American consumers are increasingly influenced by ads served on retailers' own websites compared to third-party marketplaces, according to a new study by Intellias, a leading software engineering and digital consultancy company. The research, which surveyed over 1,000 U.S. shoppers, highlights the growing opportunity for retailers to leverage their direct-to-consumer (DTC) channels to drive customer engagement and boost return on ad spend (ROAS) for third-party brands and advertisers.
The study revealed that 25% of shoppers are now swayed to purchase products advertised on retailers' websites, while an additional 15% are persuaded by ads served on retailers' mobile apps. In contrast, only 13% of consumers are influenced to buy products after seeing ads on third-party marketplaces, and 14% are influenced by branded ads on social media platforms.
As traditional advertising methods lose their impact - with over half (52%) of U.S. shoppers ignoring digital ads and 50% disregarding search ads, according to a separate ADvendio poll - consumers are seeking more curated and personalized advertising experiences from trusted brands.
Alexander Goncharuk, Vice President of Global Retail at Intellias, commented: “There’s no denying the sizable opportunity RMNs present in enhancing shopper engagement and enabling retailers to connect 3rd party brands and advertisers with conversion-ready audiences. This becomes even more effective when retailers connect data from across their digital and in-store channels and overlay this with loyalty program insights to offer hyper-segmentation. By tapping these predisposed-to-purchase customers, retailers can deliver greater engagement and campaign performance that significantly increases return on ad spend (ROAS).”
Intellias' research found that 54% of consumers would be more likely to purchase items advertised by a 'trusted' retailer, and 55% would be more inclined to try new brands recommended by a retailer they regularly shop with.
This shift in consumer behavior coincides with the rapid growth of Retail Media Networks (RMNs) among U.S. retailers. As they explore omnichannel engagement opportunities across their digital and in-store networks, Insider Intelligence predicts that retail media revenues will surpass TV advertising by 2028. Meanwhile, WARC estimates that retail media ad revenues will reach $124 billion this year alone.
Ulta Beauty is one of the most recent major beauty retailers to launch their own retail media network called UB Media in mid-2022. Their loyalty program, Ultamate Rewards, boasts 37 million members who account for an impressive 95% of the company's sales.
UB Media leverages this valuable first-party data to help brands reach their target audiences through various advertising channels, including sponsored products, offsite display and video ads, social media campaigns, influencer marketing, and in-store opportunities. In October 2023, Ulta announced a partnership with Meta to enhance their retail ad network measurement capabilities.
Macy's Media Network is another notable player, offering a range of advertising options through its media network, including self-service sponsored product ads, complementary category, and previous purchase behaviors. The company's extensive loyalty program, Star Rewards, provides rich customer data that can be leveraged for targeted advertising campaigns.
