Retail media is one of the hottest trends in digital marketing for 2023.

It is also considered the "third wave" of online advertising, after search ads disrupted the industry in the early 2000s and social media in the 2010s.

The idea is simple:

Large online retailers own a lot of data about the shoppers' behaviour, which they use to sell ads on their platforms. Usually, this happens in the form of "sponsored" products on search pages or banners on the homepage.

Amazon and Walmart lead the industry, effectively challenging traditional publishers and Big Tech.

Some numbers and facts about retail media:

✅ Retail media is expected to see the fastest ad spend growth in 2023 in the U.S, +26% vs 2022, outperforming ad champions like Meta and Google.

✅ Amazon Ads has become the third-largest digital advertiser in the U.S., behind just Alphabet and Meta. In the third quarter 2022, ad revenue jumped 30% YoY.

✅ For comparison, ad revenues at Meta, fell 3.7% over the same period.

✅ Amazon's revenue from advertising was higher than fees from its Amazon Prime membership, audiobooks and digital music combined, in Q3 2022.

✅ Walmart's ad revenue is expected to climb by 42% in 2023, Instacart's by 41% and Amazon ads by 19%.

Who said online advertising was in trouble?

Retail media is emerging as a key driver of revenue and profit growth for online retailers and technology companies, particularly in the face of economic hardships and layoffs.

But let's look at this from the perspective of brands and advertisers.

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Pros of retail media for brands

1. Reach potential customers when they are already close to purchasing.
   Users browsing Amazon or Walmart are looking for something specific to buy soon. Can you think of a better moment to showcase your products?
2. Operate in a first-party data context.
   Retailers sell their own users' purchase history data, which advertisers can use for efficient audience targeting.
3. Measurability.
   Retailers have long charged for prime product placements, such as placing items at eye level in large grocery stores.
   However, the latest innovation in retail media is the ability to accurately measure the impact of those premium placements on sales. Because the whole process (from ad buying to the user purchase) takes place on a single platform, the latest limitations on third-party cookies and tracking don't apply.
4. Trust.
   Consumers will trust your ad message more when it's delivered on a platform they already love.
   

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Cons of retail media for brands

Unfortunately, retail media also comes with risks. Some of its advantages can turn into liabilities if not thought through properly.

1. Commoditisation.
   When advertising your products among hundreds of others, it may highlight their strengths but also reveal weaknesses, such as a lower rating or higher pricing.
   In contrast, a good organic ranking is typically a result of your products naturally outperforming others.
2. Ad tax.
   Brands not only pay a commission to sell their products on a retailer's platform. Now they also pay advertising fees if they want their products to be seen by consumers.
3. Giving up data and paying to get it back.
   When a brand chooses to sell its products on a marketplace like Amazon, it loses access to valuable customer data. In fact, the customer belongs to Amazon, not to the merchant.
   However, in today's digital economy customer data is extremely valuable. As a result, brands are essentially paying to regain access to this data through targeted advertising.
4. Privacy concerns.
   Ever wondered why retail media is more popular in the US than in Europe? One of the reasons is GDPR.
   Advertisers are generally attracted by the first-party context of retail media and how they can avoid third-party tracking and targeting limitations.
   But, as Mariano delli Santi, data privacy campaigner at the Open Rights Group, puts it while talking to the Financial Times: "the fact that this is being done by a centralised platform [Amazon, for example], instead of bits of data gathered across the web [third-party cookies], changes little to the [privacy] risks."
   Also, according to Jill Smith of Kroger, a US retail giant, "the fastest-growing part of retail media is off-site advertising, where brands like Coca-Cola use Kroger audiences for reaching households on social media, CTV, or programmatic display outside of Kroger.com." This means that first-party data is actually being used in a third-party context.
   

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Bottom line

Retail media is undoubtedly one of the biggest trends in online advertising, poised to deliver years of revenue and profit growth to retail giants. However, it comes with risks that brands should carefully consider.

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The online retail industry is arguably living its worst time in a decade.

However, two new products by Shopify might secure a bright future to the Canadian-based company, as well as to the eCommerce sector as a whole.

1. Commerce Components by Shopify
2. Shopify Audiences
   

But they're not re-inventing the wheel, it's all taken from the Amazon playbook. Let's see why!

