A retail media network is the advertising business of a retailer or an online marketplace. It sells ad space on the retailer's own website, app and stores, and chooses who sees each ad using the retailer's own data about what shoppers search for and buy. In India, the "Sponsored" products at the top of a search on a shopping app or a quick-commerce app are retail media.
A retailer has two things that most other publishers lack. First, its shoppers are already about to buy something. Second, it knows what each logged-in shopper has bought before. This is first-party data, data that a company collects itself. So the retailer can show an ad at the moment of choice, and later see whether the same shopper bought the product. Most other channels can only estimate that.
Take, for example, a brand of instant noodles that sells on a quick-commerce app in Chennai. The brand's team runs its marketplace ads through marketplace management software. It bids ₹8 per click for the search word "noodles". When a shopper types "noodles", the app runs a quick auction among all the brands bidding for that word. The app's software ranks the bids, together with how often each product is bought after a click, and puts the winner in the first "Sponsored" place. A shopper taps it and adds a ₹56 pack of four to her cart. The brand pays ₹8 for the click. Its report shows the click, the ₹56 sale and the cost: ₹1 of ad spending for every ₹7 of sales. This closed loop, from ad to sale inside one system, is what brands value most in retail media.
Sellers on an online marketplace buy such ads in seller central, the marketplace's own tools for its sellers. Large brands may also buy a retailer's audiences through a demand-side platform (DSP), to show them ads on other websites as well. Supermarket chains with loyalty cards run their own retail media, using the basket data analysed by retail media and customer analytics software.
Retail media has grown fast, because the retailer earns this ad money on top of its margin on each sale. It also has a cost for shoppers. When the top results are paid for, the first product shown is not always the most suitable one. So marketplaces label sponsored results. Each brand's results from every retailer usually go into marketing reporting and analytics tools, which combine them with the brand's other channels.