By: Matthew Piazza, Katheryn Stanwick and Meena Raman
Published: July 23, 2024 | Updated: October 10, 2024
Read time: 5 minutes
Introduction
The retail media revolution is here. Over the last few years, retail media networks (RMNs) exploded in popularity and created a major shift in the marketing landscape.
Retail media networks are advertising platforms that allow brands to advertise on a retailer’s media properties, like their website or mobile app. As marketing evolves in a cookie-less world, advertisers are looking for new ways to access and use first-party data. Retail media offers brands a wealth of retail data, and with it, the ability to target and personalize marketing efforts to consumers.
Understanding retail media networks (RMNs)
What is a retail media network?
The definition of a retail media network is a platform owned by a retailer that allows advertisers to run campaigns on the retailer’s media properties. As a result, advertisers can access and show content to the retailer’s captive customer base, which can unleash major targeting and personalization benefits.
Retail media networks aren’t limited to the retailer’s website, though it is certainly an important channel. With retail media, advertisers can run campaigns across:
- The retailer’s mobile app
- A physical store location, like on an electronic sign
- A website other than the retailer’s
- Connected TVs
Similar to traditional marketing, advertisers can run promotions, search ads and display and banner ads.
What is retail media?
Retail media refers to the industry at large, which is made up of hundreds of retail media networks across the globe. Retail media has become critical as the retail landscape gets more and more competitive. As consumers respond to higher prices and new competitors enter the market, retailers must do more than ever to boost revenue and protect the bottom line. Launching media networks helps retailers monetize their in-store and online traffic and create a new stream of revenue.
On the flip side, RMNs help advertisers reach engaged customers. If you’re advertising using an RMN, the customer may already be browsing on the retailer’s website or shopping at one of their brick-and-mortar stores. This is particularly valuable in some industries, like consumer packaged goods, where getting in front of consumers can be a challenge.
Despite its benefits, retail media hasn’t always been a hot topic. Only in recent years has retail media become the fastest growing advertising channel, growing by more than 20% each year. By 2027, it is forecasted to almost reach social media in terms of ad spend. So, what’s causing the big shift?
Historically, advertisers could use cookies to uncover data on shoppers and enhance targeting. However, as new privacy regulations are introduced and cookies disappear, first-party data has become increasingly valuable. Through retail media networks, advertisers can access personal information that customers have opted in to share with the retailer through a loyalty program or other avenue. This first-party consented data helps advertisers know what, where and when customers are shopping, enabling them to build better audiences and target specific groups.
The advent of new tools and technologies has also helped fuel the rise of retail media, by giving retailers the analytical infrastructure to monetize their properties.
The benefits of retail media networks
Retail media networks offer retailers a critical new stream of revenue and the ability to improve collaboration with suppliers and advertisers. In turn, they give advertisers first-party consented data and with it, the ability to expand reach and improve personalization efforts.
For CPGs in particular, the benefits of retail media are far-reaching. Around three in four CPG organizations believe retail media networks are integral to achieving top business goals, like improving customer experience, deepening brand relationships and growing revenue.
While media networks are a certainly a hot topic amongst retailers and CPGs, they’re not limited to just these industries. Travel companies are beginning to enter the space, for example. United Airlines launched the airline industry’s first media network, Kinective Media, which will allow advertisers to reach United customers on the airline’s mobile app and in-flight entertainment screens. Macy’s, Norwegian Cruise Line and IHG Hotels are just a few of the companies partnering with the new network.
Key players in the retail media landscape
Many of the world’s largest retailers, like Amazon, Walmart and Target, are trailblazers in the media landscape. Amazon leads the list of top retail media networks and is expected to capture over 80% of U.S. retail media search spend in 2024. Walmart, the second-largest network, is expected to continue growing its share of the market as well.
Retailers across the board are entering the space. However, non-discretionary retailers, like grocery chains and drugstores, are particularly focused on building retail media networks. Within this space, some examples include Albertsons Media Collective and Kroger Precision Marketing, which is projected to grow 20% in 2024. Half of CPGs are investing in four or more retail media networks.
However, RMNs aren’t always spearheaded by retail giants. In fact, many smaller retailers are looking to enter the space by joining forces and creating networks that operate across their banners. Alliance Retail Group helped launch a retail media network connecting over 1,400 independent grocers, their suppliers and their customers. Giant Eagle and Wegmans have also linked their retail media platforms to Rippl, a network designed for regional grocers.
How to use retail media networks
Retail media doesn’t behave the same as traditional media and recognizing its benefits and nuances is key to its successful integration into marketing strategy.
Rather than use the same ads you would use in traditional digital channels, consider developing unique content for the retail media network. Over half of CPG marketing leaders say their teams are creating specific retail media advertising content.
Advertisers can use testing and analytics to quantify the impact of ads on sales and identify the top-performing ad formats. Experimentation tools can help advertisers measure advertising effectiveness and maximize the ROI of investments.
The future of retail media networks
Retail media network market size currently sits around $140 billion and is only continuing to grow. More and more retailers will be launching media companies. In tandem, advertisers will continue to ramp up their marketing investments. New studies indicate that spend on RMNs will outpace spend on traditional TV advertising by 2028.
As retail media network growth continues to soar, so will innovation. Retailers may begin to offer more enhanced capabilities and value-added services, like tools for performance measurement and audience creation, segmentation and targeting.
The creation of retail media collectives, which consolidate first-party data for advertisers, is another emerging trend that is likely to continue. For instance, Albertsons Media Collective launched Collective TV, providing advertisers with new data and tools for running campaigns over streaming, digital video, and soon linear TV.
Conclusion
Retail media is the new buzzword in the marketing world, but that doesn’t mean it’s going away anytime soon.
Harnessing the power of retail media will be essential for succeeding in almost every industry. To stay ahead of the curve, advertisers will need to think of retail media from the get-go and as an essential ingredient in their go-to-market strategies.
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