How Amazon Is Shaping the Future of Retail Media Networks
The Amazon advertising ecosystem and the recent integrations with the retail media strategies and omnichannel consumer data platforms.
The retail media space is witnessing what can best be described as a revolution. What used to be a niche advertising format is now the fastest growing channel in digital advertising. Budget allocations are shifting by brands from traditional search and social to on-site, off-site, and in-store retail advertising. Retailers are monetizing their owned customer data and consumers are able to shop in a seamlessly integrated and frictionless online and offline world.
No one is best positioned to take on this transformation more than Amazon. Given their product assortment, customer intent, first party data, and sophistication of advertising tech, Amazon has been able to construct a retail media ecosystem with unparalleled power and Adtech in the world. However, the narrative is bigger than just Amazon and retail media networks.
The bigger narrative is convergence. Amazon’s model is being utilized to shape the entire retail advertising ecosystem and retailers everywhere are converging their media networks, first party customer data, and omnichannel strategies to the same blueprint.
This article discusses how Amazon Advertising collaborates with other retail media and how merchants are modifying their services and how brands can benefit from this synergetic system.
1. The Rise of Retail Media: A New Power Channel in Advertising
Just a couple years ago, retail media was a story purely about Amazon. But now, virtually every major retailer—Walmart, Target, Kroger, Instacart, Best Buy and dozens more—has a retail media network. These networks enable brands to advertise to consumers in real time during purchase, using retail first party data as the targeting engine.
Why is retail media growing this quickly?
1. First party data is becoming the new gold.
Privacy changes, cookie loss, and tracking limitations have made traditional advertising a much more unreliable endeavor. Retailers have stepped in with their own data—purchase history, loyalty behavior, real time shopping habits, product preferences, and more.
2. Closed-loop attribution.
Retail media is able to have absolute certainty on which ads resulted in which purchases. Most ad channels can’t do this and with this level of granularity.
3. High intent environment.
Consumers on retail sites are already in a buying mindset. This is a much more conducive environment to make a purchase than social media or upper-funnel display ads.
4. New Streams of Revenue for Retailers
Retailers operate on a break even basis. As a result, advertisers profit more from these deals. Retailers notice they are losing hundreds of thousands of dollars on ads.
Amazon showed how retail media deals are profitable. Generated revenue from other industries.
2. The Work of Amazon in Creating the Model for Retail Media
Amazon didn’t come up with the strategy. Just improved it and got it to a stage of success no one else has reached. To understand how Amazon works today, it helps understand how new retail networks function.
Amazon’s Retail Media Pillars
1. Amazon Search Ads
You can also see these ads in almost all stores. Amazon contains a marketplace of sponsored brands, sponsored products, and sponsored display ads. These ads are in the filters of product search results, order confirmation emails, and even shopping cart abandonment emails.
2. Amazon DSP
Amazon’s ads are just ONE part of what Amazon owns and controls, including FireTV, IMDb and Twitch. DSP ads are precise, targeted ads to Amazon’s first-party audience segments.
3. Amazon Marketing Cloud
A secure, privacy-compliant clean room for brands to analyze the impact and value of advertising dollars.
4. Amazon Stores and Brand Pages
Amazon’s Mini Site allows brands to create a stand alone store.
5. Whole Foods + Amazon Fresh
Shopping offline while utilizing online data for tracking is what Amazon calls interchange.
6. Amazon Attribution
Companies assess how certain platforms like Google, Facebook, and influencers impact Amazon sales.
Amazon integrated advertising using on-site retail marketing, off-site digital media, and loyalty streaming, as well as offline grocery purchases and third-party media.
This data-driven marketing approach started off as a model for other retailers as well.
3. The Convergence Begins: How Retailers Are Following Amazon’s Footsteps
Almost every retail media network today tries to defend Amazon’s structure:
1. on-site search + display advertising
Walmart Connect, Target Roundel, Kroger Precision Marketing, and Instacart Ads all serve ads within their own shopping environments.
2. off-site advertising using retailer data
Retailers often use The Trade Desk, Google, or partner DSPs to activate retail data programmatically outside the retail website.
3. In-Store Media Networks
Using shopper data to personalize ad targeting, digital shelf screens, self-checkout screens, smart carts, and retail TV ad networks are.
4. Retail Media Clean Rooms
Retailers now offer data clean rooms to brands for analysis of audience insights and the path-to-purchase behavior.
5. Loyalty Integration
Retailers with loyalty programs (Kroger, Walgreens, Tesco, etc.) enhance their media network targeting using shopper data from their loyalty programs.
It’s basically Amazon’s way of doing things, modified for a specific retailer’s surroundings.
