The retail media framework

The stakes have never been higher for eCommerce leaders: uncertainty in markets coupled with a higher cost of capital has made profitable growth an imperative. With retail media advertising forecasted to make up over 20% of total digital ad spend in the US in 2023, totaling over $45 billion (Insider Intelligence), it will play an essential role in the marketing strategies of advertisers who want to win in an environment where balancing top- and bottom-line performance is essential.

The power of retail media advertising lies in the positive feedback cycle that it creates. An initial ad investment drives traffic to your products, leading to more sales. In turn, those new sales bring in more high-quality, first-party customer data that will deliver insights into how your advertising and products are performing and how they can be improved. Finally, turning data-backed insights into action increases efficiency and frees up budget to invest in retail media advertising platforms, driving further sales.

We break retail media up into four key components:

• Before you advertise: lay the groundwork with market awareness and retail readiness

• Capturing demand: on-site ads win sales from existing demand, driving your organic rankings higher and maximizing organic sales (and thus improving profitability)

• Creating demand: external traffic and off-site ads drive branded searches to attract new customers and inspire loyalty among shoppers who’ve already purchased

• Intelligence and analytics: retail media’s first-party data, based on actual sales, unlocks insights around seasonality, advertising, and product positioning, enabling quick and effective decision-making

Before you advertise on a retail media platform

Each brand’s situation is unique, so there are some fundamental questions that need to be considered before making an investment in retail media advertising. These considerations fall into two categories: market awareness and retail readiness.

Market awareness

Market awareness takes market and competitive dynamics into consideration when crafting your advertising strategy. The characteristics of the market you plan to enter with your product (and ads)—e.g., new categories or established, competitive categories—should guide goal setting, planning, and optimization for your ad campaigns.

Below are some of the questions you should take into account:

• How strong is the demand for the product category? 

• How mature is the competitive landscape?

• How is market share dispersed? 

The answers to these questions will vary from brand to brand, and sometimes from product to product, but they should guide your approach to building and capturing demand and shape your expectations upon entering the market.

Want to learn more? Our guide to market awareness on Amazon has all the information you need to do product research.

Retail readiness

Retail readiness is a prerequisite for advertising performance. It ensures that your product is well-positioned to deliver traffic and conversions once it appears in the search results and in sponsored ads.

We have a blog article that explains in detail how to make sure your product is retail ready, but a few of the most important questions you’ll need to consider are below:

• Have you optimized the product listing (title, product description, bullet points, etc.)?

• Do you have enough inventory to ensure that your product remains in stock? 

• Do you have a well-thought-out pricing strategy? 

A retail-ready product will be more likely to win sales. The more sales you get and the higher your conversion rate, the better your organic rankings. The better your organic rankings, the more profitable your business will be. It all begins with retail readiness. 

Capturing demand: on-site retail media advertising

The appeal of retail media ads is intuitive because, at its best, all parties involved win. The customer wants to buy a certain product, the brand wants to sell that product, and the retailer wants to facilitate the transaction (and collect its commission).

To that end, on-site ads are a powerful demand-capture tool that offers scaled distribution, access to premium placements within the SERP and product pages, and unique advertising formats like video and display ads.

Account structure: orchestrating campaign and targeting types

Crafting an account structure that balances control with efficiency is the top priority. Advertisers need to effectively allocate and pace through budget while ensuring that campaign performance goals are met.

Deciding how to group products (and when to create single-ASIN campaigns) lays the groundwork for your retail media advertising account. Below is a summary of our recommended best practices for product grouping, and some advice on when to create single-ASIN campaigns.

Note that these best practices are general guidelines—your retail media execution strategy may vary depending on your specific category, product range, and advertising objectives.

Targeting types

We recommend creating separate campaigns whenever a product’s ads have unique objectives, like driving awareness, targeting a specific customer segment, or clearing inventory.

Lumping different targeting types (e.g., branded and competitor) into the same ad campaign will make it difficult to analyze performance and to identify your best performing segments and provide them with an appropriate budget.

Below are some of our recommended best practices when segmenting by targeting type.

• Branded targeting: Branded targeting is not just for playing defense. It’s also great for cross-selling and up-selling other items in your product portfolio, and for supporting new product launches.

