Retail Media Networks: The World Beyond Amazon

Five years ago, the term “retail media network” (RMN) was synonymous with Amazon.com. Today, the landscape looks much different. Numerous brands, from grocers and pharmacies to pet supply stores and delivery services, now offer retail media networks. Advertisers are starting to shift budgets, but Amazon is still a key player, capturing 45 percent of consumer package goods’ (CPGs’) RMN budgets in 2021. How can CPGs benefit from working with other RMNs? How can retailers build a RMN to compete with Amazon and deliver value to CPGs? Merkle’s research from fall 2021 uncovered key insights about how RMNs can create value for CPGs and build lasting partnerships.

RMNs Offer Brand Exposure and Audience Data to CPGs

Consumers’ behaviors and loyalties are changing. During the pandemic, many consumers stepped outside their comfort zones, abandoning favorite brands in favor of convenience or health and safety. This affected brands and retailers alike. Consumers favored retailers with delivery services, expedited shipping, and quick in-store checkout experiences. Consumers were also more willing to switch brand loyalty for more in-stock products. Working with retailers beyond Amazon expands a CPG’s presence across the customer journey and on the digital shelf. Today’s diverse portfolio of RMNs means that CPGs are likely to find a partner that aligns well with their own customer base, adding immense value by connecting their brand with the most relevant audiences.

Although retailers often meet consumers in a conversion-focused moment, RMNs’ benefits for CPGs extend up the funnel into brand awareness and exposure. Sixty percent of RMN operators surveyed use email sponsorship and/or social media to increase a brand’s exposure to their audience. CPGs are also starting to see more media management options to govern those placements more closely. RMNs are supplementing their managed service offerings with self-serve models that let the brand take control of their optimizations and strategies.

Despite its name, retail media networks also offer valuable partnerships that include no media at all. Fifty percent of surveyed retailers offer data monetization without media, which is extremely enticing, especially in the case of strong vertical and audience alignment. Changes in privacy regulations and Google’s impending deprecation of third-party cookies make access to owned first-party data increasingly critical. RMNs have access to transactional data that can supplement a CPG’s first-party data to create a more defined audience picture.

Retailers Can Provide Clarity, Flexibility and Personalization to Attract CPGs

To build an attractive RMN, retailers need to determine points of differentiation that provide value for CPGs. As a retailer establishes its RMN practice, it must choose a clear tone in external communications with the marketplace. Will it be retail-focused or publisher-focused? Is its value rooted in unique audience segments or product-based offerings? A firm understanding of its positioning is critical for a RMN to effectively communicate its value proposition in a brand-friendly tone.

From there, retailers can lean into several key areas to address a brand’s needs. One whitespace opportunity in the RMN landscape is personalization through creative. Forty percent of brands view it as a benefit of RMNs, but only 10 percent of surveyed retailers offer it. Dynamic creative optimization (DCO) fuels personalization across owned and external media properties and can deliver significant operational efficiencies for a retailer. CPGs and retailers both stand to benefit from DCO as part of the RMN offering, and it's a strong differentiator for retailers that can get it right.

Reporting and measurement are also areas where retailers can add value for CPGs. Forty-three percent of surveyed CPGs want reporting transparency from RMNs, and 40 percent of CPGs see closed-loop reporting as one of the biggest benefits of working with RMNs. Brands want flexibility and clarity when it comes to understanding how their placements are performing. A mix of off-the-shelf and custom reporting capabilities with visual dashboarding can give CPGs the opportunity to see performance in a way that’s most meaningful to them. Investment in reporting and measurement solutions is made more critical by the number of CPGs that want control of optimization. A growing number of CPGs want to see self-service management options from RMNs, and having the right data to inform optimizations is a critical enabler.

The Bottom Line

The prevailing attribute CPGs cited as what they want from a RMN is to be easy to work with. They want a retailer that’s attentive to their needs and flexible in what they offer, whether that’s management models, reporting capabilities or creative. Retailers in the process of exploring or building a RMN can set themselves apart from Amazon by constructing their offering with a customer (in this case, CPG)-first mentality. It’s how retailers have always operated with their shoppers — why act any differently with a B-to-B customer? With the right offering, CPGs can continue to diversify their RMN investments and unlock unique value through new partnerships.

Megan Cameron is the vice president of monetization for New Stream Media, a solution that allows retailers to grow their digital ad revenue, create more personalized experiences for consumers, and form unique partnerships with manufacturers.