The Rise of Off-Site Retail Media Advertising | Behind the Numbers Special Edition
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Welcome to a special edition episode of the eMarketer podcast, Behind the Numbers. I'm Marcus and today we have a special conversation from the eMarketer Summit, Commerce Media Trends 2025 from May 9th. Listen as eMarketer Principal Analyst Sarah Marzano and Google's Head of Retail Media, Sean McGahey discuss the rise of offsite retail media advertising. Enjoy. Hi everyone. I'm back for a special sit down with Sean McGahey, Head of Retail Media at Google.

But first, to set the scene for our conversation, today more than 80% of the $60 billion spent on retail media is directed toward on-site advertising. But the shape of that is evolving quite quickly. By 2027, we're projecting that one in every $4 spent on retail media will shift to off-site channels. So, Sean, welcome. It's great to have you here. I'm very excited to invite you to share what you're seeing from the front row perspective of how off-site retail media is taking shape.

Thank you for having me. It's a pleasure to be here.

Awesome. So something that I have been having a great time sort of covering and thinking about and writing about is all the factors that are driving the urgency and opportunity in offsite retail media right now. But Sean, from your perspective, what's top of mind in terms of why it sort of now feels like a really instrumental moment in offsite for retail media? Yeah, sure. A few things. One is the fact that shopper journeys are very complex.

and that retail media networks need scale to reach those shoppers wherever they may be. And so that need to use retail media to further influence shopping behavior requires offsite to meet them in all the various touch points that they have.

I would also say competition is driving a lot of the interest in offsite as it feels like there's a new media network launching every day. And so you need to have as a network, the inventory and the offerings to compete with the other places that those dollars could go. And so we see that driving a lot of offsite activity. And then lastly, incrementality, that ROAS is not enough in retail media as the industry has matured and ensuring that you're

finding new buyers as a part of these campaign activations. And we're seeing offsite being a great channel to help drive, improve out incremental sales in a retail media buy. Yeah, I love that. I feel like you hit on so many of the themes that we've sort of been coming back to throughout our programming today, right? The top of mind need for scale as retail media networks look to continue their momentum, the finite nature of onsite inventory, and the need to reach customers beyond lower in the funnel, right, activations.

So Google, for its part, owns some of the most critical moments in the shopper's journey, just to keep us on that topic, right? Everything from search to YouTube. So how are you thinking about those critical moments, right? Where you sort of have this pervasive kind of presence and how does it influence your retail media strategy, right? I think about a shopper in the context of a Google search versus a YouTube environment and this context is feeling quite different.

Yeah, no, I'm happy to share. As we talk about the complexity of shopper journeys, one thing we are seeing on the Google side is that there's four behaviors that are consistent. So one, there is searching behaviors that are in most every shopper journey. There's scrolling behavior. There's streaming. And then there's shopping that's being incorporated across all of those four behaviors. And so we're using the insights and the knowledge that we have in those behaviors to influence how we're approaching retail.

And so from a searching standpoint, we're complementing sponsored product ads with off-site ads on Google Search and Shopping. From a scrolling standpoint, we're leveraging our demand gen product that reaches scrollers on the Google Discovery feed or when they're searching for their next video on YouTube or when they're scrolling through the YouTube shorts.

We're able to use that as an offsite activation during that behavior. When they're streaming, we announced at the new fronts earlier this week that retail audiences and conversions are coming to DV360, which reaches 98% of CTV households. And because we have our merchant center infrastructure and we have 45 billion product listings that update 2.1 billion times every hour, we're able to add shoppable products

inventory and all of those moments. And so we're really leaning into what do we know about consumer behaviors, what are shoppers actually doing, and leveraging our platforms and our solutions to meet them where they are.

Yeah, no, I love that. And I think we talk sort of ad nauseum in this industry about how the purchase funnel has collapsed or it doesn't feel as relevant in the linear way we used to look at it. But I like the framework that you've sort of set up that feels like it more accurately reflects sort of the multitude of activities that customers are engaging in on various digital surfaces at any point in time and all the sort of nuance in terms of the opportunity to reach them in the

those moments, which I really think is where the purchase journey is kind of evolving towards. You mentioned the announcements around Stevie360, which I think was just earlier this week.

which has happened since then, Google has been expanding its retail media capabilities quite quickly. And to me, that points to what feels like a really intentional product roadmap. So I'm curious what you're able to share about where sort of you see both Google and the broader retail media landscape heading in the coming years and what role you think Google plays in that.

