What Is a Retail Media Network?
A retail media network (RMN) is an advertising platform set up by retailers on their website, app, or other digital platforms within their network. It provides brands and advertisers a unique channel to connect with prospects who have a high buying intent. What’s more, it helps them get the coveted first-party data.
RMNs operate as the digital equivalent of in-store advertising, offering a digital format that blends seamlessly with the online shopping experience.
How Do Retail Media Networks Work?
At its core, a retail media network is an advertising service owned by a retailer. This service allows marketers to purchase advertising space across all the digital platforms and channels owned by the retailer. It taps into the retailer's first-party customer data to connect with shoppers throughout their buying journey.
In essence, a successful retail media network effectively monetizes every addressable channel within a brand-safe and privacy-compliant environment.
Partner brands (advertisers) can show ads in prominent spots on the retailer’s website, including:
- Search results pages
- Home page
- Product detail pages
- Category pages
What Is an Example of Retail Media?
Retail media advertising involves brands promoting their products or services on a retailer's website. An example of this can be Samsung advertising its new products or services on Walmart’s website.
While it might sound like traditional display advertising, the key difference lies in the location, which is the retailer's website, and the fact that the brand (advertiser) will most likely utilize first-party data to precisely target their ads.
Becoming a retail media network isn't as simple as creating a website. Retailers must invest in the right technology to make it work. They need the infrastructure to support this advertising network.
Historical Context and Evolution
Retail media can be viewed as the digital counterpart of traditional in-store advertising, where products were promoted through methods such as A-boards, in-store ads, loyalty cards, coupons, and samples.
In addition to in-store advertising, retailers had access to traditional media channels, including newspapers, television, radio, and out-of-home (OOH) advertising. However, the reach of these traditional channels was limited, and evaluating the success of advertising campaigns was often a complex and costly process.
A pivotal moment in the evolution of retail media networks occurred in 1994 when AT&T displayed the first internet ad on HotWired.com, marking the dawn of digital advertising.
In 2012, Amazon entered the scene and launched Amazon Advertising. Since then, it’s been the most dominant player with 89% of the U.S. retail media ad spend. The industry continues to evolve with new participants entering the market.
Key Players in the Retail Media Space
Here are three major players who own massive retail media networks. Let’s take a look at each:
Amazon
The eCommerce giant, Amazon, has mastered the art of retail media with its Amazon Advertising platform. Thanks to its expansive digital footprint and access to an enormous customer data pool (over 200 million in the U.S. alone), Amazon offers brands diverse campaign options.
Amazon Advertising operates similarly to Google Ads, with brands bidding on keywords and paying per click.
CVS
Consumer Value Store, known as CVS, has ventured into the retail media landscape with its CVS Media Exchange (CMX).
CMX provides brands with valuable advertising real estate informed by CVS's robust first-party data, incorporating both off-site and on-site targeted ads.
This is made possible by CVS's extensive customer data, derived from nearly 10,000 locations nationwide, years of loyalty program data, and high-traffic online platforms. This treasure trove of data equips advertisers to craft personalized ads strategically positioned for maximum visibility.
Walgreens
A seasoned player in executing digital ad campaigns for other brands, Walgreens has formalized its presence in the Retail Media Network arena through the launch of Walgreens Advertising Group (Wag).
Wag extends ad placements on its online store, physical retail outlets, and other digital platforms, such as social media and Google.
Other major players include Walmart, Target, and Kroger.
Why Is a Retail Media Network Important?
Retail media networks allow brands to advertise where consumers already spend their time, like in-store advertising but in a digital format. It's like having a "digital shelf" that increases a brand's visibility as shoppers explore online, just like in-aisle promotions in physical stores.
When brands advertise on a retailer's website or app, the ads feel relevant to online shoppers. This engagement provides valuable insights into shoppers' behavior, helping brands tailor products and messaging to better serve their audience.
Key Benefits of Retail Media Network
Additional Revenue Stream
Retail media network is a rapidly expanding sector, offering businesses a fresh revenue source for both brands and retailers. For instance, Walmart's network generated over $2 billion last year.
Enhanced ROI
Advertising in retail media networks reaches customers in a buying mindset, resulting in significantly higher returns compared to other channels.
According to McKinsey & Company research, consumer goods and advertisers often see ROAS returns of 3 to 5 times.
Reliable Customer Data
Access to first-party data collected directly by the retailer makes RMNs a more reliable source of information than third.party cookie data. This can facilitate better understanding of customers and adaptive marketing approaches.
Improved Visibility
Collaborating with an RMN enables precise targeting of specific audiences at various stages of their buying journey.
The strategic placement within the right retail network reaches consumers already interested in your products, enhancing brand exposure.
Next-Level Personalization
RMNs not only help retailers and advertisers, they also enhance the customer’s shopping experience with incredible personalization.
For instance, the US supermarket Kroger effectively targets shoppers based on loyalty card data, helping them discover products they are already interested in.
Emerging Trends in Retail Media Networks
Retail media networks are increasingly finding a place in the advertising strategies of savvy marketers, with brands seeking to optimize their ad investments and ensure their campaigns resonate with the right audiences.
Here are some key trends that are shaping the growing retail media landscape:
1. Expanding Brand Participation in Retail Media
In 2021, over 23,000 businesses collectively invested over $3 billion in retail media, as reported by MediaRadar. This data signals a rising interest among brands to explore the potential of retail media.
2. Diversification of Digital Marketing Strategies
As the advertising industry evolves, marketers are seeking dependable insights to guide their advertising endeavors and formulate robust marketing strategies.