4. How Amazon Fits Into The Bigger Picture Of Retail Media.
Amazon isn’t an outlier when it comes to the media retailing industry. In fact, it spearheads it, and retail networks modify their technology, partnerships, and measurement to match Amazon, or compete with it.
This is how Amazon’s ecosystem integrates with the wider retail media sphere:
1. The hybrid models of direct retail and marketplace.
To achieve greater product assortment, retailers are emulating Amazon’s marketplace structure. There are more sellers, and therefore, more advertising inventory that can make more money.
Some of these are :
– Walmart Marketplace
– Target+
– Best Buy Marketplace
– Lowe’s Marketplace
Consequently, retailers are able to achieve:
– more traffic
– wider product assortment
– better data
– stronger targeting capabilities.
This integration makes it possible for the advertising campaigns of multiple retailers to function like Amazon multi-channel campaigns.
2. Activating Multiple Retail DSPs.
There is a growing tendency for brands to run campaigns that use both Amazon DSP and multiple retail DSPs (Walmart DSP through The Trade Desk, Kroger DSP, Instacart DSP, etc).
This integration operates more seamlessly than expected, especially when it comes to how advertisers map out their spending:
Disregarding the fact that Amazon advertising is often looked at as a different silo, brands are now focusing on a single retail media budget, with spending allocated across retailers on similar KPIs:
– ROAS
– incremental sales
– new-to-brand shoppers
– omni-channel lift
The retail advertising ecosystem is synthesizing to the pace set by Amazon in measurement and attribution.
3. Data Clean Rooms Became Became the New Standard
Amazon Marketing Cloud (AMC) was a pioneer of the retail clean rooms. Currently, almost all the big box retailers have their own:
Walmart’s Walmart Luminate
Kroger’s 84.51° Stratum
Target’s Roundel Insights
Albertsons Media Collective
Instacart’s Ad Insights
Clean rooms provide the opportunity for anonymized shopper level analysis, allowing for the cross-channel convergence of:
search + display + social + streaming
online + offline purchases
retailer + external
brand CRM + retail media data
Amazon set the stage, but now the whole industry, including the competitors, runs on the same infrastructure.
4. Omni-Channel Experiences Expanding Beyond Just Amazon
Amazon integrates digital activities with offline purchases at:
Amazon Fresh
Amazon Go
Whole Foods
Retailers are also doing this with:
app-based in-store experiences
mobile scanning and payment
loyalty card integrations
digital shelf screens ad which use shopper data
connected carts
As omni-channel converges with retail media, the more personalized and more measurable the ad, the better the experience. It doesn’t matter where the shopper buys.
5. The Full-Funnel Approach That Retailers Are Starting To Implement
Amazon provides advertising solutions throughout the customers’ journey:
Awareness: Streaming TV, Twitch, Fire TV
Interest: DSP display ads
Research: Sponsored Brands, Brand Store
Purchase: Sponsored Products
Loyalty: Subscribe & Save
Retailers Started Building Their Own Full-Funnel Stacks. Retail media is no longer solely “bottom-of-funnel.”
This greatly aligns multi-retailer strategies and simplifies the framework for brands to manage using Amazon-inspired playbooks.
5. The Unified Retail Media Strategy That Brands Can Implement
For most brands, Amazon is the primary focus for retail advertising. However, as retail networks expand, marketers must find a way to integrate these networked platforms using a single omni-channel strategy.Here are the most important steps:
1. Create a Balanced Retail Budget
Rather than allocating Amazon ads as a single unit, incorporate it into a more comprehensive structure:
Core Retail Channels: Amazon, Walmart, Target
Grocery & Delivery: Kroger, Instacart, Albertsons
Category Specialists: Best Buy, Home Depot
Regional Retailers: Meijer, Tesco, Carrefour
Budgets should be allocated based on:
– category share
– market dominance
– audience size
– data availability
– omni-channel opportunities
2. Synchronize KPI Metrics Across Retailers
Amazon utilizes:
ROAS
new-to-brand
branded vs non-branded mix
repeat purchase rate
impressions and reach
total advertising cost of sales (TACoS)
Other retail networks are also using the same metrics. To evaluate performance across platforms, develop a single, coherent scorecard.
3. Integrate Retail Media To Your CDP
With a customer data platform (CDP), brands are able to consolidate:
Amazon customer insights
retailer loyalty data
CRM data
website analytics
social engagement
offline purchase data
This permits:
omni-channel attribution
predictive forecasting
unified audience targeting across retail networks
more consistent messaging
4. Utilize Clean Rooms for Advanced Attribution
With AMC and other clean rooms, you are able to measure:
which channels bring in new shoppers
how sponsored display ads influence sponsored products
the effect of off-Amazon advertising
multi-touch attribution for retail media
customer lifetime value forecasting
Clean rooms provide a single source of truth to justify your retail strategy.