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‍Commerce Components by Shopify

After over a decade spent building a world-class eCommerce infrastructure, Shopify now plans to "rent out" that same infrastructure to new customers.

Even retailers that don't currently use Shopify, will be able to purchase individual components and install them onto their own systems. Components include Shopify's high-performing checkout, a fraud-protection system, a tax platform and more. See the full list of available components.

This is a game changer.

‍Why?

For a start, it allows prospective customers to get a taste of Shopify's features without committing to a whole new platform. Once they're hooked by the great performance of individual components, they'll be more likely to switch fully to Shopify.

Not only Commerce Components will help find new customers, it will also generate revenue in the meantime!

Most importantly, Commerce Components has the potential to be extremely profitable.

Many of the components are already included in the regular Shopify subscription. Now, they are being detached and sold individually, making the marginal cost of every new sale potentially very low.

‍What does Amazon have to do with this?

‍Commerce Components by Shopify reminds me of AWS, Amazon's cloud product.

Amazon had built a huge infrastructure to serve its eCommerce business. Why not making this infrastructure publicly available for a fee?

Today, AWS is one of Amazon's most profitable business units.

I envision a similar future for Shopify!

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‍Shopify Audiences‍

Today's mantra in the advertising industry is "first-party data".

First-party data refers to what your consenting users provide when interacting with your products, as opposed to data "for sale" sourced by third-party providers.

Initiatives like the Apple-Tracking Transparency (ATT) prevents third-parties from accessing users' data. This makes online advertising less effective. In fact, the likes of Meta and Google strongly rely on user behavioural data collected on third-party websites and apps.

Although this is good news for users, it can be bad news for advertisers, who in turn rely on Meta and Google advertising.

Shopify decided to do something about this, with the launch of Shopify Audiences.

Merchants using Shopify can generate a first-party list of their most valuable users. After that, a machine-learning algorithm expands this list, creating a larger lookalike audience.

Finally, merchants can upload this list onto Meta and Google's ad platforms and use it as their advertising target audience.

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‍The Problem

‍Shopify Audiences helps advertisers target more valuable users on Meta apps and Google. I also envision their lookalike algorithm to improve over time.

However, it doesn't solve the campaign optimisation part, which is still impacted by ATT.

In fact, with ATT, third-parties can not track when a user eventually makes a purchase after a click on an ad.

This is a big deal, because ad platforms learn what type of ads work best with what user, after analysing their post-click behaviour.

So, Shopify Audiences is not a game changer (yet). Rather, it is the first step towards a new ad tech ecosystem.

The size of the Shopify's merchants network is large enough to be an ad network by itself.

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Once again, this is plain Amazon playbook! In fact, Amazon Ads is built on the huge network of Amazon sellers.

Once the advertising journey starts and ends on the same platform, no ATT can ever stop it.

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Will these new products make Shopify the next Amazon?

Here are 5 online advertising trends I'm definitely going to watch in 2023:

1. CTV
2. Programmatic OOH & Contextual Advertising
3. Retail media
4. Audio ads
5. Shorts

CTV

Connected TVs, or TVs that are connected to the internet, are becoming increasingly popular. With the recent introduction of ads on platforms like Netflix and the expected rollout of ads on Disney+, the CTV market is set to open up great opportunities for advertisers.

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Programmatic OOH & Contextual Advertising

In the summer 2022, Google announced that advertisers could buy digital out-of-home ads through Display & Video 360. This is when I realised that programmatic OOH advertising will become mainstream.

Programmatic OOH will not scan people passing by a billboard to serve personalised ads. Rather, it will use contextual and geo-location data to show dynamic content, like a shop-specific sale, football real-time results, and more.

Contextual targeting will be increasingly common in online ads too. New privacy regulations are making personalised advertising harder to perform and less effective. Plus, the general sentiment around it couldn't be more negative. Advertisers will need to get more creative using contextual data!

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Retail Media

Why would retailers sell their customers' data to third-parties, when they can use it to sell ads directly?

Retail giants like Amazon and Walmart already embraced this trend, with their ads business expected to grow by 19% and 42% respectively, in 2023. Watch out, Alphabet and Meta!

Even Marriott is launching a proprietary ad network to serve ads on its websites and on guests' TVs.

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Audio Ads

Spotify ads' business will grow by 30% in 2023. With podcasts being a massive growth category, there's more and more room for audio ads. Online radio and other podcast platforms will also increase ads sales.

