In recent years, retail media networks (RMNs) have revolutionized the ecommerce world. As ecommerce growth slows, RMNs are experiencing a major boom—forecasts suggest retail media growth will double over the next 18 months. If you’re in the ecommerce space and not thinking about retail media—you need to start.
RMNs are typically associated with consumer-packaged goods brands and grocery stores. However, their appeal and benefits are spreading to other verticals like hospitality and travel. Best Buy, Lyft, Uber, and Marriott have all entered the retail media space in recent months.
Retail media networks are a huge opportunity for retailers to drive the future of consumer marketing and change brand and retailer relationships. With RMNs, retailers and brands create unique, personalized campaigns that are tailored to customer needs. Campaigns can include targeted promotions, discounts, and even incentives to encourage customers to purchase from brick-and-mortar stores. Additionally, retailers can track customer behavior and gain insight into buying habits. They can also better target campaigns and optimize strategies.
As more retail networks emerge and more brands get into retail media advertising, competition is going to get fierce. Retail media networks aren’t going away anytime soon. Those that take a “wait and see” approach and don’t jump on this trend quickly are likely to be surpassed by their competitors. Since retail media is growing fast it will continue to draw a larger share of advertisers’ total digital marketing ad spend.
RMNs are proving to be successful as a business opportunity and a marketing channel.
There are many benefits that retailers, ecommerce businesses, and consumer goods brands should consider.
RMNs for Retailers
It’s no surprise that the retailers in the U.S.—Walmart, Target, Costco, Lowe’s, and more—have launched RMNs. Here are the top reasons retailers need a retail media network.
1. Increased Revenue
Retail media is extremely lucrative, with margins that far exceed other channels. Research suggests that advertising spend on retail-owned channels will grow 22% per year over the next five years, with robust margins of 70% to 90%.
It’s a high-growth, and profitable revenue stream for retailers to cash in on. With its high profits, retailers can re-invest revenue from RMN to fund other business strategies.
Overall, RMNs are disrupting digital advertising and the future of ecommerce. Early adopters of RMNs will benefit the most. As more businesses catch on and the market gets crowded, the revenue gains will likely decrease.
2. Access to First-Party Data
Privacy changes are making traditional forms of digital advertising less effective.
Access to quality first-party data is one of the major benefits of retail media networks. Unlike other traditional media, retailers are uniquely positioned to collect reliable first-party customer data.
For example, a retailer can track when consumers see an RMN ad and when they purchase. Ecommerce retailers can provide closed-loop measuring without the struggles other networks have. In turn, retailers can use this first-party data to help brand partners more effectively target consumers across the web.
3. More Precise Measurement
With retail media, retailers and advertisers now can measure engagement and return on ad spend in real-time.
With other ecommerce measurement platforms, getting access to this data can be costly and time-consuming. It often comes only after a campaign is over.
With retail media, advertisers now have insight into how a campaign is performing as its running. They can make changes on the fly and better plan for future campaigns.
RMNs for Brands
Retail media networks are a win-win for retailers and brands. It’s a profitable revenue stream for retailers, but it is also improving how brands market to consumers.
More and more consumers expect a highly customized shopping experience online.
With RMN, brands can better personalize their ads at scale. Using RMN’s first-party data, brands can target consumers based on everything from household size to favorite ice cream flavors. Brands can attract new customers and introduce existing customers to new products.
1. Improved Targeting
Brands gain prominence and stand out on the digital shelf. It’s easier than ever to reach consumers at the right time, with the right message.
Brands can use retail media at every stage of the buyer’s journey—from introducing a new product to re-engaging an inactive customer. When you market to someone using an RMN, you know that person is already in shopping mode. They are on a retail website and looking to buy something. By getting your brand and product in front of them at this crucial time, increases your chances of conversion.
2. Build Trust in Your Brand
Retail media is changing the way brands and consumers interact. Retail media networks are making it possible for brands to purchase “digital shelf space” from retailers. Consumers search for or visit the website of familiar brands that they already trust. Therefore, they are likely to trust a brand they see on a large retailer’s website. By investing in an RMN new or smaller brands get in front of consumers who otherwise may not have found them.
Bottom line? The two biggest areas of opportunity for retail media for brands and retailers is data and revenue. If executed correctly, retail media networks can increase revenue and collect more reliable, robust first-party data than any other ecommerce platform.
Interested in how best to utilize the retail media boom to help you meet your own business goals? We’re here to help.