Next For Grocery Retail Media Networks: Contextual Commerce

Product Diversity Will Be Critical To Retail Media Scale

Retail media networks’ (RMNs) ad spending is on pace to hit U.S. $45.15 billion this year and is expected to maintain a 20%+ growth trend for the next four years. By 2027, RMNs will account for a quarter of all digital ad spending, or $106 billion.

In the grocery and CPG vertical, RMNs such as Walmart Connect, Kroger Precision Marketing, Albertsons Media Collective, etc. have made substantial revenue gains over the past few years. However, as the category continues to expand, individual RMN’s potential hinges on their capacity to achieve greater scale. While on-site placements have proven effective, the limited inventory poses a challenge. Off-site solutions utilizing first-party data offer more extensive reach, but the sustainability of these strategies is jeopardized by regulatory constraints on cookies, imposed by both private entities and government bodies.

To sustain their impressive double-digit growth, RMNs must appeal to a larger share of advertising budgets, encompassing both shopper and national segments. The key to this lies in diversifying their product portfolio. RMNs need to introduce highly targeted products that can engage a substantial volume of new shoppers and generate incremental sales. In addition, they must also have the ability to scale in today’s regulatory environment. 

For grocery and CPG retailers, contextual commerce within online recipe content provides RMNs with a scalable, future-proof, ad-targeting solution that can drive incremental revenue for both retailers and CPG brands. 

Giant Eagle’s retail media network, Leap Media, recently announced its strategic partnership with Chicory, adding the platform’s contextual commerce solutions to its RMN product portfolio.

What is Contextual Commerce?

Contextual commerce is a digital media solution that combines contextually targeted ads with shoppable capabilities. In the case of recipe content, contextual commerce solutions place highly targeted, contextually relevant ad units in and alongside recipes with the ability to seamlessly cart ingredients or products at an online retailer. 

The Benefits of Contextual, In-Recipe Advertising For RMNs

Uniquely Targets Inspired Intent

Current RMN advertising products are designed to engage retail shoppers across various stages of the purchasing journey, effectively tapping into diverse consumer shopping mindsets. For instance, on-site ad placements within a retailer's e-commerce platform, such as search and sponsored products, reach individuals in an active, high-intent shopping mindset; while off-site ads (targeted using first-party data) in non-e-commerce settings connect with retail customers in a more passive, low-intent mindset. The choice between these tactics depends on the specific advertising objective, with shopper marketers favoring on-site placements and brand advertisers leaning towards off-site strategies.

Contextually targeted ads within online recipes harness a more influential shopping mindset among grocery consumers: the inspired, driven mindset. Recipes possess a unique ability to spark new purchases and encourage experimentation, as they showcase how various ingredients, products and brands can be combined to create a meal. According to Chicory's 2023 State of Online Recipes Report, an impressive 75% of respondents expressed that they were motivated to purchase a new product after encountering it in a recipe, while 57% reported being similarly motivated to explore new brands.

Hyper-Targeted Advertising For A World Without Cookies

RMN off-site solutions leverage a retailer’s first-party browsing and purchase data, coupled with other behavioral insights, to deliver highly targeted advertisements. These tactics are highly scalable as off-site inventory is nearly infinite and data can be modeled to create more volume. However, these solutions are also largely dependent on cookies and mobile ad IDs (MAIDs) for targeting. As privacy laws restrict cookie and third-party data usage, grocery retailers need to explore alternative solutions.

In-recipe contextual advertising analyzes the content of the web page itself rather than relying on user data to target ads, making it a more scalable future-proof targeted media solution. To further illustrate, Chicory's proprietary Contextual Recipe Targeting combines natural language processing with an extensive food taxonomy to distill recipe content into discrete components — meals, ingredients, products, and more. This provides advertisers with hyper-relevant, hyper-targeted ads that reach inspired shoppers at scale, all while respecting consumer privacy. In addition, a platform like Chicory’s can display relevant ads for ingredients or recommended pairings, as well as kitchen tools or related products that complement the recipe.

Contextual Advertising With High Viewability

In-recipe advertising seamlessly integrates ads within recipe content, creating a contextually relevant advertising experience. The ads are designed to be non-intrusive and blend naturally with the recipe, enhancing the user experience rather than disrupting it. Hyper-contextual ads of this nature don’t contribute to ad fatigue often brought on by current first-party and third-party data-related targeting tactics. 

While maintaining the authenticity of the recipe environment, these ads generate much higher viewability and engagement rates compared to other standard units. This is not only because the recipe card itself is typically the focal point of a recipe page but also because the ads provide value to the reader, offering a seamless path to purchase a product they need.  

→ Reach out to learn more about how in-recipe media can help your retail media network grow 

Seamless E-commerce Experience 

The ability to integrate shoppability into various contexts is redefining the boundaries of retail, especially as consumers are more comfortable than ever shopping in non-traditional e-commerce environments 

While online grocery shopping was a necessity at the height of the pandemic, many shoppers have continued the habit, now citing convenience as the number one reason why. Retailers looking to drive online sales need to ensure that they’re providing convenient and simple e-commerce experiences to shoppers, on and off-platform. Adding contextual commerce to RMN portfolios enables retailers to do this more effectively and better connect with modern grocery consumers who continue to embrace new digital experiences.

Expanded Reach to New Shoppers 

Most retail media network tactics primarily focus on on-platform strategies, like on-site media and paid search, which target existing shoppers already on or visiting the retailer's site. Even off-site media campaigns typically leverage existing shoppers' purchasing habits and interests to target retailer shopper segments who have previously purchased specific or relevant items. This approach significantly limits a retailer's potential reach because it largely caters to existing shoppers. 

Contextual commerce, and specifically in-recipe media, enables RMNs to reach a broader audience and engage a higher volume of new and lapsed shoppers via off-platform content. Recipe browsers are actively seeking meal inspiration and building lists online but have yet to reach the retailer’s site, making them prime acquisition targets. On average, new and lapsed shoppers account for 44% of total sales of Chicory’s in-recipe media campaigns. 

Contextual targeting strategies prevent a retailer from missing engagement opportunities with potential shoppers by meeting them where they already are. 

→ Learn how contextual commerce can drive incrementality for retailers

Drives Incremental Sales 

Incrementality is increasingly important for retail media networks as advertisers seek to prove the true impact of their media campaigns. In simple terms, incrementality refers to dollars that were definitively driven by a specific marketing tactic or execution. Shopper marketers are moving beyond “attributable” sales measurement, asking retailers to share incrementality and show proof that their ad spend is driving sales lift. 

One of the key benefits of a contextual commerce solution that reaches consumers in an inspired, driven mindset is its ability to drive new product purchases and trials. This, in turn, translates into measurable, incremental sales growth. 

Scaling Your RMN With Contextual Commerce 

As RMNs continue to emerge and shape the advertising landscape, they face the challenge of achieving greater scale to capture a larger share of advertising budgets. In the grocery and CPG vertical, in-recipe contextual advertising emerges as a future-proof solution. 

By tapping into the inspired consumer mindset, in-recipe contextual advertising guarantees high viewability and engagement, encouraging brand exploration and new purchases. RMNs who diversify their portfolio by adding this tactic to their offerings will gain a scaleable, privacy-conscious strategy that drives incremental sales growth. 

To explore how contextual commerce can help your retailer or RMN scale, visit chicory.co/retailers or reach out to hello@chicory.co.