This post is for retailers new to digital advertising and retail media, looking to understand how in-store advertising fits into their overall retail media strategy.
Executive Summary
Retail media spending is projected to surpass TV advertising, with forecasts pointing to growth of $105 billion by 2028. For brick-and-mortar retailers, in-store advertising presents a significant opportunity to connect with shoppers at key decision-making moments, transforming physical locations into highly effective media spaces. With dynamic advertising in aisles, checkout lines, end caps, and entryways, retailers can engage customers where it matters most and create a powerful new revenue stream.
Performance marketing, aimed at driving immediate actions, aligns perfectly with in-store advertising when deployed strategically throughout the store. This allows retailers to influence shoppers during their journey and turn their physical presence into an interactive marketing platform. Timely and precise attribution—focused on metrics like sales, units sold, and traffic—helps retailers measure campaign success and understand the overall impact of their in-store campaigns.
In-store advertising comes with its own set of challenges, such as hardware procurement and installation logistics, but these can be addressed with smart planning and well-designed solutions. Different areas within the store require different approaches, and a thoughtful mix of hardware helps create a cohesive in-store media presence that works seamlessly for shoppers.
In-Store Advertising: The New Frontier in Retail Media
With eCommerce peaking during the pandemic, brick-and-mortar transactions still make up 85% of retail sales. In-store advertising taps into this vast space, turning foot traffic into ad revenue by placing targeted ads where shoppers are making decisions in physical stores. And shoppers enjoy it. By reimagining physical stores as digitally activated spaces, traditional retailers can offer the convenience and possibilities of online shopping within the physical store.
The Opportunity in In-Store Advertising
Retail media is on track to outpace traditional TV, with spending estimated to hit $104.5 billion by 2028. For traditional retailers, in-store advertising is a powerful way to narrow the gap with their online competitors and leverage their physical presence to drive shopper engagement. Shoppers still enjoy seeing, feeling, and tasting products in stores and welcome digital experiences that enhance their journey and bring the online shopping experience into the physical store. This is a rapidly expanding opportunity to capture shopper attention at the most critical points along their journey, both online and in-store.
In-Store Advertising Explained
In-store advertising provides retailers with the ability to deliver targeted, context-aware campaigns in real time right when shoppers are deciding what to buy. Let’s dive into some key aspects: Marketing Strategies, Targeting, Selling Models, Measurement, Attribution, and Practical Installations.
Marketing Strategies
In-store advertising is ideally positioned to leverage both performance and brand marketing. In-aisle advertising drives immediate purchase decisions based on shopper intent and context, similar to performance marketing where ads can be hyper-targeted to search keywords. Offering a coupon for a hot sauce brand in the hot sauce aisle will drive conversions for that hot sauce as shoppers increasingly search for value. Meanwhile, high-traffic areas like entryways and checkout lines can be used for broad reach and high-impact campaigns, such as new product or brand launches. End caps are a great blend of both strategies. Placing the right ad in the right location creates a balance between driving sales and building a brand presence while also providing a delightful and value-add experience to shoppers, especially when promotions are utilized. Targeting relevant ads and content where it can help shoppers with decision paralysis ensures maximum impact and ad effectiveness.
Targeting
In-store advertising should blend different targeting approaches to maximize engagement:
- Audience Targeting: Segmenting based on demographics or behavioral data helps tailor content to the right shoppers. Audiences are primarily detected in-store via logged-in app sessions or through mobile data providers.
- Contextual/Category Targeting: Positioning ads based on shopper context—such as products they’re considering in a specific aisle—adds relevance, effectively turning the physical store environment into a keyword-targeted search ad.
A well-designed in-store advertising strategy leverages both audience and contextual targeting, but contextual targeting is the true advantage of in-store advertising over any broad-reach brand marketing mediums like TV. While some companies view in-store as a way to send a general message to many shoppers in a target demo, focusing on displaying messages in the parts of the store where shoppers are shopping your product category leads to the best performance.
Selling Models
Programmatic selling has transformed how ads are bought and sold, and in-store advertising is no exception. Traditional guaranteed selling allows brands to reserve inventory in advance, but more sophisticated models, like Programmatic Selling, bring agility and real-time optimization to the table.
Programmatic buying uses data and algorithms to sell ad inventory in real time to the highest bidder, often optimized by ad performance. This ensures maximum relevance to shoppers, highest value to advertisers, and highest revenue for retailers. The unique buying context of the store environment offers the highest value to endemic advertisers—those that sell products in the store.