• Category: Relevance and the competitiveness of your offer are key here. This campaign structure is best for products with specific strategies in place and strong brand presence.

• Competitor conquest: Targeting by ASIN relevance, and by the competitiveness of your product offer, will drive the best results.

Campaign types and target harvesting

Perpetua's campaign structures

Within your account, each campaign type has its own function. The automatic PPC campaign performs target research, harvesting successful keyword and ASIN targets for use in manual keyword and ASIN campaigns.

As targets are moved from campaigns that encompass a wider swath of targets to those that are more refined, negative targets are often used to stop the flow of traffic to source campaigns. Negative targets can also be used to cut off traffic coming from irrelevant or unprofitable keywords.

There are, however, a couple of problems with this strategy: 

• It puts some natural limits on the scale you’re able to achieve with your campaigns.

• It ignores the dynamic nature of the marketplaces.

• It can be very time-consuming for large accounts with many ASINs.

The problem: in practice humans often apply these structural approaches inconsistently, negating the impact of the strategy. Optimizing ad segments and match types in silos further compounds this problem, often leading to underperformance on growth or profitability goals at the product portfolio level.

Perpetua’s approach: we give superpowers to eCommerce advertisers

Perpetua empowers advertisers to scale up their business—without scaling up human resources. 

Perpetua’s goal-based campaign creation allows you to create a high-performing campaign structure in a matter of minutes. Our best-in-industry playbooks are built right into our product, giving users the time-savings of customizable automation combined with the flexibility of granular controls to streamline keyword, bid, and budget optimization across segments.

Levers: optimizing campaigns (and how Perpetua can help)

Scaling in a competitive eCommerce environment means either adding more people and time or adding tools that can accelerate your team’s productivity. 

Automation takes some of the high-frequency, repetitive tasks that are necessary for campaign optimization off of the plates of advertising practitioners, leaving people to do what they’re best at—creative, strategic work.

Targeting

Hands-on-the-keyboard advertising practitioners can spend a lot of time analyzing search term and search query performance reports to determine which keywords and ASINs to target with their ad campaigns. 

One of the principal ways Perpetua drives value is by returning much of this time to clients. Using historical campaign and conversion data, Perpetua’s Ad Engine automatically harvests keyword and ASIN targets it believes will lead to a sale. The ability to set conversion thresholds for harvesting ensures you have extra control if you want it.

How do we handle negative keywords? If a keyword has a low conversion rate, the ad engine will automatically begin to lower bids until it reaches a point where your bid is too low to win on that keyword—resulting in no spend on that keyword (which has the same effect as adding a negative keyword to a campaign).

Bidding

Retail media advertising delivers distribution on the digital shelf, and bidding determines your share, the cost to achieve that share, and the ultimate ROI. 

In order to reach your ROI goals, you’ll need to have them clearly defined when you start spending on ads: know your profit margins, break-even ACoS, and target ACoS, so your retail media execution is on point and optimized. 

Perpetua’s always-on bid optimization will automatically adjust bids, optimizing for the greatest number of sales while reaching a target ACoS that you set at the campaign level. 

Focusing on ACoS at the campaign level (as opposed to the keyword level) allows you to maximize sales by scaling up the keywords that are driving the greatest number of purchases (at what may be a slightly higher ACOS than the target) and scaling down those that aren’t driving revenue (at what may be a lower-than-target ACoS).

The need for automation

The strategies we’ve laid out seem straightforward. But implementing them at scale becomes a daunting task. Common error points include:

• Mixing ASINs with different margins and price points in the same campaigns.

• Inconsistent application of keywords and negatives, leading to lack of control.

• Optimizing against incomplete data, resulting in suboptimal outcomes.

Perpetua’s Ad Engine accelerates everything from campaign creation to target harvesting and bid optimization, delivering time-savings, plus precise and consistent execution. This enables advertisers to increase productivity and develop a sophisticated account setup, achieving maximized outcomes. 

