Grocery Retail Media Networks Lead the Charge with Sponsored Products

In this deep dive data set from our Sponsored Products Benchmarks Report, we see US grocery retail media networks leading the charge with more sponsored product placements and more ad coverage than other verticals.

Below, our Chief Sales Officer Lars Djuvik and Vice President of Sales Paul Dahill dig into why grocery has seen such success with sponsored products, and some of the reasons for variation in sponsored product usage by grocery subcategory.

Why Have US Grocery Retail Media Networks Taken the Lead with Sponsored Products?

Within the grocery sector, suppliers, often dealing with lower margins compared to other retail verticals, allocate their planned budgets predominantly to sponsored ads, a tactic considered a lower funnel activity. This approach prioritizes influencing the "digital shelf" at the point-of-purchase, emphasizing immediate Return on Advertising Spend (ROAS) over branding initiatives like pre- or post-roll video, CTV, and offsite efforts where the ROI might not be as immediate.

Lars Djuvik, CSO Crealytics, gives some context on the higher-than-average usage of sponsored products in the grocery category:

   “Grocery retail media, with its extensive supplier network, excels in cultivating strong relationships through Joint Business Planning (JBP). This strategic planning process aligns retailers and suppliers, ensuring a shared understanding of annual goals, with integrated media plans aimed at achieving desired outcomes. While business planning is common across retail sectors, it is most prevalent in Consumer Packaged Goods (CPG) and Fast-Moving Consumer Goods (FMCG).”

Let’s take a look at this data set, including publicly available search results on sponsored products collected from 10 U.S.-based retail media websites (desktop) over Q3-Q4 2023.

Ranking Grocery Amongst Other Categories by Sponsored Product Share

• The grocery industry ranks first in percentage of search results with sponsored coverage—20% ahead of the other 6 categories published in our report.

• The continued rise in consumer demand for purchasing groceries online suggests a promising future for continued inventory growth.

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Exploring Sponsored Products Share by Subcategories

• Even excluding data from market leaders such as Amazon and Walmart, at least one sponsored product appears in the majority of grocery searches.

• On the high end, searches related to Baby Food (100%), Snacks and Sweets (83%) and Household (81%) show at least one sponsored result.

• On the lower end, only half the results for Fresh Produce (51%) and Breads & Bakery (49%) show sponsored products, leaving room for improvement.

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On the differences in sponsored product usages over grocery subcategories, our VP of Sales Paul Dahill shares:

“The great disparities in sponsored product coverage across subcategories are not surprising.  

Some fresh, locally-made items with a short shelf life—like Bread & Bakery—don’t have a great depth of advertisers and thus, tend to show fewer sponsored products.  

Bulky household items that shoppers are more likely to buy online– like laundry detergent and toilet paper—can be more competitive and in this case, sponsored products can be more lucrative for retailers and advertisers.

Another factor to consider is margins. As we see here, high-margin items like Baby Food & Formula offer a greater monetization opportunity with a higher volume of advertisers competing to win loyal customers. When the cost of acquiring a customer outweigh the profits on lower-margin items, there will be less auction density and fewer opportunities for sponsored products.”

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Comparing Average Number of Sponsored Products by Subcategories

• Pantry Staples, Beverages and Fresh Produce show the most sponsored products per page (average of 8.5)

• Vitamins & Dietary Supplements, Household and Snacks and Sweets show the least (average of 7.5).

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Sponsored Product Monetization Across Grocery Retail Media Networks

Average Percentage and Maximum Number of Sponsored Products on Page One of Grocery Search Results

• Kroger commands close to 30% share of sponsored product coverage in grocery (27.2%), nearly 10 percentage points ahead of Amazon (19.9%).

• In their grocery sponsored product coverage (11.7%), Walmart has room for growth.

• Amazon shows the maximum number of sponsored products on page one of grocery search results (12), followed by Walmart (10).

• While both grocers show a maximum of 9 sponsored products on page one of search results, Kroger (27.2%) is 10 percentage points ahead of Albertsons (17.2%) in average percentage of sponsored products on page one of search results, indicating that they are accessing more ad coverage.

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From Exclusive Data Published in Our Sponsored Products Benchmarks Report

In our Sponsored Products Benchmarks Report, we analyzed over 2,000 sponsored product keywords across ten top US retail media networks --Amazon, Walmart, Macy’s, Target and more. From this data, we documented three trends that reveal how top RMNs are maximizing eCommerce AND ad revenue while maintaining a good shopper experience.

Methodology: This data excerpt includes publicly available search results on sponsored products collected from 10 U.S.-based retail media websites (desktop) over Q3-Q4 2023. Data is based on a representative set of more than 2000 keywords in selected categories. In this edition, we focus solely on ‘in-grid’ search i.e. sponsored products which appear within the main body of search results. In future editions, we may include additional ad units, such as carousels and display ads, and additional page types.

What’s Next?

• Download the full Sponsored Products Benchmarks Report.

• Check out our deep dive article on sponsored products in fashion.

• Reach out to learn more about our Retail Media Solutions.