From new channels to emerging tech, our team of experts is breaking down the trends shaping the future of digital marketing. As EVP and GM at Fluent, Brian Hogan leads the growth strategy for adflow, a post-transaction advertising solution designed to help brands reach highly engaged audiences at the moment of purchase. Read on as Hogan explores the factors that have led to the rise of commerce media and will continue to feed its rapid growth in 2024.
The rise of commerce media just makes a ton of sense. Retail media networks (owned and operated by online retailers) smartly position personalized ads along the customer journey. They also leverage their first-party data to target ads on the open web on behalf of their clients. These personalized, contextualized, and relevant ads feel like marketing at its highest aspiration: full-funnel attribution for advertisers and meaningful ad content for consumers. And yet, online shopping isn’t new. Amazon launched almost 30 years ago. Why now?
The rise of the third wave of digital advertising is driven by forces much larger than a good idea. And it’s bigger than the privacy policies of Big Tech or the sweeping privacy legislation issued by governing bodies over the last few years. Commerce media owes its success to a rising generation of shoppers, game-changing technology leaps, and how the last three years have changed us all. These driving forces may intermingle, but the arrows all point in the same direction. Let’s untangle them for a better look.
The pandemic changed us
Grocery shopping, WFH, telemedicine, audiobooks, piano lessons. If we could do it online, we did more of it during the pandemic. Online shopping went into hyperdrive with 43% growth in 2020 compared to 2019. While it was reasonable to expect spikes, there was no dropoff once the virus subsided and things returned to “normal.” In fact, almost any way you slice it, online use increased. We are forever changed.
The funnel is flattening
While the four stages of the purchase funnel – awareness, interest, desire, and action – remain the same, the advertising channels for reaching consumers at each stage are compressing. The data indicates that Gen Z and Millenials are increasingly beginning and ending their purchase journeys in just two places: social media and ecommerce.
The long courtship of customers that traditionally began with upper funnel TV and print advertising isn’t effective with the younger demos. For them, the ads need to be contextual (i.e., appear in meaningful moments) and more transactional because the target is closer to making a purchase decision. One example is the success of shoppable ads, which take the consumer from awareness to action in very short order.
Privacy laws and regulations are putting an end to third-party data (cookies) and making first-party data the lifeblood of all digital advertising. The retail media networks are in a prime position to capitalize. The same first-party customer data used to target ads within the walls of the retail media networks is also fueling media buying/planning services across other ad channels like social and CTV. And because retail media networks don’t have nearly enough inventory to satisfy the demand from agencies and brands, it’s a match made in heaven…for now, at least.
Artificial intelligence could not have arrived at a better time for commerce media. Crunching data from multiple sources, distilling it into a strategy, and deploying relevant ad campaigns in a split second is much better with AI. Could we do it without artificial intelligence? Sure, but not as well. AI will source better customer insights, connect all the touchpoints and stakeholders, and continue to play a major role in the rise of commerce media.
Peers, not pros
The younger generations are not reading product reviews from “experts” to help make purchase decisions. Instead, they are increasingly looking to relatable influencers and aggregate reviews on shopping sites to educate themselves and build confidence to make a purchase. This represents a major shift from older generations. It also bodes well for online retailers that collect reviews from confirmed buyers and encourage customers to become influencers and brand advocates. Customers are under retailers’ roofs from discovery to purchase, which means advertisers get the full funnel attribution they crave.
The endless rise of commerce media
Commerce media is not just a new wave. It is a tide that will continue to reshape the shores of digital advertising for years to come. Its alignment with consumers’ evolving preferences solidifies its status as an enduring and integral component of the advertising ecosystem. The convergence of various factors, including the transformative impact of COVID-19, the infusion of artificial intelligence, and the changing dynamics of consumer trust, are the real reasons commerce media will be the fastest-growing channel in 2024.
If you want to learn how Fluent can help your brand unlock incremental value through the power of commerce media, contact us here.