• by Todd Wasserman , July 26, 2022

What will be the defining advertising medium of the 2020s? McKinsey has weighed in on this question, surmising that “commerce media” will be perhaps the biggest.

In a recent article, McKinsey makes the case that commerce media is a new form of advertising and compares it to the rise of programmatic advertising.

What is commerce media? McKinsey defines it as “a new form of advertising that closes the loop between media impressions and commerce transactions to improve targeting, provide new audience insights, and deliver more relevant and valuable experiences for consumers.”

The first type of commerce media to gain any traction so far is retail media, ad networks like Walmart Connect and Kohl’s Media Network. Other retail media includes Kroger Precision Marketing, Marriott Media Network and Roundel, Target’s media network, among others.

As McKinsey notes, commerce media has its roots in affiliate advertising like the Amazon Associate program that allows individuals to promote items on Amazon in exchange for a 10% commission. But commerce media also includes “live commerce” and “shoppable TV,” where consumers can interact with video content and buy directly from their TV or device screens.

The report notes that in China, shopping on the live streams of popular influencers has become mainstream, and live-commerce media purchases reached $170 billion on 2020, driven by the apparel/fashion and beauty categories. New areas of growth include the metaverse, where consumers could purchase anything they see.

McKinsey estimates that retail media networks could generate as much as $100 billion in ad spending by 2026.