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Shorts

Short vertical videos, such as YouTube shorts, Instagram Reels, and TikToks, have become extremely popular. I don't know which one of these platforms will come out on top in 2023, but one thing is certain: short ads will become a major trend.

Advertisers will need to get creative in designing video ads specifically for this format. I think we'll see some very cool ones!

According to the Financial Times, Alphabet and Meta will no longer hold a majority share of the US online ad market for the first time since 2014. Their duopoly market share is expected to decline to 48% in 2023.

Some have questioned whether this indicates a struggle within the industry as a whole, or just a reshuffling of market share.

The reality is that the industry is expanding. New players are entering the market, creating new opportunities and gaining market share.

In particular, I see the industry moving in three "new" directions:

1. CTV ads (connected tv ads)
2. Ads in native apps
3. Merchant media

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Connected TV (CTV)

‍Netflix has recently launched its ad-supported subscription tier, where video ads are served in movies and tv series. This is thanks to a partnership with Microsoft, which is boldly entering the CTV ads space. Disney+ is planning to do the same soon and we can expect other streaming services to follow.

CTV will be one of the biggest trends in the ads' industry in 2023. Yet, not all companies will find success in this area. While Alphabet has already embraced this trend through YouTube, Meta missed the boat. In fact, platforms that are primarly designed for mobile usage struggle to break into the TV space, which opens the door for new players.

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‍Ads in native apps

‍It has become clear how digital ecosystems are essential for big tech profitability. Apple is doing everything in its power to keep competitors out of its ecosystem. APP (Apple tracking transparency) is a great example of this. Apple Search Ads are in, Facebook Ads out. I expect to see more and more ads on Apple native apps on iPhone, Mac, Apple TV and more. In fact, its ad business is forecasted to grow by 26% in 2023, with plans to double its digital advertising business workforce.

‍Meta is also trying to build its ecosystem with the Oculus device and its metaverse. Will it succeed?

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‍Retail Media

‍This will be another great trend in 2023.

Retailers can sell ads directly using their own customer data rather than selling the data to third parties. Amazon and Walmart are among the largest players in the sector, with their ad business expected to grow by 19% and 42% respectively next year.

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Advertisers will need to reassess their media mix in 2023!

Unpopular opinion: to stop climate change we just need to get poorer.

Our consumption produces over 60% of all greenhouse gases. So forget about evil Chinese chemical factories or ruthless capitalist executives. It's our rich lifestyle that harms the planet.

It's not about buying an electric car instead of a petrol one. It's about not buying a car at all. It's not even about using car-sharing or other low-emission means of transport. It's about stopping travelling so frequently.

We often feel like we don't have enough money to do what we want, but the reality is that we have more than anyone before us ever dreamt of. Our grandfathers were not going for weekend gateways or takeaway meals every week.

How to get poorer is the problem: work less, produce less and earn less?

Maybe. But then the same formula should be applied to everyone.

As always, it all comes down to inequality.

Top-skilled workers in rich economies could even work a 20h week, but they will still make more money than the worse-offs working 60h+ per week. Therefore, they'll still consume more.

In fact, the world’s richest 1% produce more than twice the emissions of the 3.1 billion poorest humans. But I'm fairly sure they don't work twice the time. Quite the opposite I would expect.

Fighting climate change while still chasing financial growth is not realistic.

This also applies at a personal level.

Our expectation of always getting better jobs, growing our finances and consumption over time is not sustainable anymore.

Quoting Greta Thunberg, it's not just governments talking "bla bla bla", but it's also us in our everyday lives.

How to change this? I don't know :(

This is the end 😔

Elon Musk's take over is the end of Twitter.

Facebook doesn't appeal to Gen Z. It is the end.

It's been a while I've felt quite negative about my future and the future of the world.

The pandemic first, the war in Ukraine then, climate change. It's hard to stay faithful.

But the reality is that things do end. It's inevitable. And it's not necessarily a bad thing.

There would be no Facebook without MySpace, no Spotify without Napster, and so on.

I remember once I was on a guided tour of an ancient castle in Ireland. The building had been owned by the same family for centuries. Unfortunately, the last heir of the family didn't have the financial means to maintain the castle. So she had to give it away and moved to Australia soon after.

