In recent years, the retail industry has transformed significantly – in large part due to retail media networks. With the rise of digital ads, e-commerce, and the increasing use of technology in shopping, traditional brick-and-mortar retailers have had to adapt to stay competitive.
The rise of e-commerce has been nothing short of meteoric. Online shopping platforms have expanded beyond mere convenience, offering an array of products, competitive pricing, and personalized shopping experiences that traditional retail models struggle to match.
This shift has been accelerated by the global pandemic, which forced consumers and businesses alike to pivot towards digital solutions.
In response to these changes, traditional retailers have been compelled to reinvent themselves. Many have embraced digital transformation by integrating e-commerce platforms and enhancing their online presence.
One of the most significant changes in the retail landscape has been the emergence of retail media networks (RMNs). In this article, we’ll explore what retail media networks are, why they are becoming increasingly popular, and the top retail media networks to watch in the coming years.
Why Are Retail Media Networks Becoming Popular?
Ad Placements Through Retail Media Networks
The Fast-Approaching Cookieless Reality
Key Benefits of Retail Media Advertising
Five Things to Consider before Choosing a Retail Media Network
Top Retail Media Networks to Watch
Challenges for Retail Media Networks
The Future of Retail Media Networks
How to Add Retail Media Networks to Your Advertising Mix – A Strategy Guide
Navigating Retail Media Networks with Division-D
What Are Retail Media Networks? How do they work?
Retail media networks are digital advertising platforms established for retailers to sell their first-party shopper data and/or the ad space on their website or mobile applications.
RMNs offer invaluable and exclusive first-party access to unique inventory and shopper data, making them the perfect place for endemic and non-endemic brands to target shoppers based on past, present, and prospective shopping behavior.
These networks allow brands to advertise their products directly to consumers while they are shopping on the retailer’s website or app. This type of advertising is known as “retail media” or “retail media advertising.”
Retail media offers a unique opportunity for brands to reach customers at the point of purchase. By advertising on a retailer’s platform, brands can increase their visibility and drive sales by targeting consumers who are already interested in their products.
Businesses are expected to increase spending in retail media advertising to $25 billion from 2018 to 2023.
Retail media networks are gaining popularity due to several factors. One of the main reasons is the shift towards e-commerce and the rise of online shopping. As more consumers turn to online shopping, retailers have had to find new ways to monetize their digital platforms.
Retail media networks provide a way for retailers to create a new revenue stream by selling advertising space on their websites and apps.
Another reason for the rise of retail media networks is the increasing use of data and technology in advertising. Retailers have access to first-party data about their customers, including their shopping habits, preferences, and purchase history.
By leveraging this data, retailers can offer highly targeted and personalized advertising opportunities to brands, making their platforms even more attractive for advertising.
Each of the ad placements below offers unique advantages and opportunities for brands to connect with customers through retail media networks.
Retailer Home Page: Ad placements on a retailer’s home page are highly coveted due to their visibility and potential reach. These ads are often the first thing a customer sees upon entering the site, making them prime real estate for high-impact, brand-awareness campaigns.
Retailers can strategically place banner ads, promotional videos, or featured product placements here. These ads can be tailored to showcase trending items, seasonal promotions, or new arrivals.
Category Page: On a category page, ads are more targeted, as they appear alongside products of a specific type or genre. This allows advertisers to align their products with similar items, increasing the relevance and effectiveness of the ad.
For instance, an ad for running shoes placed on a sports footwear category page would likely engage customers already interested in athletic gear.
Search Page: Ads on search pages are unique as they are triggered by the customer’s search terms, offering a high degree of personalization and relevance. When a customer searches for a product, sponsored listings or ads related to their query can appear at the top or within the search results.
This placement is effective as it captures the customer’s intent at a moment when they are actively looking for a product.
Product Page: Product page ads can be highly effective in influencing purchase decisions. These ads might appear as recommended products, complementary items, or even competitive alternatives.
They benefit from the customer’s already heightened interest in a particular product type or category. For example, an ad for a phone case on a smartphone product detail page directly targets consumers considering a phone purchase.
The fast-approaching cookieless reality, driven by growing concerns over privacy and data security, marks a significant shift in the digital advertising landscape. For years, third-party cookies have been the cornerstone of online advertising, enabling businesses to track user behavior across the web, target ads with precision, and measure their effectiveness.
However, with major browsers phasing out support for third-party cookies and stricter privacy regulations coming into play, such as the GDPR in Europe and the CCPA in California, the advertising world is on the brink of a major change.
This impending cookieless future is creating a vacuum, particularly in the realm of personalized advertising and audience targeting, which retail media networks are well-positioned to fill with a wealth of first-party customer data.
This data, gathered through direct customer interactions and transactions, is both rich and compliant with new privacy standards. Retailers like Amazon, Walmart, and Target have already established robust media networks, leveraging their extensive customer data to offer targeted ad solutions.
