Behind the Numbers: The Rise of Off-Site Retail Media Advertising
EMarketer’s podcast, "Behind the Numbers," delves into the evolving landscape of digital media, providing marketers, retailers, and advertisers with critical insights and analysis. In this special edition episode titled "The Rise of Off-Site Retail Media Advertising," host Sarah Marzano engages in a compelling conversation with Sean McGahey, Google's Head of Retail Media. Released on May 29, 2025, this episode explores the shifting dynamics of retail media, the increasing prominence of off-site advertising, and the strategic innovations driving this transformation.
Introduction
Host Introduction
- Marcus [00:00]: Opens the episode, introducing the special conversation from the EMarketer Summit, Commerce Media Trends 2025.
Setting the Scene
- Sarah Marzano [00:28]: Sarah introduces the topic by highlighting that over 80% of the $60 billion spent on retail media currently goes to on-site advertising. She projects a significant shift by 2027, where one in every four dollars will move to off-site channels.
Current State of Retail Media
Dominance of On-Site Advertising
- Sarah Marzano [00:28]: Emphasizes the prevalent focus on on-site retail media and the anticipated shift towards off-site channels.
Factors Driving Off-Site Growth
- Sean McGahey [01:30]:
- Complex Shopper Journeys: Shoppers interact with multiple touchpoints, necessitating retail media networks to scale their reach off-site.
- Competitive Landscape: The emergence of new media networks requires existing players to expand their off-site offerings to stay competitive.
- Beyond ROAS: As the industry matures, focusing solely on Return on Ad Spend (ROAS) is insufficient. Off-site channels help in acquiring new buyers and driving incremental sales.
Google’s Strategic Approach to Retail Media
Leveraging Critical Shopping Moments
- Sarah Marzano [03:17]: Highlights Google’s ownership of pivotal shopper moments, like search and YouTube, and queries how these influence retail media strategies.
- Sean McGahey [03:17]:
- Four Consistent Shopper Behaviors: Searching, scrolling, streaming, and shopping.
- Tailored Strategies:
- Search: Combines sponsored product ads with off-site ads on Google Search and Shopping.
- Scrolling: Utilizes demand generation products on Google Discovery Feed and YouTube Shorts.
- Streaming: Integrates retail audiences and conversions into DV360, reaching 98% of CTV households.
- Product Infrastructure: With 45 billion product listings updated 2.1 billion times hourly, Google can incorporate shoppable inventory seamlessly across platforms.
Adapting to the Evolving Purchase Funnel
- Sarah Marzano [04:49]: Discusses the collapse of the traditional purchase funnel and appreciates Google's nuanced approach to reflecting multifaceted consumer activities.
- Sean McGahey [05:49]: Outlines Google's commitment to adding value by addressing market needs rather than merely building solutions, focusing on performance, reducing industry fragmentation, and standardizing measurement.
Measurement and Optimization in Retail Media
Challenges with ROAS and Measurement
- Sarah Marzano [07:27]: Notes tensions around the use of ROAS and the difficulties advertisers face in navigating disparate platforms.
- Sean McGahey [07:28]:
- Standardizing Measurement: Integrates retailer conversion data into Google's measurement frameworks.
- Reducing Fragmentation: Develops ad tech solutions like DV360 and Google Ads to unify fragmented retail media networks.
Real-Time Bidding and Optimization
- Sean McGahey [11:08]:
- Opportunity for Real-Time Adjustments: Moves beyond static, flighted campaigns to enable dynamic bid adjustments based on ongoing performance.
- Actionable Data: Utilizes real-time data to enhance incremental sales through timely optimizations.
- Sarah Marzano [12:49]:
- Need for Rapid Decision-Making: Highlights the importance of swift investment decisions in response to changing consumer sentiment and economic conditions.
- Sean McGahey [12:49]:
- Avoiding Stagnation: Encourages leveraging real-time measurement to seize trending opportunities and avoid rigid campaign structures.
Opportunities for New and Mid-Sized Retail Media Networks
Unique Value Propositions
- Sarah Marzano [09:06]: Observes that a few dominant players currently capture most ad spending, questioning opportunities for newer entrants.
- Sean McGahey [09:06]:
- Differentiate Through Unique Data: Advises new and mid-sized retailers to leverage unique data points, such as in-store availability.
- Performance Over Scale: Emphasizes the necessity for smaller players to outperform competitors in ROAS and campaign effectiveness to secure ad spend.
Emerging Playbooks
- Sarah Marzano [10:29]: Predicts the emergence of unique strategies tailored to individual retailers’ strengths, moving away from a one-size-fits-all approach.
Omnichannel Attribution and In-Store Integration
Integrating Online and Offline Data
- Sarah Marzano [13:33]: Discusses the importance of omnichannel attribution and incorporating in-store inventory levels into the purchase journey.
- Sean McGahey [13:58]:
- Google Maps Utilization: Uses product feeds to display in-store offerings and drive foot traffic through local inventory ads.
- Offline Sales Data: Incorporates in-store sales data into Google's platforms for comprehensive measurement and optimization.
Practical Applications
- Sarah Marzano [15:33]: Highlights the potential of Google Maps and merchandising inventory to enhance retail media effectiveness.
- Sean McGahey [15:33]: Provides a personal example related to searching for baby products, illustrating how Google Maps can support localized and in-store related searches.
Future Outlook and Innovations
Vision for Retail Media’s Future
- Sean McGahey [16:29]:
- Incremental Sales and Personalization: Focuses on driving incremental sales through personalized marketing strategies.
- Advanced Measurement: Aims to deliver accurate and trusted retail measurement to influence marketing behavior positively.
- AI Integration: Plans to leverage artificial intelligence to enhance the effectiveness and personalization of retail media activations.
Closing Remarks
- Sarah Marzano [17:08]: Expresses excitement about the future of retail media and appreciates Sean’s insights, acknowledging the depth and ongoing developments in the field.
Key Takeaways
-
Shift to Off-Site Retail Media: By 2027, a significant portion of retail media spending is expected to move off-site, driven by complex shopper journeys, competitive pressures, and the need for incremental sales beyond traditional ROAS metrics.
-
Google’s Comprehensive Strategy: Google leverages its vast ecosystem, including Search, YouTube, and Maps, to integrate retail media across various shopper behaviors, ensuring a cohesive and scalable approach.
-
Importance of Measurement and Optimization: Real-time data and dynamic bidding strategies are crucial for maximizing campaign effectiveness and adapting to changing market conditions swiftly.
-
Opportunities for Smaller Players: New and mid-sized retail media networks can carve out niches by utilizing unique data points and focusing on performance-driven strategies to compete with larger networks.
-
Omnichannel Integration: Combining online advertising efforts with in-store data through platforms like Google Maps enhances attribution accuracy and drives both online and offline sales.
-
Future Innovations: The integration of AI and advanced measurement standards will continue to refine retail media strategies, making them more personalized and effective.
This episode of "Behind the Numbers" provides a comprehensive overview of the current trends and future directions in retail media advertising, emphasizing the pivotal role of off-site channels and the strategic innovations spearheaded by industry leaders like Google. For marketers and advertisers navigating the digital media landscape, the insights shared by Sarah Marzano and Sean McGahey offer valuable guidance on staying ahead in a rapidly evolving market.