Yeah, I would say as we leaned into our product development, we didn't want to just build solutions because we could build solutions. We really wanted to take an assessment of what's going on in this market and how can we uniquely add value with what we have.

And so some of the three things that we noticed is that one, in retail media, there's a growing demand for media that actually performs. We're seeing a disconnect between the great ROAS that might be in a report and then the conversations that those same advertisers are having with the merchandising side of retail and where the JVPs and those conversations aren't as favorable as the retail media report is.

is highlighting. And so making sure that we're helping retail media networks add media inventory that really moves the needle for whatever those objectives are, is one of the areas that we're leaning into from our products. Secondly, we know this is a very fragmented industry, that the average brand is buying across six to 11 retail media networks. Each media network has about 5%,

five to 10 different ad tech platforms that they use to activate and that we can't get to the next level of scale with that much fragmentation. And so we're building solutions in the ad tech products that the industry has been using for a while across our search ads 360 solution, DV 360, as we mentioned, and even within Google ads. So to reduce the fragmentation that we see in this market. And then lastly, measurement and that standardization of measurement.

the great value of retail media is their measurement and then when you interview advertisers the thing that is most challenging for them is the retail media measurement right absolutely we're looking at our solutions and say how can we use the measurement standards and approaches that digital marketers have been accustomed to throughout google and up and bring retailer conversion data into that framework

Yeah, no, I think that's spot on because I think when you sort of look back at retail media's relatively short history, it's really been fueled by a level of excitement and enthusiasm that really came to define its sort of first few years, right? As retailers rolled out their offerings and we sort of figured out where the low-hanging fruit was. But it feels to me like a consequence of retail media reaching the level of maturity that it's at today is that some of these sort of pervasive tensions around where

where and how measurements like ROAS are used and where they fall short, or the difficulty when it comes to an advertiser's capacity to navigate a really disparate set of platforms are really sort of coming to a head, right? And then in order to continue with momentum, it's really time to start figuring out some solutions to these issues, which aren't new. Again, they've been bubbling under the surface for quite some time. It feels like this is sort of the moment to really start addressing them.

On the topic of retail media being still a relatively sort of like nascent part of the digital advertising landscape, I think that retail media has come to be defined really by the dominance of a very small handful of players who capture the majority of ad spending. I would love to hear your perspective on where you see the biggest opportunities for newer or mid-sized players to break through.

Yeah, happy to. So in my role, every retail media network in America is my customer. And when I'm talking to like some of the newer or the mid tier retailers, the thing I always tell them is you can't take the big guy's playbook and just copy and paste it to your business, right? You have

unique value adds within your data that you need to lean into like things like in-store availability um like how do you lean into those opportunities and then also the expectation of you and the fact that um there's often a finite number of retail media networks that brands are going to choose um requires you to outperform on your competition to really

get that next dollar. Like where someone else might lean more into the upper funnel because of the scale that that retailer has. If you don't have a similar scale, like you're going to have to really outperform them. Like the incremental ROAS that you're driving needs to

you know, outperform some of your competition. The way that a retail media campaign influences what's happening with merchandising needs to be stronger than what they might see with their competition. And so we really just lean into helping the networks. And I really see the opportunity is approaching the unique value adds of the size of the retailer that you are, but competing with performance.

Yeah, no, that makes a ton of sense. And I think that's one of the most interesting things about the point that we're reaching in retail media today is we're going to start seeing finally a sort of like break off of this sort of like one singular playbook that is typically sort of the roadmap to launch. And we're going to see really unique cohorts start to emerge where hopefully retailers start to recognize what strength they have to really offer in the landscape and tailoring their solutions with that in mind.

You mentioned measurement. And I think something that you've said in the past is that the measurement to activation cycle needs to get tighter. Can you tell me more about what you think or what that looks like in practice?

