A Full-Funnel Approach to Retail Media Ad Formats

The true strength of retail media ad formats lies not in their versatility alone, but in how strategically they are deployed to move consumers seamlessly through the funnel.

A full-funnel approach redefines how we think about ad formats. No longer confined to specific stages of the funnel, each format has the potential to engage and influence consumers in ways that are far more dynamic and context-driven.

Of course, there will be best practices learned over time—video ads should be only used at the top or sponsored ads are best at the bottom. But a full-funnel approach means you aren’t locked into how any given ad format should work. The power lies in knowing when and where to use each format to deliver the right message to the right audience at the right moment. It’s no longer about predefined assumptions—each format must be adaptable, deployed with precision to address the needs of consumers as they move through their journey.

Popular retail media ad formats

Sponsored ads formats prominently feature products and brands in search results or on product detail pages, seamlessly integrating into the shopping experience. These placements are inherently valuable for driving low-funnel conversions because they appear at critical decision-making points, sometimes right on product detail pages. With branded targeting, they are hyper-relevant for conversions. 

However, sponsored ads can also be powerful mid-funnel when using in-market, peer brand, or contextual targeting, especially if you exclude past purchasers to boost new-to-brand conversions and top-line growth. Surprisingly, they can even support top-funnel awareness campaigns by leveraging broad in-market, lifestyle, or contextual targeting—particularly with video formats like Amazon’s Sponsored Brand Video, which are highly effective for awareness.

Display ads are visually appealing and versatile, offering opportunities to catch a consumer’s attention and keep your brand top of mind as they browse platforms. Their impact is shaped more by targeting than format, making them relevant at various funnel stages depending on the audience you’re trying to reach. 

On-site display ads, placed directly on retailer sites, are highly effective for conversions as they are close to the point of sale and contextually relevant to shoppers in a purchasing mindset. Off-site display ads, on the other hand, are great for awareness and incremental reach, especially when using contextual targeting, as they engage consumers on their favorite websites and content, ultimately driving them back to the retailer site.

Video ads (including online video, streaming, and CTV) can be used at any stage of the funnel. Their rich, immersive sight/sound/motion experience allows brands to tell a story, demonstrate product benefits, or create an emotional connection. They are especially vital for launching new products or brands, regardless of price point, as they help build market share and drive topline growth. While streaming TV (STV) may come with higher CPMs, intelligent targeting and retargeting segments for those exposed to STV ads make it a smart investment. 

Contextually relevant placements and interactive features like QR codes, which drive viewers directly to product pages, can further enhance effectiveness. Investing in video ads, particularly for STV, can deliver impressive incremental reach and is essential for growing household penetration and overall market share—far beyond the returns of just focusing on on-site media or branded search ads.

Dynamic ads via DSP adapt to consumer behavior in real time, offering personalized content that resonates with individual needs. On-site, they enable marketers to reach highly granular audience segments within a retailer’s environment, ensuring that your message is delivered to precisely the right consumers at the right moment. Off-site, these ads can be applied to the millions of ad impressions available every second on the open web, expanding your reach while maintaining relevance. This format’s unique value lies in its ability to change and respond to consumer interactions, providing a tailored experience that feels relevant and timely.

Ways to use ad formats across the funnel

In retail media, the versatility of ad formats allows marketers to engage consumers effectively at any stage of the funnel. Each format carries unique strengths that, when leveraged strategically, can meet the specific needs of consumers as they progress through their journey. The key is not to confine any format to a particular funnel stage but to understand how each format’s characteristics can influence and guide consumers at various points.

To illustrate this flexibility, we’ll use the same three ad formats — Sponsored Ads, Display Ads, and Video Ads — as examples to demonstrate how they can be effectively used at every stage of the funnel.

Top of the Funnel: From awareness to precise engagement

At the top of the funnel, ad formats play a critical role in capturing attention and making that all-important first impression. But it’s not just about initial visibility — it’s about engaging consumers in a way that resonates with them personally and piques their interest in your brand. The flexibility of ad formats here allows you to craft messages that align with consumers’ early-stage behaviors, whether through compelling visuals, engaging narratives, or search-driven relevance.

Examples at the top of the funnel

• Sponsored Ads: These ads can establish a strong presence during initial exploration, ensuring your brand is considered from the beginning, especially when combined with broad targeting strategies like lifestyle targeting, broad In-Market segments (people browsing in-aisle), category non-branded terms, or contextual targeting.
• Display Ads: Eye-catching visuals can create intrigue, encouraging consumers to delve deeper into your brand’s offerings. While creativity is important, targeting is key.
• Video Ads: Storytelling through video can foster an emotional connection, inviting consumers to learn more and start their journey with your brand. Targeting is key to maximizing these formats as mid-funnel consideration drivers—use In-Market segments (aisle-browsers), broad remarketing segments (people who viewed your brand with longer lookback windows for more scale), custom segments of those who viewed peer brand product pages, contextual targeting, and category-branded search terms.

