The Ultimate Guide to Commerce Media

Advances in digital technology have opened new doors in the marketing world, bringing together consumers and content in a unique way through commerce media. By reaching customers at every stage of the funnel, commerce media is reshaping the shopping experience, making it frictionless and enjoyable while also driving better business results. Rather than passively consuming ads at the start of their journey, customers engage and form bonds with brands through relevant and dynamic content all the way from discovery to retention.

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Commerce media interweaves advertising and e-commerce, leveraging first-party customer data to enhance marketing campaigns and streamline shopping experiences. With a solid commerce media strategy, businesses can build better relationships with customers and remain competitive and relevant.

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Although retail businesses have been front-and-center in the commerce media movement, it extends far beyond retailers to include airlines, hotels, ridesharing companies, and automobile sales. Businesses of virtually every kind can benefit from understanding and implementing a commerce media plan to increase sales and improve customer engagement.

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Understanding Commerce Media

Before you jump headfirst into commerce media, you need to know what it is, where it came from, and what it involves. With that solid foundation in place, you can begin developing a strategy for your business.

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What Is Commerce Media?

Commerce media is an innovative approach to advertising for a cookieless future. It's a media strategy that uses commerce data to make more personalized and relevant offers to customers without violating their privacy. It includes advertising on commerce platforms, websites, social media, and other retailers' sites.

The term commerce media refers to a broad set of practices, all of which aim to advertise products in a way that feels natural and personalized. This sets it apart from traditional media, which hinges on static ads and brand-focused messaging. Over time, these types of ads have become less effective for audiences looking for more relevant experiences and real-time interactions.

In contrast, commerce media is dynamic and full-funnel. Rather than just influencing a customer's initial perception of a brand, it has a direct impact on purchasing behaviors.

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History and Evolution

Commerce media is a fairly new idea—and one that continues to change. It's based on the concept of affiliate advertising, where publishers form partnerships with brands, but world events and technology changes have given it a much wider scope.

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The Transformative Effect of COVID-19

The shift toward commerce media might have begun with affiliate marketing, but other factors were responsible for its exploding popularity. Perhaps the most significant event was the COVID-19 pandemic, which sent millions of shoppers online and permanently altered their expectations. While people stayed home during the pandemic, they wanted to replicate in-store shopping experiences as much as possible, and commerce media is an important part of that effort.

As e-commerce grew during the pandemic, the amount and types of information available about customers also shifted. Advertisers and businesses suddenly had access to a greater number and variety of customer signals that they could use to shape their marketing strategies. These kinds of data are critical to commerce media because they allow for personalization.

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Compensating for the Loss of Cookies

Another milestone in the development of commerce media was the announced phase-out of third-party cookies. Cookies allow brands to collect third-party data about customers, but they've been a source of many privacy concerns for consumers and regulators. The result has been a push for less invasive, more effective data-gathering methods.

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Google originally stated that they would stop supporting cookies on their Chrome browser in 2020. While they announced in July 2024 that they were abandoning that plan, the move away from cookies is still well underway. Businesses have begun tapping into new sources of internal and external data that not only pose less of a privacy threat but also offer deeper insights.

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Commerce media has become a safe haven for organizations picturing life without cookies. Because of its reliance on first-party data, it's become an increasingly popular option not only to replace but also to improve upon the era of third-party cookies.

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The Rise of Retail Media Networks

One of the most significant developments in commerce media is retail media networks (RMNs), ad platforms that retailers can set up within their websites. These networks allow brands to purchase ad space on retailer-owned platforms, including websites and apps, so they can reach customers at every stage of their buying journey.

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By partnering with RMNs, businesses can have their ads appear on other sites as sponsored content. Unlike pop-up ads, which tend to be intrusive and obnoxious, these sponsored ads look native to the page and enhance rather than disrupt the shopping experience.

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Key Components

Commerce media pulls together multiple ad formats and channels to successfully reach customers. Some of the most crucial pieces of a commerce media strategy include:

• Shoppable ads: This interactive digital advertising allows users to buy products directly from the ad rather than sending them to a retailer or manufacturer's website. Customers can complete their purchases within their immediate environment, making their shopping experience faster and more efficient.
• Live commerce: When customers watch videos or live streams on their televisions or devices, they can buy products directly from their screens. This form of advertising has become especially popular with the rise of TikTok and other video-based social media platforms.
• Other content-commerce integration: Additional ad types also allow advertisers to strategically integrate their content into the shopping process. For example, businesses might use video ads to show customers how products work and sell those items using links embedded in the videos.

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If your business is just dipping its toes into commerce media, keep in mind that you don't have to use all these ad types at once. Experiment with the ads that feel like the best fit for your brand before expanding into other formats.

