Retail media ad spending is slated to grow 24% through 2028, but store giants like cosmetics brand Ulta Beauty aren't staying in their lane to capture those gains. Instead, they're looking to attract advertisers outside of their typical store aisles.
Take Ulta's two-year old retail media network, UB Media. It boasts 300 brand partners who want to reach UB Media’s 44-plus million loyalty customers. The skincare and makeup purveyor’s RMN has recorded a 35% annual rise in ad spending. But Ulta has concluded it can grow even higher and even faster by going beyond what’s skin deep.
So it's partnering with e-commerce tech provider Rokt to attract AI "non-endemic" ads, Digiday recently reported. In this case, that means "non-beauty brands" like streaming video network Hulu and payments platform PayPal.
The move represents what experts say is a natural evolution for retail media networks (RMNs) seeking to expand their competitive advantage while maintaining the delicate balance of user experience by showing they know their shoppers better than their rivals.
“Non-endemic ads certainly have a role to play in retail media, so long as they are non-intrusive and complementary to a retailer's customer expectation,” says Drew Cashmore, head of strategy at retail media tech platform Vantage. “Non-endemic done right creates added value for retail customers — think special discounts on travel, bonus points for credit card signups.”
But the path to non-endemic success isn't without its hurdles.
Summer DuBois, director of operations and agency innovation at Public Label, points out that maintaining relevance is where RMNs’ heads are at. “Retailers need to ensure that these ads enhance rather than disrupt the shopping experience," she says. “Striking the right balance between ad inventory and user experience is essential.”
DuBois considers the shift to non-endemic ads as a natural evolution within retail media networks, driven by the demand for better monetization. “Rather than just being the ‘next wave,’ their true value lies in complementing a retailer's core business focus,” DuBois says. “These ads generate incremental revenue without disrupting the customer experience.”
For retailers in CPG, beauty, travel, or wellness, non-endemic ads add value by providing relevance beyond the main product categories, she adds. It’s about creating targeted placements that benefit both brands and retailers.
“Brands gain access to an engaged audience that might not otherwise interact with their offerings, while retailers monetize their traffic more effectively, especially when offsetting paid traffic costs,” DuBois says. “Ultimately, non-endemic ads help retailers generate new revenue streams and enrich the customer experience, making them a strategic complement rather than a distraction.”
In particular, the drive toward non-endemic advertising is fueled by several factors, including the increasing value of first-party data in a world moving away from third-party cookies, says Fred Seddon, director of commerce and retail media at Kepler. “If Google can reach the target audience with a set of web browsing behaviors, RMNs can do it just as well (or better) with a set of purchase behaviors,” he says.
For non-endemic advertisers considering investment in retail media networks, the decision often comes down to incrementality, says Seddon, noting that the questions marketers want answered are “Does this RMN's dataset let me reach my audience in different or more effective ways? Does the RMN expand my overall reach?”
Seddon suggests non-endemic advertisers start small. They should focus on "either one or a small set of RMNs to experiment with before incorporating additional ones into their plan."
The expansion into non-endemic advertising also reflects a more sophisticated understanding of consumer behavior.
“Just like shoppers don't shop at a singular retailer for all of their needs, they don't exist in a bubble," says Renee Caceres, head of retail media at programmatic ad platform StackAdapt. “Auto and insurance messaging may be applicable for people who are driving to and from the grocery store. Travel messaging may be relevant for shoppers looking to add to their wardrobe.”
Nevertheless, Cashmore warns retailers to proceed carefully. Non-endemic advertising can “minimize valuable retail space or take customers away from their shopping cart." The key is finding the right placement strategy.
“The challenge here is that retailers don't want to drive customers away from the point of purchase,” Cashmore says. “This leads us to offsite advertising, which is a great solution to immediately kickstart the flywheel with retail media's first-party data solutions."
For Ulta Beauty, the move into non-endemic advertising comes at a challenging moment. The beauty retailer has revised its full-year outlook downward, now expecting net sales of $11 billion to $11.2 billion, with comparable sales projected to decline by 2%, Digiday’s report notes. The expansion of its retail media network could provide a vital new revenue stream while potentially enhancing the shopping experience for its 44 million loyalty members.
The success of this strategy will likely depend on how well Ulta and other retailers can balance the promise of increased revenue against the risk of alienating their core customers. As Seddon puts it, the key is “preserving their brand, data security, and retail customer experience in the process.”
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