Latest / The DTC Marketing Podcast with Fexingo: Direct-to-Consumer Brands, Shopify, and E-Commerce Growth / How DTC Brands Use Retail Media Networks for On-Site Ads
Transcript
- Lucas: So here's a number that stopped me this week: retail media networks are expected to generate over sixty billion dollars in ad revenue globally this year. That's not just Amazon and Walmart anymore. DTC brands that run their own Shopify stores are starting to ask — should we be getting a piece of that? Luna: You mean selling ad space on your own site? Like, letting a competitor run a sponsored product card on your checkout page? Lucas: Exactly that. It sounds counterintuitive — why would you let another brand park their logo on your digital real estate? But the logic is actually pretty tight. Your site has traffic. Your traffic has purchase intent. And you have first-party data about those visitors that Google and Meta can't touch. So brands are starting to monetize that attention directly. Luna: Right, because after the cookie deprecation, your own customer data becomes the most valuable asset in the room. Lucas: Bingo. So the model works like this: a DTC brand — let's say a premium mattress company — sets up a self-serve ad platform on their site. A complementary brand, maybe a high-end sheet company, pays to appear in a 'shop the look' widget on the mattress product page. The mattress brand gets paid per impression or per click, and the sheet brand gets access to an audience that's already in buying mode. Luna: And that audience is higher intent than almost any social ad target, because they're literally on a product page. Lucas: Exactly. Now, the pioneer here is really Instacart. They built a retail media network called Carrot Ads — yes, that's the actual name — and they've been opening it up to CPG brands for years. But what's interesting is that smaller Shopify brands are now using platforms like PromoteIQ or Skai to create their own mini networks. Luna: PromoteIQ — that's the one Microsoft bought a few years back, right? It basically lets any retailer run their own programmatic ad marketplace. Lucas: That's the one. So for a DTC brand doing, say, two million dollars a year in revenue, adding a retail media network can bring in an extra five to ten percent top line with almost zero marginal cost. No inventory to manage, no shipping, no returns. It's pure margin. Luna: But there's a tension here, right? If you let competitors advertise on your site, aren't you risking customer trust? I mean, I go to a brand's site because I trust their curation. If suddenly there's a sponsored product from a brand I've never heard of, that feels like a breach. Lucas: That's the number one objection, and it's valid. The brands that do this well are very careful about how they frame it. They label ads clearly — 'sponsored,' 'partner pick,' things like that. And they only accept advertisers that are genuinely complementary, not direct competitors. So the mattress brand won't take money from another mattress brand, but they'll happily take it from the sheet company or the pillow company. Luna: So the curation is part of the value proposition. You're basically saying, 'We vetted this partner, and we think you'll like them.' Lucas: That's the smart play. And there's a really specific case study I want to walk through — a cosmetics DTC brand called Uoma Beauty. They launched a retail media pilot on their Shopify site last year using a tool called KERV Interactive. They let complementary beauty brands run shoppable video ads on their product pages. The result: they generated enough ad revenue to offer free shipping on all orders without eating into their margins. Luna: Wow. So the ads essentially subsidized the shipping cost. That's a direct impact on conversion rate. Lucas: Exactly. Uoma's average order value didn't change, but their conversion rate went up about twelve percent after they introduced free shipping. And the ad revenue covered the shipping cost entirely. So it was a net positive for everyone — the advertiser got targeted reach, Uoma got better checkout metrics, and the customer got free shipping. Luna: That's the kind of win-win that actually works in DTC. It's not abstract. Lucas: And look, I think the reason this is relevant right now — June 2026 — is that the cost of customer acquisition has been climbing for three straight years. Facebook CPMs are up something like forty percent since 2023. So DTC brands are desperate for alternate revenue streams. Retail media networks let them turn their existing traffic into a profit center instead of just a cost center. Luna: It's almost like turning your store into a media company. You're not just selling products, you're selling access to your audience. Lucas: Exactly. And that's a shift in mindset. You have to start thinking like a publisher. Your product pages are content, your blog is editorial, and your ad placements are inventory. The brands that get that are the ones that will thrive. Luna: And speaking of thriving — I know these episodes take a ton of research to put together, and they're ad-free because of listeners who chip in. If these marketing conversations have sparked something you've actually used in your own work, buy me a coffee dot com slash fexingo is where you can support the show. Lucas: Yeah, it really does make a difference. A couple of dollars a month is genuinely what keeps these going. So if you've gotten value from the podcast, that's the place. Luna: Alright, back to retail media. One thing I want to dig into — how do you price these placements? Is it CPM, CPC, or something else? Lucas: Most DTC brands start with cost per mille — CPM. You charge a flat rate per thousand impressions. The rates vary wildly depending on your traffic quality. A site with high purchase intent, like a supplement brand with a loyal audience, can charge fifty to a hundred dollars CPM. That's way above what you'd get from a display ad network. Luna: Because the audience is worth more. They're pre-qualified. Lucas: Exactly. Some brands move to a cost per click model, but that requires more tracking infrastructure. The simpler play is just CPM — you know your traffic numbers, you know your ad inventory, and you sell it like a billboard. Luna: What about the operational side? If I'm a small DTC brand with a team of five, do I need a whole ad ops department to run this? Lucas: That's the beauty of the platforms like PromoteIQ or KERV — they handle the programmatic auction, the ad serving, and the reporting. You basically plug it into your Shopify backend, set your floor prices, and approve advertisers. It's not zero work, but it's much lighter than building your own ad server. Luna: So the barrier to entry is pretty low now. That's interesting. Lucas: It's getting lower every quarter. I think within two years, most mid-tier DTC brands will have some form of retail media network. It'll be as standard as having an email list. Luna: But there's a risk of over-monetization, right? If every page is plastered with ads, you ruin the user experience. Lucas: Huge risk. The best practice is to limit ad placements to one or two spots per page — maybe a 'shop the look' widget and a sponsored post on the blog. And never put ads on the checkout page. That's sacred ground. The moment a customer feels like they're being sold to during checkout, you lose trust. Luna: That makes sense. Keep the ads in the discovery phase, not the transaction phase. Lucas: Exactly. And measure the impact on core metrics — conversion rate, time on site, repeat purchase rate. If those start slipping, you've gone too far. Luna: Alright, so for a DTC brand listening right now, what's the first step? Should they just sign up for PromoteIQ tomorrow? Lucas: First step is to audit your traffic. How many monthly unique visitors do you have? What's the average session duration? If you're under fifty thousand monthly visits, the ad revenue probably won't move the needle. But if you're above that, it's worth a pilot. Luna: And what about the creative? Do you need to produce ad assets for your advertisers? Lucas: Most platforms let advertisers upload their own creative. You just provide the placement specs. So it's pretty hands-off. But the brands that do best are the ones that help their advertisers optimize — because better ads mean higher CPMs for you. Luna: So it's a partnership. You're incentivized to make your advertisers successful. Lucas: Exactly. And that's the mindset shift I mentioned earlier. You're not just a retailer anymore. You're a media owner. Luna: That's a powerful frame. I'm going to be looking at product pages differently now. Lucas: Same. And I think the next evolution is dynamic pricing — where the CPM adjusts in real time based on the visitor's likelihood to buy. We're not there yet for most DTC brands, but the infrastructure is being built. Luna: That's both exciting and a little terrifying. But I guess that's the direction. Lucas: It is. And for now, the brands that start early will have a first-mover advantage in building their own ad ecosystems. The ones that wait might find their traffic monetized by someone else. Luna: Alright, I think we've given listeners plenty to think about. Thanks for the deep dive, Lucas. Lucas: Always a pleasure, Luna. See everyone next week.