5. Building an Always On Retail Media Architecture
The biggest companies never turn off their retail advertisements. They do:
always on search ads
mid funnel DSP campaigns
specific season bursts
brand building campaigns
This ‘always on’ ads started with Amazon, but now works with all retail networks.
6. The Future: An Integrated Retail Media Super Ecosystem
Retail media is evolving rapidly, as it continues, convergence is expected to reach:
1. Omni-Channel Attribution as the Norm
Every retailer will soon be able to track:
a user seeing an ad on their screen
walking into the ads store
purchasing a product at the cash
returning to their screen later
making a different purchase
This is the next milestone.
2. Streaming Media + Retail Data Integration Everywhere
Amazon links advertisement with:
Prime Video
Fire TV
Twitch
Amazon Music
Freevee
Retailers are now streaming and connected TV advertising, using their own shopper data to target advertisements on smart TV’s and other digital platforms.
3. Standardization of Audience Cross Retail
Just as the social media platform implemented performance metrics, retail media networks will soon have:
uniform ad styles
common classification systems
coordinated outcome data
This will ease the process of multi-retail campaigns for brands.
4. Explosive Growth of Marketplace Integration
A multitude of other retailers will begin integrating marketplace to compete with Amazon, expanding their available products, which will create more ads and deeper data.
5. AI Optimizing Retail Media
Some functions are to be automated in machine learning, such as:
bid adjustments
keyword optimization
segment targeting
creative variations
forecasting
This brings greater efficiency and returns for the brands.
7. Brand and Advertiser Implications
The Amazon and retail media networks merging brings unprecedented potential. Brands that are capable of integrating Amazon strategy with retail media as a whole will achieve:
greater performance
improved attribution
increased profitability
enhanced customer insight
greater market share
The main point is to realize that Amazon is not a stand-alone channel anymore; it is the framework for the entire retail media system.
Final Reflections
Media at the retail point has evolved into one of the foremost powers within advertising. It is Amazon that has set the first blueprint, but the evolution of the industry is the merging of the retail platform with loyalty data, streaming content, in-store media, and advanced clean rooms.
The real progress is in the collaborations between the retailers, brands, and technology companies in creating a cohesive, omni-channel customer journey that integrates online browsing, mobile shopping, in-store visits, and streaming activity into a singular, actionable path.
As this ecosystem develops, Amazon continues to be the centerpiece, but
not the only one. The prospects belong to the brands that know how
to bring together Amazon Advertising with other retail media
networks and customer data platforms, creating a continuous loop that
captures consumers wherever and however they want to shop.
FAQs
1. What does “convergence” mean in retail media?
It refers to how Amazon’s advertising model and other retail media networks are becoming the same in their use of data, technology and omni-channel marketing.
2. Why is Amazon important in retail media?
Because Amazon was the first to build a large scale retail advertising ecosystem using first party data, search ads, a DSP, and closed loop attribution.
3. How are retail media networks similar to Amazon’s model?
They all provide, onsite search ads, display ads, loyalty data targeting, offsite media activation, clean rooms, and digital in-store advertising. Just like Amazon.
4. What is Amazon Marketing Cloud (AMC)?
AMC is a clean room that provides brands with advanced customer insights, attribution across channels, and full-funnel campaign performance.
5. What role do data clean rooms play in retail media?
Clean rooms allow brands to securely examine shopper data and track the entire customer journey throughout different media.
6. How does omni-channel shopping drive convergence?
Thanks to loyalty data and analytics, online browsing, mobile apps, and in-person shopping integrate more than ever, leading to Amazon and other retailers functioning more alike.
7. What are examples of retail media networks besides Amazon?
Other retail media networks include: Walmart Connect, Target Roundel, Kroger Precision Marketing, Instacart Ads, Tesco Media, Boots Media, and Albertsons Media Collective.
8. How do brands benefit from this convergence?
Ad formats are more consistent, results are measurable, targeting is more unified, and brands can more easily measure performance across retailers.
9. How is Amazon influencing other retailers’ strategies?
Other retail networks are adapting to Amazon’s model of search ads, DSP, attribution, and data integration.
10. What is closed-loop attribution in retail media?
Closed-loop attribution is the ability to measure true performance by identifying the link between an ad view and a purchase, online and offline.
11. Do retail media networks work only online?
No. Most networks now have in-store screens, smart shopping carts, digital shelf labels, and other connected devices to show personalized ads.