Perpetua software is customizable enough to execute any strategy. Below are just some examples of ways users can fine-tune their advertising campaigns:

• Custom goals: launch any campaign with any product grouping, on any set of keywords, with just a couple of clicks

• Keyword harvesting controls: choose whether keywords are harvested automatically, after a set number of conversions, or only after manual approval

• Keyword boost: dominate top-of-search to maximize incrementality, own flagship category keywords, and improve organic rank

Creating demand: external traffic and off-site ads

External traffic refers to any shopper that arrives on your product page in a retail media platform via a channel outside of the retailer’s website. Search engines, social media, and the Amazon demand-side platform (DSP) are all examples of external sources of traffic that can direct buyers to your product listings.

External traffic represents an extra layer of the upper funnel that can help you outperform your competitors by introducing your brand to a new audience and inspiring customer loyalty.

Here is a summary of the key types of external traffic, their aims, the strategies they are most suitable for, and the desired end results.

Want to learn more?

• Watch → Perpetua’s External Search Masterclass

• Read → Go viral with influencer marketing

• Research → Understanding the Amazon DSP

Analyzing performance: where the advertising flywheel comes full circle

In a highly competitive retail market, the ability to leverage data and analytics often determines the success or failure of an advertiser’s retail media advertising strategy. Measuring the effectiveness of demand capture and creation shines a spotlight on the strategies that are working and those that aren’t.

Gauging incrementality

On retail media platforms, advertisers only have limited space to vie for shoppers’ attention with ads. Therefore, to bring in incremental sales—i.e., those that wouldn’t have happened without a customer interaction with an ad—it’s crucial to understand how and where your ads and product listings are showing up. 

Two key ways to track the space you’re taking up are share of voice and organic rank. Perpetua’s Search Insights feature offers SOV and OR data at an hourly granularity for the Top 100,000 search terms on Amazon globally.

Perpetua Stream provides hourly SOV data not available on the Amazon Ad console

Think of share of voice (SOV) as the digital ad space that you own. In Perpetua, we express this as a percentage of your brand’s visibility against your competitors for both organic and paid product slots. 

Organic rank (OR) is the position on the search results page where your product(s) appear, beginning after the top-of-search sponsored placements. 1 means that your product appears first, the ideal outcome for any advertiser. 

SOV and OR data can be used to: 

• drive incremental sales by using TOS multipliers for keyword and ASIN targets where your products are not appearing at the top of the organic rankings or in TOS ad slots

• prevent cannibalization by removing TOS bid multipliers when your products reach the top organic placements.

Validating ad performance data

Ad performance is the cornerstone on which successful retail media execution is built. Every practitioner knows the numbers they need to keep an eye on, but few know how their KPIs compare to their competitors. 

The free Perpetua Benchmarker Report puts your performance in perspective by providing you with Amazon performance benchmarks on country, category, ad-format, and individual-product levels, for ~20,000 Amazon product subcategories.

Based on an internal Perpetua study involving over $2 billion in Amazon ad sales, the Perpetua Benchmarker report includes:

• funnel analysis: find the weak points in your funnel that are increasing your costs and making you miss out on sales;

• KPI benchmarks: for your top 100 products, identify the areas of your ads that need optimization—from listing and ad content to targeting and bidding;

• account structure audit: make sure you have the right setup in place when peak periods come;

• impact driver analysis: each month's report includes a change analysis to measure the success of your latest optimizations.

Actionable market intelligence: the key to retail media execution

Retail media advertising platforms are more competitive than ever. From the search results page to product detail pages and advertising placements, shoppers are presented with a dizzying array of products to choose from. 

To win in this environment, advertisers need to understand their competition and what is happening in the larger market around them, and use this information to optimize their advertising.

Prism, Perpetua’s competitive and market intelligence solution, puts that data at the fingertips of advertisers, allowing them to:

• Track market share and benchmark performance

• Analyze category and market trends

• Identify and assess new product opportunities

• Gain competitive insights that drive winning advertising actions

Read more about harnessing the power of market and competitive intelligence to turbocharge your advertising.

Summary

Retail media advertising is a powerful way to generate and capture demand while garnering the reliable data advertisers need to fine-tune their advertising and product strategies. When used to its fullest potential, it will be a continual driver of sales and insights for your business, your engine for profitable growth.