Retail media would typically be considered a restricted auction since it first started with endemic advertisers. However, as more opportunities for non-endemic advertisers have been created (e.g., off-site advertising or areas focused less on conversion, like checkout lines), those lines have blurred. Nevertheless, endemic advertising generally performs best in the store context, where shoppers are making decisions, and in-store advertising will therefore be considered a restricted auction in most scenarios.
Existing trade marketing relationships can be leveraged, but organizations will have to navigate ownership of these relationships since they blur the lines between online marketing/performance marketing teams and trade marketing teams. Retailers that are winning in in-store retail media ae doing so be leveraging trade marketing relationships while utilizing the scale and efficieincy of fully automated, hyper-targeted, and progammatic selling systems.
Measurement and Attribution
Effective measurement is critical for any advertising category. Attribution focused on bottom-line metrics like sales and units sold is essential for performance marketing campaigns and understanding the true impact of in-store campaigns. Traffic metrics such as impressions also provide valuable insights into campaign reach and engagement, helping retailers and advertisers evaluate the overall performance of their campaigns. Retailers need to ensure these critical KPIs are available, but focusing on sales and Return on Ad Spend should be the first priority of any in-store campaign.
Hardware and Practical Installations
Hardware scalability has historically been a challenge for in-store advertising, but the solution lies in simplicity and well-designed solutions. Hardware that supports widespread, low-cost deployment throughout stores is essential to provide shoppers with a digitally enabled experience across their entire shopping journey. It also ensures retailers can achieve the critical mass of screens necessary to generate significant revenue.
Small-footprint stores like convenience stores should target 10-20 screens, while an average drugstore/grocery should aim for 30-50 screens, and supercenter-sized stores can benefit from 100-200 screens. While the initial investment might seem substantial, the return on investment (ROI) can be rapid, delivering long-term gains that far surpass traditional operations. The operational costs of digital advertising are low enough that the payback period can occur within months—or even weeks—depending on the placement.
Since revenue can be continuously generated with minimal operating expenses after the initial installation, the long-term profitability becomes a significant contributor to a store's bottom line. Industry frontrunners have shown that retail revenue can be increased by 20%, with 85% profit margins—meaning that, on average, scaled in-store advertising can contribute a net +17% to operating profits. To achieve this scale, installation must be simple and scalable.
Locations and Formats
The effectiveness of in-store advertising also depends on choosing the right location and format. Different locations of the store provide different analogies to the online shopping journey and the examples of advertising that have been pioneered and proven online:
- Aisles: Targeted, aise-category specific ads in aisles align directly with a shopper's current shopping focus, encouraging conversions. High-impact, high volume of placements. Online metaphor: keyword-targeted sponsored search results placements.
- End Caps: These high-visibility but context-aligned placements offer an opportunity for both brand building and immediate sales opportunities. Perfect for a high-impact product or brand launch. Online metaphor: top-of-the-page Sponsored Brands placement.
- Entryways: Capture attention as shoppers enter, setting the tone for the shopping experience and reaching a broad audience with every shopper walking in the store. Online metaphor: home page takeover ads.
- Checkout Lines: Reinforce brand messaging and prompt impulse purchases for front-end products. Lower impact, lower placement volume. Online metaphor: checkout page recommended pairings.
AdSprout: Leading In-Store Advertising Forward
At AdSprout, we’re helping retailers transform their stores into interactive advertising platforms. Our approach combines scalable hardware, flexible sales models, and precision attribution models to maximize the value of in-store advertising.
Why AdSprout?
- Simple: We focus on building for low-cost and easily installable hardware as well as utilizing existing screens and hardware already in the store.
- Flexible: Our flexible platform monetizes ad placements across the entire store with appropriate sales models for different placement types and with the lowest revenue share in the industry.
- Clear Attribution: Our attribution focuses on the KPIs necessary to unlock performance marketing and brand marketing budgets - sales, units sold, and impressions.
Join us as we transform the future of shopping and retail media. With AdSprout, you can harness the power of in-store advertising to create meaningful connections with your customers, drive sales, and capture advertising revenue that rivals even the biggest digital players.
Stay tuned as we explore more topics in our blog series on the evolving world of in-store retail media—helping you learn, grow, and succeed in this exciting new frontier.