The Rise of Commerce Media and the Collapse of the Attention Economy

The rise of commerce (or retail) media and the collapse of the attention economy go hand in hand. Case in point: The 2010s were good to direct-to-consumer (D2C) commerce. Most retailers experienced low customer acquisition costs (CAC) afforded through low-cost social media ads (mostly via Meta products like Facebook and Instagram). At the time, these distribution channels were still a bit of a wild, wild west when it came to customer data restrictions.

Today, that’s no longer the case. The majority of D2C commerce businesses are worth less than what they raised in VC money. Not to mention, the media landscape — which also fed off of the spoils of low-cost social media distribution — has completely transformed in the last decade. Media juggernauts like Buzzfeed and Vice Media fell just as swiftly as the traffic and attention economy that made them.

Restrictions on social and digital media advertising based on consumer privacy protections (like iOS tracking restrictions and the fall of third-party tracking cookies) have limited paid search and social ads as growth channels. While all of this sounds pretty dire, the industry evolved to make way for new media channels that double as retail. For example, Gen Z regularly uses TikTok as a search engine, and Amazon.com's $40 billion ad business is bigger than the global newspaper market combined.

Let’s take a look at why retail media is having its moment right now, and what brands can do to capitalize on this trend.

Content is No Longer King. Intent is the Emperor

When you boil down the trend of retail as media it all comes down to this: Content is no longer king. Intent is the emperor. First-party data from consumers is far more valuable than the broken digital ad business of the early 2010s. The collapse of third-party cookies for user acquisition has forced retailers to examine their own first-party data strategies or, alternatively, look to places that have one.

In the old ad model, media companies or social channels serve ads to appeal to a demographic, such as women 25-34, alongside relevant content. If you think about it, advertising has always been a leap of faith, assuming these women are interested in the athleisure apparel being advertised. If not, the athleisure brand moves on to the next channel with that coveted demographic. In the new retail media model, advertisers spend directly on retail media channels, such as athleisure product pages targeting the core demographic. In essence, they’re monetizing intent rather than monetizing attention — which carries with it a much higher return on investment.

High intent buyers are often the ones visiting marketplaces like Amazon and Walmart. Or as Ben Evans put it in his piece about Amazon’s ad business linked above, they’re paying digital “rent” to these sites for prime placement, just as you would pay rent for a retail space in a mall or for shelf space at a grocery store. Tying a SKU to the ad unit increases the relative value of these ads. McKinsey estimates the commerce media industry to be $1.3 billion in enterprise value.

Beyond consumer behaviors on Amazon and TikTok, retail media networks (RMNs) have also taken off. These networks are fundamentally changing the media agency business model, promising more reach and higher ROI. It’s a similar dynamic to what has happened with retail affiliate networks and the influencer economy.

So what does it take for a brand to play to win in this new retail media landscape?

Key Takeaways

For retailers, playing along in a retail media world will require thinking like a media property, along with creating a complementary distribution strategy in existing channels like Amazon, Walmart, TikTok and others. What does that mean?

1. Content for commerce will become more important.

Focusing on the “media” part of retail media instead of just the ad unit will maximize the opportunity to capture and keep the attention of buyers. Think about how you use the real estate on your own website. How can content answer intent-filled shoppers’ questions? How can content inspire them to think about new opportunities with your product?

As generative artificial intelligence-based search takes off, answering people’s questions will become more central to retail brands’ content strategies. Rather than buried on a product detail page, I predict that Q&As will become a more prominent part of retailers’ SEO strategies, feeding the machine of chat-based AI answers.

2. First-party data strategies will become critical.

The data you own on your customers and prospects can become a primary value-driver and reduce reliance on third-party channels — if you know how to use it. As a result, we will see more brands invest in a commerce customer data platform (CDP) to help target the right content to the right buyer at the right time.

A CDP goes hand-in-hand with a content for commerce strategy. Often these tools use AI to hone in on omnichannel opt-in subscriber or customer behaviors, enabling marketing and merchandising teams to target channel-specific offers down to the specific person based on their previous activities.

3. Retailers (and their agencies) will need to refine their ad strategies.

While pay-per-click and social ads should still be a part of the mix, retailers and their agencies will have to take into account buyer behaviors. For example, if Gen Z is using TikTok instead of Google as a search engine, how does the digital ad mix change? How will RMNs, affiliate marketing relationships and mega-marketplaces like Amazon change these dynamics even further?

As with other ad strategies, testing and learning will be required to identify which of these channels work best to drive ROI for high-intent buyers. It's even better if you can acquire first-party data when buyers purchase through one of these channels.

To sum up, rather than the old-world model of capitalizing on demographics, today’s retail media capitalizes on intent. To win in this new market, retailers need to test which intent-based channels work best for them, as well as act as their own media property to make the most of first-party data. If done properly, the results of accurate targeting plus high intent equals a win for both consumers and brands alike.

Bryan House is the chief experience officer at Elastic Path, a composable commerce solution.