Yeah, happy to. I think there is a big opportunity in real-time bidding and optimization when it comes to retail media. We often see flighted campaigns and like it's going to run from this time period to this time period associated with the seasonal event. And even, and we're not really looking at the performance until the campaign flight is over and there are opportunities to say, hey, this is working. How do I make adjustments or increase my bids to

to gain more opportunity there that is not pervasively being activated across the industry and so we we see an opportunity there when it comes to integrating those signals into platforms like Google to where we can not only help from a reporting and attribution standpoint but use our infrastructure to say hey this is working let's increase our bids in our off-site Google shopping campaign

And so we think that there will be more activations in that space to not just report and it's stagnant, but like leverage the data in a more real time manner to drive results for the advertiser.

Yeah, and I think that's spot on because measurement and sort of improving measurement isn't just about making it easier for an advertiser to really effectively measure the performance of campaigns across a set of retailers, but it's about being able to make decisions really, really quickly. Something I was talking about in one of the previous panels was the fact that like,

the last few weeks are a great example of the fact that consumer sentiment can change quite quickly, and the state of the economy can change quite quickly. And so where you're wanting to invest and make decisions also needs to be able to change quite quickly. But without really efficient, streamlined methods of measurement that are trustworthy, it feels like that's never going to happen.

Yeah, I agree. And also, I think there's a lot of behavior of taking traditional shopper approaches and just like applying them to retail media, and that it can often miss a lot of real time opportunities. Like we highlight for our partners, hey, this is trending on Google right now, like

We are seeing this area spike or this product is growing and it's difficult to meet that opportunity because of, well, this is already flighted and it's already in this plan and we can't make those adjustments. And so we think measurement and optimization towards that measurement and solutions that allow you to do that is actually going to get us more incremental sales in this space by not just making it stagnant, but making it actionable.

Yeah. I'm curious if you would be willing to sort of dive deeper into some of what you mentioned around omnichannel attribution and the ability to bring in in-store inventory levels into that purchase journey. I think for me, that seems like an opportunity for retailers who maybe do most of their business in physical stores and therefore haven't had as much success scaling their on-site retail media business. And what role can Google play in that?

Yeah, so one of the benefits and the value that we have is Google Maps. And that often there's a lot of search behavior happening on Google Maps. We work with retailers to use their product feeds to identify what type of in-store products

offerings that they may have or if the product that the person is searching is near them because of what's available in that in-store environment for the retailer. And so we're leaning into that. Like people may know it as local inventory ads, but that is like a strong asset to not only, you know, support your online activations, but to really help you drive the in-store foot traffic and footfalls.

connection there. But to really activate that, one, you need to have that type of information in the product feed. And then two, you need to be able to upload your offline sales data into platforms like ours so that we can measure, report, and optimize to what is happening in store in real time.

Yeah, no, I feel like I'm so glad we touched on this because the maps is not even a surface that we had talked about yet, right? That Google owns. And I think if you, I spend a lot of time in my maps trying to figure out where I'm going and what the hours are and all these things. But I think you've also sort of teed up the opportunity there to incorporate merchandising, inventory levels, category management into this retail media space and how that's already something that's quite important. But as we see in-store attribution become a larger part

of this industry, the need for that is only going to grow.

- Sarah, as you know, I just had my third daughter and my Google search queries right now are like GMO free organic baby formula near me. - Yup. - And when we partner with retail media networks, there's a lot of queries like that on Google, that will show up not only on Google search, but those ad placements will show up on Google maps under specific campaign types.

And so we just see it as a really big, ample opportunity to grow. Yeah, I can relate to that. I think when you have a small child at home, some of those needs that arise when they're really urgent. Listen, these chats tend to fly by and we are running up on closing time here. But I wonder if looking ahead, if you could just leave us with sort of a short statement on what you're most excited about when you think about the future of Retail Media Networks.

Yeah, a few things I think about one, the truth, truly realizing the opportunity of retail media when it comes to its ability to drive incremental sales, to increase personalization and to deliver measurement that people understand and they believe in that changes marketing behavior.

And so we're really looking forward to the opportunity to do that with both Google's media products and our ad tech products and our measurement solutions in leveraging AI as a more foundational underpinning of all these activations to increase the effectiveness and personalization of what we're doing in this space.

Awesome. It feels like we're on the precipice of a very exciting time. I really appreciate you joining us to share just a little bit of what you guys are working on. I feel like we barely scratched the surface, but so much interesting stuff in the work. So thank you so much, Sean.