First-party data and Retail Media Networks
First-party data collected through RMNs enhances the effectiveness of advertisements but also aligns with the growing consumer demand for privacy and personalization.
How retailers capture first-party data
Retailers capture first-party data through direct interactions with their customers across various touchpoints. The collection starts from the moment a customer visits a retailer’s website, mobile app, or physical store. Online, every click, search query, and item viewed or purchased is tracked, creating a rich profile of the customer’s preferences and behaviors.
In physical stores, loyalty programs play a crucial role, where customers provide personal information and consent to data tracking in exchange for rewards, discounts, or other benefits, allowing retailers to link offline purchases with online data for a more comprehensive view.
Moreover, retailers gather data through customer service interactions, online surveys, and feedback forms. Social media interactions and email marketing campaigns also provide valuable data, as they track engagement, preferences, and responses to specific content or offers
In this era of heightened privacy awareness, retailers are increasingly transparent about their data collection practices, ensuring compliance with privacy laws and maintaining customer trust.
Drawing audience insights from first-party data
Once retailers have captured first-party data, they can analyze it to draw meaningful audience insights. Advanced analytics and machine learning algorithms play a pivotal role in this process, sifting through vast amounts of data to identify patterns, trends, and customer segments.
Retailers can understand what products are popular, why certain products appeal to specific customer segments, how purchasing decisions are influenced by factors like seasonality or price, and what the customer journey looks like from discovery to purchase.
These insights enable retailers to create highly personalized shopping experiences. For example, they can tailor their website and app interfaces to individual preferences, recommend products more accurately, and create personalized marketing messages that resonate with different audience segments.
This data can inform inventory management, product development, and even store layout decisions.
Retail media advertising is a powerful strategy with significant benefits:
Benefits for Brands
Targeted Advertising: By advertising on a retailer’s platform, brands can reach their target audience at the point of purchase, increasing the likelihood of a sale.
Increased Visibility: Retail media networks allow brands to increase their visibility and reach a larger audience by advertising on popular retail websites and apps.
Data-Driven Insights: By leveraging the data available on retail media networks, brands can gain valuable insights into their target audience and the effectiveness of their advertising campaigns.
Cost-Effective: Advertising on a retail media network can be more cost-effective than traditional forms of advertising, as brands can target specific demographics and only pay for the ads that are clicked on.
74% of brands have an established budget for advertising via retail media networks.
Improved Return on Investment (ROI): With more precise targeting and the ability to reach consumers at key decision-making moments, advertisers often see a higher ROI on their ad spend in retail media networks compared to traditional advertising channels.
Access to Rich Analytics and Insights: Retail media networks provide detailed analytics and insights about consumer behavior, preferences, and trends. This data is invaluable for advertisers in refining their marketing strategies and creating more effective campaigns.
Competitive Advantage: Utilizing retail media networks can provide a competitive edge, especially in highly saturated markets, by placing products directly in front of interested consumers in a retail setting.
75% of non-consumer packaged goods advertisers plan to increase their investment in retail media networks.
Benefits for Consumers
Personalized Shopping Experience: Retail media networks use consumer data to tailor the shopping experience, showing relevant product recommendations and advertisements based on individual preferences, browsing history, and purchase behavior. This personalization makes it easier for consumers to find products that genuinely interest them, leading to a more satisfying and efficient shopping experience.
Price Control on Goods: By providing targeted offers and discounts directly to consumers, retail media networks can help shoppers save money on products they are likely to purchase. This targeted approach often leads to better deals and promotions on items that align with the consumer’s interests and needs, contributing to more cost-effective shopping.
Enhanced Product Discovery: Retail media networks introduce consumers to new products and brands that align with their interests and previous purchasing behavior. This broadens the consumer’s shopping options and simplifies the discovery process, making it easier to find new items that they might like.
Convenient and Integrated Shopping Experience: Retail media networks often integrate seamlessly with online shopping platforms, providing a cohesive and user-friendly experience. This integration allows consumers to view products, read reviews, and make purchases all in one place, streamlining the shopping process and saving time.
Brand Alignment: When selecting a retail media network, it’s crucial to ensure that the platform’s audience aligns with your brand’s identity and values. A network that resonates with your brand’s image can enhance credibility and relevance, leading to more effective engagement with your target audience.
Budget: It’s important to evaluate the cost-effectiveness of the network, considering both the initial investment and the potential return on ad spend. A network that offers scalable solutions can accommodate different budget sizes and growth plans.
Size: The size of the retail media network can significantly impact your campaign’s reach and effectiveness. Larger networks may offer broader reach and more advanced features, but smaller networks might provide more niche targeting and personalized service.
Niche: For brands targeting specific market segments, choosing a retail media network that caters to a particular niche can be highly beneficial. Niche networks often have a more engaged and targeted audience, which can lead to higher conversion rates and more effective use of advertising spend.
Performance: Assessing the performance metrics of a retail media network is essential. Look for networks with a proven track record of delivering results, such as high engagement rates, effective targeting capabilities, and robust analytics tools.
