ver the past decade, retail media has become a major player in the advertising landscape, allowing brands to connect with consumers at the point of purchase in a very powerful way. The industry continues to evolve into two clear categories: endemic and non-endemic retail media. To fully understand the differences between these two models, it is necessary to understand the history of retail media, how it developed, and where it's headed.

The Birth of Retail Media: Shopper Marketing and the Amazon Effect

The roots of retail media can be traced back to the early 2000s, with the rise of shopper marketing. Shopper marketing emerged as the strategic approach for companies to influence consumer decisions directly at the point of purchase, both online and in-store. Retailers realized that the best way to influence purchasing behavior was to use their platforms and data to offer ad solutions that reached consumers in real time as they were shopping.

Amazon, an early leader in e-commerce, saw early on the opportunity that this type of approach represented. In 2006, Amazon launched its first retail media platform, which was called Amazon Advertising, also known as Amazon Marketing Services. Given its dominance in e-commerce, Amazon had an unparalleled amount of first-party consumer data, which it leveraged to help brands reach shoppers actively seeking specific products. With millions of avid shoppers coming directly to the platform, Amazon's retail media network was the game-changer, altogether changing the entire way brands look at digital advertising.

The Emergence of Walmart and Other Retail Leaders

Confronted by Amazon's success, other giant players such as Walmart, Target, and Best Buy created their retail media networks. Walmart Media Group came into existence in 2014 and quickly emerged as a force in the space. These retailers realized that their foot traffic in physical and online stores gave them goldmine customer data and direct access to the shopper. They started selling ad space on their websites, in-store displays, and even mobile apps, which offered brands a new way to reach consumers during their shopping journey.

When more retailers jumped on the retail media bandwagon, a boom occurred, particularly in the grocery sector. Supermarkets and grocers, once retailers that focused primarily on selling goods, started their retail media solutions. Kroger, Albertsons, and others developed their platforms as the demand for targeted advertising, which could actually drive purchasing decisions, grew.

The retail media landscape became saturated in the late 2010s, with nearly every major retailer having some form of a media network.

However, as the retail media market grew rapidly, cracks began to appear. Many retailers rushed to create their platforms without fully considering the long-term sustainability of such a fragmented ecosystem. The market became oversaturated, with each retailer trying to capture a share of the growing ad spend, but offering similar targeting capabilities and inventory.

This glut of retail media networks has led some experts to predict that consolidation is inevitable. Smaller and less effective networks may struggle to compete against the Amazon and Walmart juggernauts, and the cost of managing these platforms could eventually outweigh their profitability. We are likely to see some retailers exit the space or merge with others, leading to a more consolidated retail media market in the near future.

Non-Endemic Retail Media: Expansion Beyond Retailers

Although the retail media initiative was born within the retailers' domain, the growing industry has also given way to non-endemic retail media networks (RMNs), advertising solutions for those brands that aren't selling on the same plane. Non-endemic RMNs partner with myriad publishers and platforms, including all major streaming services such as Peacock, Roku, and other more prominent media to offer ad space for brands that can't be defined by any affinity with retail at all.

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For example, a non-endemic RMN might partner with a streaming platform like Roku to offer brands the ability to advertise to users watching a particular type of content. These ad networks leverage first-party data to target audiences based on their behavior, preferences, and interests. Even though these platforms may not sell physical products, they still offer valuable access to highly engaged consumers.

Non-Endemic RMNs: A Broader Ecosystem

The scope of non-endemic retail media is much beyond traditional retailers and media platforms. Any service that collects and owns first-party data can effectively become a non-endemic RMN. Think of industries such as travel, hospitality, and finance - companies like hotels, airlines, or even credit card companies are sitting on valuable data that can be used in the targeting of specific audiences with tailored ads.

For instance, PayPal has recently established its own retail media network by tapping into its enormous user transaction database for advertisers to run highly targeted ads. Similarly, Marriott has ventured into the retail media space as well, giving brands the ability to advertise to consumers based on their past hotel stays and preferences. These non-endemic RMNs bring new opportunities for brands to reach consumers in non-retail contexts, expanding the potential of retail media beyond traditional shopping environments.

Some of the new players in the non-endemic space include:

PayPal: It uses transaction data to help brands target consumers across the web.

Marriott – It offers ad space to brands targeting travelers based on booking data.

United Airlines: It targets frequent flyers with personalized advertising.

Expedia: It offers ad space to travel-related brands.

American Express: It allows brands to target cardholders based on their spending behaviors.

These new RMNs represent how the advertisement industry is reaching new horizons, opening up new avenues of communication between a brand and its clientele in ways previously unimaginable.

Tomorrow's Retail Media: A Balanced Ecosystem

While this is a rapidly changing retail media landscape, non-endemic and endemic networks will heavily influence the future of advertising. Endemic networks likes as Amazon and Walmart continue to dominate due to large customer bases and first-party data, but non-endemic networks are rapidly growing and diversifying the types of platforms for advertisers to use.

In the coming years, we’re likely to see more consolidation among retail media networks, with smaller, less effective platforms being absorbed by larger players or exiting the market altogether. Meanwhile, non-endemic RMNs will continue to grow in influence, offering new avenues for brands to connect with consumers outside of traditional retail environments.

Retail media has come a long way since its early days, and as the industry matures, the opportunities for brands to reach and engage consumers will only become more diverse and sophisticated. Whether through endemic or non-endemic networks, the future of advertising is set to be increasingly data-driven, personalized, and interconnected.

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