Retail media presents an opportunity for brands to diversify their digital marketing approaches and adapt to the changing landscape.
3. Leveraging First-Party Insights for Relevance
First-party insights are proving invaluable in assisting brands in crafting more personalized and relevant campaigns, especially for shopping audiences.
This approach not only enhances the shopping experience for consumers by presenting them with pertinent ads, but also empowers brands to allocate their ad budgets more strategically.
While the retail media landscape is still relatively young, its maturation holds the promise of becoming a valuable and informative facet of digital advertising for brands in the near future.
Challenges in Implementing Retail Media Networks
Implementing retail media networks comes with several hurdles that businesses need to address to ensure success. These challenges include:
1. Privacy and Data Security Concerns
As brands gather and utilize consumer data to enhance their targeting and personalization efforts, ensuring the privacy and security of this data becomes paramount.
Navigating the complex landscape of data regulations and safeguarding customer information is a challenge that retailers and brands must proactively manage.
2. Scalability and Integration with Other Platforms
Achieving seamless integration of Retail Media Networks with other digital marketing platforms and existing technologies can be a complex endeavor.
Ensuring scalability to accommodate growing demands while maintaining operational efficiency requires strategic planning and technical expertise.
3. Navigating the Competitive Landscape
The retail media space is becoming increasingly competitive, with more brands and retailers entering the arena.
Staying ahead in this dynamic landscape necessitates continuous innovation, strategic positioning, and the ability to differentiate offerings effectively.
4. Adherence to Evolving Regulations
Adherence to the ever-evolving landscape of data privacy and advertising regulations is a persistent challenge. Retailers must stay updated with changing compliance requirements to avoid potential legal and reputational risks.
5. Ensuring Measurable ROI
Determining the return on investment (ROI) from retail media advertising can be challenging. Brands need robust analytics and measurement tools to assess the effectiveness of their campaigns and optimize ad spend.
Effectively addressing these challenges is crucial for retailers and brands looking to harness the potential of RMNs while delivering a secure and personalized shopping experience for their customers.
The Future of Retail Media Networks
Predictions and Expected Developments
Growing Spend
According to GroupM, advertising in retail media will increase by about 60% by 2027, exceeding the expected growth of all digital advertising. It is expected that more retailers will invest in expanding their retail media offerings.
Increased Personalization
The focus on data-driven insights will lead to more sophisticated personalization strategies, enabling brands to create highly tailored ad campaigns. Retail media networks will harness artificial intelligence (AI) and machine learning to deliver precise and relevant advertising content.
Integration of Physical and Digital Shopping
Retailers will explore innovative ways to integrate the online and offline shopping experiences, leveraging technologies like augmented reality (AR) and location-based services to bridge the gap between physical stores and digital advertising.
Emerging Technologies and Their Potential Impact
Augmented Reality (AR)
AR has the potential to revolutionize the shopping experience by enabling customers to visualize products in their real-world environment. Retail media networks can use AR to provide immersive product demonstrations, driving higher engagement and conversion rates.
Blockchain Technology
Blockchain can enhance data security and transparency in retail media networks. It may be used to verify the authenticity of customer data and track the provenance of ad impressions, building trust among brands, retailers, and consumers.
5G Connectivity
The rollout of 5G networks will facilitate faster, more reliable connections, enabling retailers to deliver high-quality video and interactive content to shoppers in real-time. This technology will enable richer and more engaging advertising experiences.
How to Get Started with Retail Media Networks
Here’s how you can get started with RMNs:
Understand Retail Media Basics
Begin by grasping the fundamentals of retail media networks. Learn how they operate, their benefits, and the available ad formats.
Define Your Objectives
Set clear goals for your retail media campaigns, such as increasing brand visibility or driving sales.
Choose the Right Partners
Select the appropriate retail media partners based on your target audience and campaign objectives.
Optimize Ad Content
Create engaging ad content that aligns with shopper intent and appeals to your target audience.
Budget, Monitor, and Refine
Set a budget, monitor campaign performance, and make data-driven adjustments to optimize results.
Retail Media Networks are Here to Stay
Retail media networks have emerged as a pivotal element in the digital advertising landscape, offering unique opportunities for brands and retailers to engage with consumers throughout their shopping journey.
As the advertising industry continues to evolve, retail media networks play a crucial role, providing brands with valuable insights, enabling retailers to diversify their revenue streams, and enhancing the overall shopping experience for consumers.
With more brands and retailers exploring this dynamic advertising approach, the retail media landscape is poised for significant growth and innovation in the coming years.
Conclusion
Retail Media Networks (RMNs) represent a transformative shift in digital advertising, blending the immediacy of traditional in-store promotions with the precision of digital technology. As this landscape continues to evolve, RMNs offer compelling benefits for retailers, advertisers, and consumers alike. They provide a direct line to highly targeted audiences at the point of highest buying intent, backed by the rich, actionable insights of first-party data.
As we look to the future, RMNs are set to become an even more integral part of advertising strategies, with advances in technology like augmented reality and blockchain further enhancing their effectiveness. For brands looking to capitalize on this trend, the path forward involves a deep understanding of RMN mechanisms, a clear alignment of advertising goals with network capabilities, and a commitment to continuous optimization based on robust analytics.
Ultimately, as the digital and physical shopping realms increasingly converge, Retail Media Networks stand poised to redefine the boundaries of advertising, offering a smarter, more personalized shopping experience that resonates with consumers and drives performance for brands. In this dynamic environment, staying informed and agile will be key to leveraging the full potential of RMNs, ensuring that brands not only keep pace with current trends but also shape the future of retail advertising.
