Debunking the onsite retail media ad inventory ceiling: How retail media networks drive growth

Summary

Despite hype around offsite, CTV, and in-store media, onsite retail media advertising is poised to continue driving over 80% of retail media ad spending for years. Onsite ads engage high-intent shoppers in their purchase journey, yielding significantly higher ROAS than offsite placements. They also offer superior profit margins (often 90%, 3-4x higher than offsite) and a brand-safe environment.

Leading RMNs like Amazon and Walmart derive the majority of their media revenue from onsite inventory, which has an outsized impact on overall profitability. For example, 68% of Amazon's profits come from digital advertising. Growth in onsite revenue is achievable without large traffic increases by leveraging machine learning (ML) that automatically improves ad performance, often unlocking 5x more monetization from the same inventory.

Key strategies to maximize onsite growth include: 1) adopting advanced ML for personalized, profitable ads; 2) scaling the advertiser base through self-serve portals that expand TAM and increase auction density; and 3) enabling outcomes-based targeting with probabilistic auctions, allowing advertisers to set target ROAS or CPO. By focusing on these levers, retailers can maximize value from their most valuable media asset.