Retail media has emerged as an advertising powerhouse in the international market, becoming a major revenue generator for players such as Amazon over the past few years.
Now, the trend is catching on in South Africa as leading online retailers such as Takealot, Checkers Sixty60, Makro and Woolworths adopt retail media to boost their revenues and shopper engagement.
Marketers should be paying close attention to how these platforms evolve because they offer an exciting new performance marketing opportunity.
Indeed, many leading brands are already investigating and exploring retail media platforms to get a competitive edge, including leveraging artificial intelligence (AI) to personalise ads and enhance targeting.
What is retail media and why is it taking off in South African ecommerce?
Retail media is a form of advertising that allows companies to use a retailer’s properties, such as websites, apps and in-store displays, to target consumers who are shopping actively or considering purchases.
It has existed in offline formats like point of sale displays and print catalogues for decades, but online platforms make retail media far more targeted, measurable and immediate.
South African brands are starting to embrace online retail media as a powerful new way to connect with shoppers at the moment they ready to buy. Much like programmatic platforms like the META apps or Google, retail media offers marketers powerful tools to segment audiences and target their ads.
They can reach their customers in a retailer’s digital space, at the very instant they are researching or considering a purchase.
Big growth, big opportunity
The rapid rise of ecommerce is the factor that has set the stage for the boom in retail media. Data from platforms like DataReportal confirms that growing numbers of people are shopping online, making digital platforms a big part of how customers buy today.
World Wide Worx data shows that South African online retail surged 29% to R71 billion in 2023. Online accounts for 6% of total retail spend, and is forecast to touch about 10% by 2026.
Beyond driving their own direct retail sales, leading retailers have spotted an opportunity to monetise their audiences by allowing third parties to trade from and advertise on their platforms.
Retail media platforms like Rainmaker Media (owned by Massmart) and Takealot Ads are helping brands to target their audiences with adverts. These platforms are investing in AI features to improve ad placements, product suggestions, and pricing to help brands get better results.
Why retail media matters for your brand
Given that many brands have found online advertising formulas that work well for them, why should they add yet another option to the proven mix of display, search and social ads?
A compelling reason lies in the fact that retail media is new and growing fast – starting early is an opportunity to learn about the environment while is still relatively uncluttered.
One of the strong advantages of retail media, as I alluded to earlier, is the immediacy of the connection it offers to high-intent shoppers. Retail media puts your brand or product in front of customers who are already shopping or ready to buy, boosting your chances of conversion.
In many cases, you will have access to the retailer’s first party data to create more precise, relevant ads that resonate with shoppers at high-impact moments in the conversion journey.
Furthermore, retail media is an accountable medium with closed loop reporting. Retail media shows you exactly how ads lead to sales, giving you a complete view from ad click to purchase.
The sophisticated AI and machine learning tools in some platforms enhances the accuracy and measurability of your ads, helping you to test, learn, and optimise to keep your ads effective in a fast-moving market.
Finally, retail media integrates well with your other digital marketing channels, ensuring consistent messaging and reinforcing your brand across different platforms.
We see it as a powerful way to create stronger connections with shoppers, make smarter, data-driven decision and drive sales in a competitive digital space. In future, we could imagine it becoming an integral part of many consumer brands’ digital marketing plans.
Best practices for supercharging retail media with AI
Enhanced customer engagement via AI, alongside expanding online delivery networks, is a key reason for the growth of platforms like Sixty60 and Woolies Dash. Here are some thoughts about how your brand can capitalise on this trend.
- Combine your first-party data with retailer insights: Use CRM lists and loyalty programme information alongside retailer-provided shopper data to build precise audience segments.
- Automate and optimise ads with AI: Machine learning can test different ad versions, identify the best performers, and allocate budgets more effectively.
- Personalise product recommendations: AI can suggest more relevant products based on what shoppers have browsed or purchased before.
- Deploy chatbots and AI assistants: Enhance the shopping experience on retailer sites with instant support and product guidance, helping move customers from consideration to purchase.
- Refine targeting and placements: Let AI identify the best times and places to serve ads, saving time and maximising results.
The future of retail media
As more South Africans shop online, retail media will continue to grow. Brands that embrace AI to personalise ads, integrate retail media into their broader marketing strategies, and work closely with retailers will achieve the best results.
The leaders will see retail media as more than just another way to advertise. They will embrace it as a smart partnership where data, technology, and creativity come together to drive superior conversion performance.
Alasdair Fey is digital campaign manager at midnight, the innovation agency of iqbusiness, Africa’s future-focused management and digital growth enabler. He has spent the past two years driving client-centric digital marketing initiatives, with a strong focus on campaign execution and digital platform management. He is passionate about delivering measurable results and continuously growing his expertise in the evolving digital media landscape.