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The Benefits of Commerce Media

Online advertising has been a game-changer for many businesses, but it has also come with its fair share of drawbacks, such as making the reading or shopping experience more difficult. Commerce media addresses many of these problems, offering advantages to retailers, brands, advertisers, and shoppers alike.

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Increased Engagement

Customers are much more likely to engage with commerce media than with traditional ads for two reasons. First, many of the ads are interactive, allowing the user to examine products more closely, explore different features, and complete their purchases.

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In addition, commerce media is personalized and targeted. Customers have more positive responses to ads that reflect their specific needs and interests than to generic ads that look the same for everyone.

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Improved ROI

Optimizing your return on investment (ROI) is an uphill battle, especially if you struggle to attribute purchases and customer actions to specific ads. Commerce media creates a quantifiable ROI that makes it easy to associate purchases with content.

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When evaluating the ROI of commerce media, it's important to look at key metrics, such as:

• Conversion rates
• Customer acquisition costs
• Average order values
• Customer lifetime value

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These metrics clarify the customer journey and what touchpoints are most effective at driving sales. It also enables more informed decision-making, so you can allocate resources to the marketing efforts that are most worthwhile and profitable.

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Seamless Customer Experience

Lengthy or complicated experiences often cause customers to forget about, ignore, or abandon their purchases. For instance, if a user sees an ad for a product as a pop-up on a website but has to go to a search engine to find the retailer, chances are high that they'll move on to other things.

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On the other hand, imagine that a user sees an ad while scrolling through their favorite social media platform. Rather than clicking the ad to go to the retailer's site or searching for it online, they can use the ad to instantly enter their payment information. In this scenario, you've simultaneously encouraged an impulse purchase while also simplifying the customer's experience, making it a one-stop event rather than a series of redirects.

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Implementing Commerce Media Strategies

Creating a commerce media strategy is crucial to ensuring that your ads reach customers at the right moment and the right place, but that means doing some research and careful planning. Following a few best practices can increase your chances of success.

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Developing a Strategy

For businesses that are new to commerce media, the prospect of putting together a strategy might seem overwhelming. Try breaking down the process into manageable steps to make it less intimidating:

1. Define your goal: Decide what you want to achieve with your commerce media strategy. For example, is your primary concern improving engagement, increasing average order totals, reaching new customers, or some combination of all of those objectives?
2. Create a customer profile: Build a profile based on audience characteristics, including behaviors, preferences, and buying habits. This will help you tailor your commerce media to your audience's most important needs and interests.
3. Choose placements: Consider where you want your ads to appear. For example, you might opt for ad placements on a retailer's search results page or prefer to see them on product pages.
4. Select formats: Explore what types of ads you think would best represent your brand and engage your audience. For example, you might decide to generate both video and shoppable ads for your campaign.
5. Gather data: Make sure you have data to bolster your targeting program, achieve higher engagement, and strengthen your ROI. Look for data points such as page and product views, ad click-through rates, and contextual data.
6. Implement targeting: Use your customer data to personalize ad content and placements. Many tools and platforms can automate this process and make it more effective.
7. Determine frequency: While you want as many people as possible to see your ads, constant exposure inevitably leads to ad fatigue. Think about the ideal frequency for your ads, taking into account the type of content that you're generating.

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Commerce media is also a matter of experimentation, so don't take what seems like an initial failure as a sign you should give up. Test new content, placements, and ad formats to see what works.

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Tools and Platforms

Because commerce media rests so heavily on data, finding the right technologies to support your strategy is essential. Start by looking for tools that will support your data analytics before moving to commerce media platforms.

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Artificial Intelligence and Machine Learning

Artificial intelligence (AI) and machine learning (ML) are two of the most critical tools for commerce media because they help businesses analyze data more efficiently. With these tools, businesses can get the insights they need to develop personalized ad programs that align with their customers' needs.

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Some tools use AI targeting for precisely this purpose. For example, Adflow automatically displays a personalized offer at the moment of or immediately following a customer purchase.

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Data Clean Rooms

While they aren't as familiar to the general public as AI, data clean rooms also have a significant part to play in the commerce media space. Often connected with RMNs, these digital environments allow businesses and publishers to combine and manage their data. In doing so, they can access the insights they need to develop targeted ads.

