The Value of Retail Media Networks

What do Mall of America, Kroger, Sam’s Club, Walmart, CVS, and Best Buy have in common? They’ve all added the fastest-growing ad-supported retail media channel to their marketing toolkit. Retail media networks (RMNs) — retailer-owned digital platforms that sell ad space — are expected to double over the next four years.

How fast is the RMN market growing? McKinsey forecasts ad spend to explode from $46 billion to more than $100 billion by 2026. eMarketer projects RMNs will be the third big wave — after search and social — in digital advertising.

Over the next few years, efforts to standardize RMN’s market will be realized. As the retail media network becomes more mainstream in 2023, 20 retailers, or aggregation of small retailers, across three or four verticals are most likely to encompass the majority of the market share.

From SMB to enterprise, retailers are increasingly adopting RMNs. While the conversation has danced around the context of larger, big-box retailers, this transition in advertising has proven equally effective for SMBs so long as their loyalty data is scaled and accurate. RMN ad tech provides a simplified, cost-effective solution for retailers wanting to implement audio, digital and experiential advertising in-store solutions.

RMNs: A Valuable Resource for the Marketing Mix

Retail media networks encompass many media channels like email distribution, offsite advertisements, retailer apps and brand websites. RMNs enable consumer packaged goods (CPG) companies to remain connected with customers throughout the entire purchase journey.

Because they can deliver first-party, transactional data and don’t rely on third-party cookies, RMNs offer marketers more effective ways to analyze return on investment and attribution. A McKinsey report found that because RMNs can link impressions to direct purchases, 70 percent of marketers realized better returns from advertising via this channel than other ad platforms. The retail media investment is comparable to that of connected TV (CTV), with an estimated cost-per-thousand (CPM) of $20 to $50.

While they existed well before 2020, referred to in the past as shopper marketing, RMNs' popularity increased when reliance on e-commerce increased dramatically during the global health crisis and retailers added technology to make shopper insights more prevalent to buyers. And spend continues to grow. For example, Amazon Advertising saw YoY increases of 48 percent, with this largest RMN generating $31 billion in 2021. Other retailers like Kroger and CVS have noticed and boosted their network capabilities to take advantage of this innovative strategy for reaching more customers.

What Makes RMNs Special

RMNs improve the retail media landscape by offering guaranteed context and more connected ads. Marketers can access customer loyalty data and capitalize on full-funnel advertising to create relevant, targeted CX.

RMNs don’t require third-party data. Because they’re operated directly by retailers already collecting and analyzing shopper loyalty data for other uses, the first-party data proves valuable to brands when developing new products, creating sales promotions and designing personalized campaigns. First-party data is also less prone to security issues and more accurate than third-party data.

By using first- and second-party data, RMNs also deliver the personalization shoppers have come to expect through targeted ads. With this data, RMNs can more effectively level up their full-funnel retail marketing strategies with customized online, offline and in-store tactics.

The biggest challenge with RMNs, according to Forrester’s Q4 2022 CMO Pulse Survey, is that there are too many to manage — a complaint of 45 percent of advertisers polled. Another 40 percent said they struggle with comparing performance across RMNs. One solution is to opt for fewer RMNs, consolidating solutions into only a few networks and not spreading the budget too thinly across multiple networks.

Planning to Add RMN Ad Tech? Do This

Retailers will benefit from adding a RMN to their media mix. However, to be successful they may need newer, scalable technologies and a qualified team to run it. Working with an ad tech partner ensures the retailer has the proper infrastructure and expertise to maximize its investment. Plus, this partnership can shorten time to launch by bypassing the need to build an entire retail media strategy in-house.

Before evaluating which RMNs align with their goals, brands must define those goals clearly. Is the goal to launch new or promote limited-run products? Attract new or retain current customers? Coax back previous brand customers? Once they’ve answered those questions, brands should consider the following RMN attributes.

• Creative functionality: The RMN should offer enough flexibility to broadcast and execute its message across various rich media channels while tracking performance to identify areas needing tweaking to optimize fully.
• Data management: The RMN’s technical processes and capabilities should integrate across all network channels. Brands should have access to the data for optimizing ad placement, creative assets and frequency.
• Measurement: The network should have robust closed-loop attribution, enabling brands to get a holistic view of campaign effectiveness, plus more granular data for each sales channel, creative, ad type and frequency of exposure.
• Post-campaign tracking: Retailers can gain unique insight into customer behaviors after campaign exposure with post-campaign tracking to inform current and future media strategy.
• Shopper targets: A robust RMN can identify purchase behavior-based targets aligned with campaign goals and brand strategy.
• Support: The RMN should have adequate staffing to support its customers. Some also offer self-service tools for advertisers to conduct their campaign analysis throughout and to build their target groups. 

The Future Holds Promise

A high percentage of people — 80 percent — use smartphones while shopping in brick-and-mortar stores to compare prices of products and look up reviews. A RMN’s biggest strength is its ability to generate high-quality data that enables brands to track, target and influence their customers across the entire funnel.

RMNs deliver a strong impact when brands form internal and external partnerships, stay focused on the big picture, define and set clear expectations, and gain new business insights. With in-store digital advertising, retailers of all sizes gain a new opportunity to monetize their real estate with high-margin digital ad impressions. A RMN simply closes the loop of data attribution, making it easier for brands to track purchases and shopper behaviors.

Paul Brenner is the president, audio out-of-home and chief strategy officer at Vibenomics, an advertising and experience company that powers audio channels for retailers.