I commented saying that it must have been hard for her to sell the castle and move so far away.

The guide replied that it wasn't the case: wealthy (and smart) people don't fear endings.

"Things are here and then, in a spectacular flash, they are not." (cit, The Infinite Deaths of Social Media)

I will never forget it.

What do cookie-consent banners and Russian oligarchs have in common?

In 2020, Catherine Belton, a British journalist, published a book on Russia’s kleptocratic class called “Putin’s People”.

Two of the oligarchs mentioned in the book claimed that her information was inaccurate and thus breached their rights under GDPR, the newest European data-protection law.

They decided to sue her for GDPR breach instead of for libel.

Why? 🤔

By British defamation law, claimants need to prove the information shared caused "serious harm". But with GDPR, claimants have the right to access any information their opponent has about them, even if it hasn't caused any harm or hasn't been published. So it applies also to confidential reports, corporate internal memos and more.

💡 If you believe the information is inaccurate, you can sue. 💡

Trials are very expensive, especially in the UK, so Catherine Belton and her publisher HarperCollins, eventually decided to settle the case and agreed to make changes to the book.

Of course, if your opponent doesn't care about money, you're always going to lose.

Needless to say, the same oligarchs who could sue Belton in London, were sanctioned by the British Government in 2022.

Cookie banners are not just bad for online user experience, but also for press freedom.
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To know more about this story:

The Economist: Why oligarchs love European data-protection laws

Rent is the new "CAC" (Customer Acquisition Cost).

A decade ago, when many digitally-native retail brands were first launching, an expression was popular in the industry: “Online CAC is the new rent”.

While traditional retailers were paying expensive high-street rent to acquire customers, eCommerce invested in online ads.

But now the expression flipped over: “Rent is the new CAC”.

With more and more brands online, online CAC is getting expensive. So even digitally-native retailers are planning to establish a physical presence, as a way to stand out from competitors and acquire new customers, possibly for cheaper.

In fact, because of the pandemic, rent prices have decreased, but people are gradually coming back to the high street.

We're seeing an omnichannel renaissance of physical retail.

The IKEA case is the most extreme example of this.

Started as a logistics champion, Ikea is now moving to the high street as part of its digital transformation process.

Wait, what?

Yes!

In order to push online sales, the company is planning to open an experiential showroom in central London (autumn 2023).

On top of directly selling small (high margin) items like kitchenware, the shop will allow customers to browse through Ikea furniture and order it online.

This is literally "physical" online customer acquisition! Do you think this trend will last?

Merchant Media. What is it?

The online advertising industry is going through a massive transformation due to the "death of cookies" and other privacy policies.

As always, the end of something is just the beginning of something else.

With 3rd party #cookies fading out, 1st party data is becoming more and more important. Large merchants own huge sets of customer data. Now, this data is one of their most valuable assets.

Marriott International is planning to monetise its 1st party data via a proprietary ad network, that will allow advertisers to reach its guests across the Marriott mobile app and eventually even the guestroom TVs. This will bring a new revenue stream to Marriott, as well as new premium ad inventory to advertisers.

I believe this is just the beginning!

Do you agree?

One-hit wonders have always fascinated me.

The hit “Teenage Dirtbag”, by rock band Wheatus, "Stacy’s Mom" by Fountains of Wayne and "All The Things She Said" by the Russian girl-duo t.a.T.u, are just some that come up to my mind. If you're in your 30s in 2022, you will know what I'm talking about.

I’ve always wondered how it must feel.

How would it feel to be in those artists’ shoes? You finally get to live your dreams, achieve world-wide fame doing what you love. But shortly after, you see the same dreams being shattered like a mirror crashing on the floor.

It must be devastating and excitingly explosive at the same time. Something like: “alright, I’m a nobody again, but hey, I’ve done things most humans can only dream of”.

Now, there are two different instances of one-hit wonders:

- The ones where we all forgot about both the song and the artist.

- The ones where the song became an instant classic, but the artist never made it past that.

The latter scenario is the most intriguing.

I've been thinking a lot about what happens to an artist, when people can only remember him/her for one song only. Was that their plan? Probably not. Probably, they had much more to say. Likely, they wrote tens of better songs and, in fact, they hate that one.