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Retail Media Networks

RMN platforms are a vital part of the commerce media ecosystem. Some major players in the retail world have developed these platforms, including:

• Amazon: Businesses that sell their products on Amazon have access to Amazon Ads, a commerce media platform that can reach prospective customers with relevant interests. Sponsored ads on Amazon make it easier for customers to discover your products without interrupting their shopping experience.
• Walmart: Walmart Connect allows you to place ads in high-traffic spots, including search results and browsing pages. These ads look nearly identical to Walmart product listings, helping customers feel more comfortable with clicking on and exploring them.
• Instacart: Customers who search for groceries and household items on Instacart are highly driven and motivated to buy. Promoting your products on the platform allows you to reach a targeted audience and potentially increase sales.

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When selecting one or more RMN platforms for your ads, think about where your customers are most likely to be.

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Challenges and Solutions

Commerce media is an exciting development for many companies, but the path to success isn't always easy. As businesses begin implementing their commerce media strategies, they can expect to encounter some twists and turns.

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Common Challenges

Some of the most difficult hurdles businesses encounter in commerce media include:

• Bringing stakeholders on board: For advertisers, one of the challenges is getting buy-in from leadership and stakeholders. Because it's often new territory for businesses, it can be difficult to convey how commerce media will benefit your organization's sales and engagement.
• Finding the right tools and team: Commerce media is more complicated than creating an ad and copying it into your email newsletter. It often requires tools, expertise, and outside support that are difficult for some businesses to access.
• Data privacy: Shoppers and regulatory bodies around the world are concerned about how businesses are using consumer data. Maintaining compliance while also offering personalized experiences is a delicate balance.
• Integrating across channels: Making a strategy cohesive across multiple channels and formats is another potential difficulty. With so many formats and platforms available, businesses have to find a way to stay on message while also targeting specific customers.
• Tracking ROI: Advanced analytics tools and data research are vital to determining the ROI of your commerce media strategy. Failing to track the proper metrics could make your efforts unsustainable in the long term.
• Competition: As commerce media continues to grow, more businesses will battle for limited ad space. This can drive up ad prices and make it harder for small and medium-sized businesses to compete.

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Going into your commerce media strategy with these challenges in mind will help prepare you to face them.

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Overcoming Barriers

With a nuanced understanding of commerce media, businesses can move past the obstacles involved. The key to resolving many of these issues is data, specifically the amount, quality, and type of data you collect. To stay competitive and provide customers with an ideal shopping experience, businesses need to embrace technologies, such as data clean rooms, that grant them access to deeper insights.

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Partnerships are also a critical piece of the puzzle. Businesses that collaborate and form strategic relationships will gain access to exclusive ad spaces that improve their visibility and reach.

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Last but far from least, businesses should focus on content quality. An excellent ad placement and customer targeting won't benefit your business unless you also produce meaningful content that customers find engaging.

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The Future of Commerce Media

New developments in digital advertising are sometimes blips that fade or are replaced. The opposite seems to be the case for commerce media, which has solidified its position in the marketing world.

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Emerging Trends

Some elements of commerce media are just beginning to take hold. For example, connected TV (CTV) ads are rapidly gaining steam.

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In the past, seeing an ad on television might intrigue a customer, but they still had to drive to the store or visit the business website to make a purchase. With CTV ads, customers can make purchases directly from their TV screens, and advertisers can tap into a captive audience and offer an immediate opportunity to buy.

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Commerce media on social platforms is on a similar trajectory. Platforms like TikTok give businesses access to younger customers who prefer buying items on social media rather than navigating to and browsing through an online store.

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Innovations and Technologies

The ongoing development of powerful technologies, such as AI and machine learning, will make commerce media more accessible to a wider range of businesses. They'll also offer new and more detailed insights into customers, enabling advertisers to create highly personalized ads and incentives.

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The metaverse could be one of the biggest developments in commerce media moving forward. Metaverse ads take live streaming ads one step further by allowing customers to not only see products but also examine and even try them on in a virtual space, merging physical and digital shopping experiences.

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Predictions

Experts expect big things for commerce media over the next decade. Boston Consulting Group estimates that the retail media market will grow to $100 billion, accounting for more than 25% of total digital media spending by 2026.

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Those numbers are impressive, but they don't come close to what McKinsey & Company expects to see. In a 2022 report, they predicted that commerce media will generate more than $1.3 trillion in enterprise value in the United States by 2026.

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These expectations for the future support the same conclusion: commerce media is here to stay. Businesses that get on board now will be ahead of the game as competition grows.

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Make Commerce Media Part of Your Marketing Strategy

Commerce media is still a foreign concept for a lot of advertisers and retailers, but it's quickly becoming one of the most essential aspects of digital marketing. With the power to increase ROI, engage prospective and existing customers, and enhance the customer experience, this approach to advertising is a potential goldmine for businesses.

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Connecting with customers has taken on a new meaning with commerce media. Reach out to Nativo to learn how we can help strengthen your commerce media strategy.