By Simon Bird, Co-Founder and CEO of RevLifter

Retail media – two words I’m sure you’ve heard more than a few times over 2023.  

For those in the dark, retail media enables ecommerce brands to unlock an extra revenue stream by delivering ads to shoppers on their websites. These adverts take many forms – from conventional display banners to post-purchase deals on complimentary products. 

My favourite example is from the travel industry, where airlines, car hire companies, hotel operators, and attractions all work together to push in-market customers onto each other’s sites, usually post-purchase. 

Although most ecommerce sites are yet to capitalise on the trend, retail media is growing – fast. GroupM tips retail media advertising revenue to grow 60% by 2027. As an industry, it is expected to be worth a staggering $6 billion (£4.82) in the UK by 2025.  

There is a clear explanation behind this incredible growth. With margins getting tighter, retailers are leaping on the chance to diversify their revenue. There’s also a huge demand for inventory, with a Criteo finding that 96% of UK retail sites have a waiting list for brands that want to advertise on their sites. 

Also, with retail media being fuelled by first-party data, which remains unaffected by the demise of the third-party cookie, the opportunity to use these signals for targeted campaigns becomes even more enticing. 

Retail media will continue to grow in a post-purchase form way beyond 2023, Still, there is a subsection that could generate an incredible amount of high-margin revenue for a specific type of brand. I’m talking about supplier-funded offers.   

Supplier-funded offers explained

Multi-category retailers already have a strong existing opportunity with many retail media formats, like post-puchase incentives and display banners. However, with supplier-funded offers, there is a chance to generate the same levels of revenue from a highly native option.

Recently, I saw a great example by a beauty reseller. The retailer was already using a sidebar to centralise its customers’ deals, recommendations, and messages. Given that the technology was positioned in a favourable area, suppliers were funding ‘offers’ to encourage customers to pick their brand over the competing options.

The same system works for promoting products to customers as they search for generic items or even those by competitors. By calibrating the engine to include ‘sponsored’ or ‘featured’ items on certain searches, the reseller can essentially create their own retail media network.

Supplier-funded offers – in a league of their own?

My confidence in the supplier-funded format comes primarily from its nativeness. These offers are baked directly into the customer experience and can fire on highly specific criteria.

Let’s say a customer adds a product to their cart and there’s a supplier-funded offer on a complimentary item, like a pair of socks for someone buying trainers. The retailer generates more revenue via a cross-selling opportunity, while the advertiser of the socks has also driven a sale. Meanwhile, the customer feels valued by receiving the offer for the extra item.

I’d liken this process to a bridge between personalisation and retail media. Done properly, supplier-funded offers do more than simply push customers towards brands. They actually enhance the customer experience by providing inspiration, relevant recommendations, and value for money.

One of the biggest considerations when starting a retail media effort is being able to merge a paid-for promotion with the existing experience. With supplier-funded offers, it’s clear how the two elements combine.

How to get supplier-funded offers on your site

While the likes of Boots push on with building dedicated media agencies, the good news is that it’s easy to build something much smaller and scale up. 

My advice would be to split the process into four steps:

  • Meet with suppliers

Rather than opening themselves up to advertisers in other industries, multi-category retailers could start by talking to their suppliers and assessing the demand for supplier-funded promotions. These same brands could even be investing in similar efforts with other sites.

  • Decide if you have the technology in-house

Product recommendation engines and search functions are two strong options for hosting supplier-funded offers. If you already have these tools on your site, you’ve taken a big step in the right direction.

  • Identify a tech partner

If you don’t think your tech is quite ready for a promoted feature, there is always the option of enlisting the help of a new partner. The current market is full of plug-and-play options that can go live within days.

  • Start small and gauge customer responses

Don’t turn your recommendation engine into a featured frenzy. Start by adding a few sponsored options and monitoring the conversion rate. If you’re rolling out a new tool to serve the recommendations, something around a 50% exposure should give you enough data to prove effectiveness.

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