyond retail media by incorporating a broad network of online publishers, enabling various advertisers to effectively engage audiences using data and AI, thus optimising engagement across the digital landscape.

To cut through the jargon, at Xtrordinate, we see Commerce Media as an umbrella term that now includes Retail Media. Retail Media has shown marketers the potential of combining advertising with transactional data. This has led the industry to consider how to expand Retail Media’s benefits across the entire advertising ecosystem.

Exploring Commerce Media further, it broadly enhances advertising effectiveness using transaction data. This approach deepens audience insights, refines targeting, and links advertising impressions directly to sales, both online and in-store. It’s a synergy between media impressions and commerce transactions, elevating customer experiences.

Our view is that Commerce Media is the evolution of advertising, moving away from traditional proxy metrics toward actual business outcomes, as access to true transactional data becomes more widespread and brands get closer to real business outcome attribution. For example, Content Commerce, a subset of Commerce Media, aims to connect content, social, and influencer-type formats to transactional outcomes, similar to how location-based tracking connected to transactional data can add a Commerce Media element to Digital Out-of-Home (DOOH) advertising.

With the demise of third-party cookies, technology integration and identity solutions are critical to expanding Commerce Media. The rise of Customer Data Platforms (CDPs), Identity Solutions like the Privacy Sandbox, UID2, and alternatives from vendors like Yahoo’s ConnectID and those provided by LiveRamp or ID5 are noteworthy. However, this space remains turbulent and fragmented, as Tony Katsur, CEO of the IAB Tech Lab, states, “Solving for identity and new forms of addressability in a privacy-by-design manner is going to be the industry’s issue for easily five to ten years.”

Retail Media, with a narrower focus, digitise traditional in-store product placement practices. In the digital realm, this translates to securing visible and impactful spaces on retailer websites. Not only do these strategic placements benefit brands with increased visibility, but they also offer retailers a lucrative avenue for monetising their digital space. Retail media extends beyond online grocery stores, covering wherever consumers make market purchases, linking ad expenditures directly to digital sales and providing comprehensive reporting. A robust retail media network can encompass on-site, off-site, and in-store advertising, tapping into a wider array of display options including emails, social media, and more.

A key benefit of Retail Media is its operation within a retail ecosystem, making it less dependent on nascent technological requirements such as universal IDs, onboarding offline transactions, and mobile location tracking. Retail Media is essentially an immediate shortcut to Commerce Media. However, a significant limitation is that most Retail Media solutions are walled gardens.

Australian Retail Media Networks

Advanced capabilities from Amazon, such as brand and experiential executions, Amazon Attribution connecting Google/Meta and other media investments to Amazon transactional data, and Amazon Marketing Cloud (AMC) with its ability to import offline transactions and non-Amazon conversions via their Conversion API, are starting to blur the line between Retail Media and Commerce Media.

At Xtrordinate, we believe that traditional ad-tech players will continue to drive technological innovation towards Commerce Media solutions. However, they will be joined by retailers, in their desire to claim more of the lucrative advertising market, who will follow Amazon’s lead and begin pushing to solve off-network marketing/advertising technology solutions like identity and measurement.

Why Commerce Media is the Future: The Commerce Media Ecosystem is an intricate network where marketers, media owners, and consumers symbiotically interact. Marketers, encompassing brands, retailers, and agencies, form the demand side, aiming to activate campaigns that accompany the consumer from discovery to purchase. They use commerce data and AI for precise targeting and enhanced campaign efficiency, gradually moving towards first-party data-based advertising solutions as reliance on third-party cookies diminishes. This shift is crucial as the majority of global e-commerce takes place outside the walled gardens of major online platforms, highlighting the need for open internet commerce media solutions.

On the supply side, media owners, including publishers and retailers, seek to monetise their advertising inventory. They require tools to manage and monetise first-party data, capture more advertising spend, and maintain control over content and data access. This need arises from the growing demand for privacy-safe, consent-based data collection and management.

Consumers, the central pillar of this ecosystem, are driving the shift towards greater privacy and control over their data. They seek relevant advertising experiences while retaining the choice to opt in or out, emphasising the importance of consent and value exchange in the use of their data.

This ecosystem strives to create a self-sustaining environment where marketers achieve measurable results, media owners generate ad revenue to develop diverse content, and consumers enjoy richer experiences from trusted sources. Essentially, a balanced commerce media ecosystem promises to thrive and evolve, adapting to the needs of each player within it.