For example, Radiohead exploded in 1992 thanks to the smash-hit “Creep”. Yet, they hated it, as stated on many occasions. Fortunately, Radiohead were not a one-hit wonder. They were able to replicate and outdo the success of "Creep". But what if, that was it? What if, Radiohead were remembered only for “Creep”, despite all the other masterpieces they released over the years?

Well, it was the case of Vanessa Carlton.

Her name might not tell you much, but her hit “A Thousand Miles”, definitely does. After dropping ballet, Vanessa raised to music fame with that song in 2002, when she was only 22.

The tune became an instant classic. Its signature piano intro is now the soundtrack of viral TikTok and Instagram videos, and even Gen Z rocker Beabadoobee recently covered it on BBC Live Lounge. (Yes, I'm not too old to listen to Gen Z artists, yet)

I admit, I had forgotten about her until a video documentary from Vice popped up in my YouTube feed, “The Story of A Thousand Miles by Vanessa Carlton”. I immediately recalled the song. It made me go back in time to my happy teenage years, when I would spend my afternoons in front of MTV and playing music. Nice life :)

"The Story of A Thousand Miles" is a great story of music, hard work, luck, massive success and then, somehow, failure.

At the start of the video, Vanessa mentions she’s spent the last few months living with her parents and her dog, Sinatra. Her mum is with her for the whole duration of the interview. She breaks into the conversation to support her daughter, like only a loving mum can do with her little girl. Although, Vanessa is far from being a little girl now.

I know very little about her personal life. Why is she at her parents’? What kind of relationship does she have with her mum? I don't care. The only thing I know is that the story of A Thousand Miles resonates with me and with how I feelabout adult life.

Despite many years abroad and a fairly successful career, I still sleep in my teenage bunk bed when I’m at "home". So, the story of a huge star that stays at her parents' and says “it’s been interesting”, couldn't resonate more with me.

At one point in the documentary, she states: “In your mind you get exactly what you want, and is actually not what you want”.

Even if she had achieved everything she could ever dream of, that life didn't feel like a dream at all. Rather, it was starting to feel like a nightmare.

To me, this is the essence of adult life.

We spend years preparing for it. We go to school, to college, we study and work hard to chase our “dreams”. Nothing can ever go wrong, provided we plan and focus enough.

But the reality is that it’s not as straightforward as we're told. Things that we could never plan for suddenly happen. And then what?

What is relevant for us in our teenage years, will not be in our thirties. What we thought we wanted is not actually what we want now. Our biggest achievements, the ones we worked so hard for, quickly vanish in the past as new, greater challenges arise. Although reaching those achievements was all we wanted, now it’s not enough. Now we want or need more. Things like getting married or setting up a happy family start to get priority in your “I-want” list. My 20-something self would kill me for even thinking this!

All of a sudden, what we have worked for and all our past achievements don't matter if we’re not settled by 30. They don't matter if we don’t make a 6-figure salary, even though we love our job. What we want now, or at least what we think we want, completely erases any good we did in the past, which we should be proud of.

Is Vanessa proud of her “A Thousand Miles”? Is this achievement enough for her? Or maybe, she would rather have a longer and more sophisticated music career? In the interview, she states that she “hated that song”, while her mum adorably counters with “I love that song”. So no, maybe it's not enough. Although, I sincerely hope she's still proud of it, as it's a great song.

This story also made me think that even though we do great work and things go well for a while, in the end we can still fail. Eagerness and hard work are not always enough to be successful. Even the greatest achievements can be short-lived and don’t secure a long-term success.

Adult life is all about dealing with this.

Back in the days when I was playing music, I got to a point where I believed something big could have happened. I had worked hard for it, I was improving and networking with the right people. But it just didn’t work out and I gave up. Maybe too early? May be.

I still show some music achievements in my resume, although some of them are over 10 years old. I do it more as a self-therapy measure, to remind myself that I am also that. I am also the guy who has great music stories worth to be told to grandchildren.

But the reality is, the challenges and expectations of adult life are making that guy slowly fade out in a foggy past.

Adult life is all about realising the journey is not always one way.

Sometimes we go backwards, sometimes we’re just running in circle. Sometimes, we are back right where we started. But, hey, we never stop!

If you're lucky, you release an international smash hit song, and 20 years later you live with your mum and a dog. But you’re still there, writing music, for you and whoever wants to listen.