As retail media networks continue to gain popularity, several key players have emerged in the market. Here are the top retail media networks to watch in the coming years:
Amazon Advertising is the retail media network of e-commerce giant Amazon. With over 300 million active customers and a wealth of data on their shopping habits, Amazon Advertising offers brands a highly targeted and effective way to reach their target audience.
In 2023, it is estimated that Amazon Advertising will generate over $17 billion in ad revenue, making it one of the top retail media networks to watch.
Walmart Connect is the retail media network of retail giant Walmart. With over 265 million weekly customers and a growing e-commerce presence, Walmart Connect offers brands a unique opportunity to reach a large and diverse audience.
Walmart Connect also offers a variety of advertising options, including display ads, sponsored products, and video ads.
According to ComScore, Walmart.com receives over 100 million unique visitors every month; don’t miss out on reaching the masses with our help.
Roundel is the retail media network of the retail chain Target. With over 1,900 stores and a strong online presence, Roundel offers brands a way to reach a large and engaged audience. Roundel also offers a variety of advertising options, including display ads, sponsored product ads, and video ads.
Kroger Precision Marketing
Kroger Precision Marketing is the retail media network of grocery chain Kroger. With over 2,700 stores and a growing e-commerce presence, Kroger Precision Marketing offers brands a way to reach a large and diverse audience. Kroger Precision Marketing also offers a variety of advertising options, including display ads, sponsored products, and video ads.
Other top retailers with media networks include Walgreens, Lowe’s, Kohl’s, Ulta, Sephora, and Macy’s.
Preventing Customer Distraction: Retail Media Networks must carefully balance advertising with user experience to avoid distracting customers from their shopping goals. Overly aggressive or irrelevant ads can lead to customer annoyance and potentially drive them away.
Minimizing Ad Fatigue: A key challenge is avoiding ad fatigue, where customers become desensitized to ads due to excessive exposure. This can reduce the engagement and effectiveness of advertising campaigns, impacting ROI.
Disparity Between RMNs: There’s a notable disparity in capabilities among Retail Media Networks, with larger networks often having more advanced tools and reach. This creates an uneven playing field, affecting competition and market diversity.
Siloed Data: Siloed data within RMNs hampers the creation of a comprehensive customer view. This fragmentation can lead to less effective marketing strategies and a decrease in customer satisfaction due to non-personalized advertising experiences.
45% of advertisers say their biggest challenge with RMNs is the number of networks they must manage, and 40% say it’s comparing the performance across RMNs.
The future of retail media networks looks bright, with continued growth and innovation expected in the coming years. By the end of 2023, it is estimated that retail media network spending will reach over $46 billion.
As retailers continue to invest in their digital platforms and leverage data and technology to offer more targeted and effective advertising opportunities, retail media networks will become an essential part of the advertising landscape.
Brands that embrace retail media networks and incorporate them into their advertising strategies will have a competitive advantage in the retail industry.
Understand your target audience: Before incorporating retail media networks into your advertising mix, it’s crucial to have a clear understanding of your target audience. Identify their demographics, preferences, and shopping habits to effectively reach and engage them through retail media networks.
Research and select the right retail media network: There are several retail media networks available in the market. Research and evaluate different networks to find the one that aligns with your brand’s goals and target audience. Consider factors such as network reach, audience segmentation options, and ad formats offered.
Define your goals and objectives: Clearly define your advertising goals and objectives when incorporating retail media networks into your advertising mix. Are you looking to increase brand awareness, drive sales, or promote a specific product? Having well-defined goals will help you design effective campaigns and measure their success.
Leverage data and analytics: Retail media networks provide valuable data and analytics that can help you optimize your campaigns. Use these insights to understand the performance of your ads, identify opportunities for improvement, and make data-driven decisions to maximize your return on investment.
Create compelling and relevant ad content: To effectively engage your target audience, create ad content that is compelling, relevant, and personalized. Tailor your messaging and visuals to resonate with your audience and enhance their shopping experience.
Test and optimize your campaigns: Continuously test and optimize your campaigns on retail media networks to improve their performance. Experiment with different ad formats, targeting options, and messaging to find what works best for your brand. Regularly analyze the results and adjust accordingly.
Monitor and measure your results: Track and measure the performance of your campaigns on retail media networks to assess their impact on your advertising mix. Monitor key metrics such as impressions, clicks, conversions, and return on ad spend. Use these insights to refine your strategies and achieve better results over time.
Retail media networks are reshaping the retail advertising landscape with exclusive access to rich shopper data and unique inventory. These networks aren’t just a fleeting trend, as they’re expected to see substantial growth in the coming years.
Brands that embrace retail media networks and incorporate them into their advertising strategies will have a competitive advantage. This is where Division-D shines. Division-D partners with leading retailers, offering a fully-managed service so brands can turn this advantage into a measurable success.
In the dynamic world of retail, lean on our full-service team to guide your success. Schedule a call today to learn more!