Middle of the Funnel: From nurturing to decision influence

In the middle of the funnel, the strategy shifts from merely being visible to actively shaping the consumer’s decision-making process. Here, ad formats should be used to embed your brand’s unique value propositions into the criteria consumers use to evaluate their options. By strategically leveraging the strengths of each format, you can ensure that your brand stands out as consumers weigh their choices.

Examples at the middle of the funnel

• Sponsored Ads: In the mid-funnel, highlight critical features and benefits that keep your product top-of-mind as consumers compare their options. Effective targeting can elevate these formats for mid-funnel consideration—whether it’s engaging aisle-browsers through In-Market segments or leveraging peer brand product page views to attract potential customers, targeting ensures relevance and impact.
• Display Ads: Use retargeting to keep your brand top-of-mind, reinforcing value and influencing consumers as they move through their decision-making process. Targeting strategies should focus on re-engaging users based on their prior interactions with your brand.
• Video Ads: Mid-funnel video ads can showcase product demos or comparisons to emphasize your competitive advantages. Effective targeting ensures these ads reach users who are most likely to be influenced by your message during the consideration phase.

Bottom of the Funnel: From conversion to competitive advantage

The objective is clear at the bottom of the funnel: secure the conversion. However, this stage is also where competition is fiercest, and every brand will be vying for the consumer’s final decision. Your ad formats must be optimized to drive conversion while also outmaneuvering competitors, ensuring that your brand is the one that ultimately wins the sale.

Examples at the bottom of the funnel

• Sponsored Ads: Consumers use search at every stage of the buyer journey, and when would they be more powerful than when a user is on the precipice of making a decision. Capture intent-driven traffic with search-triggered ads that offer compelling calls to action. Targeting is key—protect your branded keywords and ensure your ads are capturing those high-intent searches.
• Display Ads: Remove barriers to purchase with incentives like discounts or free shipping, encouraging final decision-making. Use targeted display ads to protect your product detail pages (PDPs) and contest similar brand keywords, keeping competitors from swaying customers at the final stage.
• Video Ads: In a conventional approach, video ads are rarely cited as being valuable at the bottom of the funnel. But, you can strategically use video to reinforce your brand’s value with testimonials or final offers that motivate the purchase decision. Leverage custom remarketing segments of users who viewed your product pages to ensure these messages hit the right audience, pushing them toward conversion.

Best practices for full-funnel ad format utilization

The best practices for utilizing ad formats across the funnel are crucial for ensuring that your strategy is effective and adaptable to the unique needs of consumers at every stage.

Align ad formats strategically with the consumer mindset, but avoid pigeonholing them into specific funnel stages. It’s crucial to remain flexible when deploying ad formats, understanding their versatility across multiple stages of the consumer journey. Limiting formats to traditional uses can restrict impact. Instead, recognize their flexibility and tailor your approach to engage consumers meaningfully, no matter where they are in their journey. For example, raising bids and budgets for top-of-search placements or product detail page (PDP) placements can help capture high-intent traffic and drive conversions effectively.

Leverage data to enhance targeting and messaging across your ad formats. It’s not just about matching an ad format to a funnel stage—the key is in precise targeting. Use the retailer’s first-party data to create custom remarketing segments of shoppers who viewed your product pages, as well as those who viewed similar brand product pages. Use a balance of short lookback windows (high purchase intent, so bid higher for these valuable segments) and longer lookback windows (lower intent, but larger audience size). Data-driven targeting ensures your ads are seen by the right people and are genuinely engaging.

Test and optimize continuously to develop a strong point of view on where and when to use each ad format. The key to mastering full-funnel retail media is an informed, adaptable strategy built on ongoing analysis and test-and-learn experiments. Focus primarily on two factors: ad placement and targeting strategy, which have the biggest impact, followed by creative, frequency capping, viewability settings, and bid levels. Consistently evaluate and refine your approach to stay effective in the ever-changing retail media landscape, as consumer behavior and platform capabilities continue to evolve.

Focus on consumer experience by understanding what your customers need at each stage of the funnel. Every interaction should be designed to meet those needs and exceed expectations. Upper funnel efforts focus on brand storytelling and lifestyle messaging, mid-funnel on product details and feature differentiation, and lower funnel on a mix of feature-selling and price/promo messaging. It’s essential to test and learn with creative approaches that enhance the overall consumer journey, ensuring your ad formats contribute to a positive, impactful brand experience that drives both conversions and long-term loyalty.