Whoever owns the data rules the world. In the wake of data and privacy restrictions tightening, retailers are monetizing their valuable first-party data through retail media networks (RMNs). While the concept of retail media networks is not new, the volume of players and the way they function have changed. Experts agree we’re seeing the next big shift in advertising, but what do these fast-growing retail media networks mean for brands?
The Growing State of Retail Media Networks
Retail media networks are advertising platforms that provide brands access to the retailer’s consumer data to target and advertise on the retailer’s owned properties, digital and offline, or digitally connected networks. Retailers like Amazon, Walmart, CVS and Instacart found success with RMNs especially once the pandemic and cookieless advertising converged into a perfect storm. Through these platforms, brands can target consumers with personalized ads and tie ad spend to sales — the coveted trifecta of all brand marketers.
This success is leading more retailers to join in. In fact, according to Ad Age, a new retail media network is created every one to two months. While Amazon dominates retail media, taking roughly 76% of the U.S. ad spend in 2021, eMarketer reports that retailers like CVS, Instacart, Target and Walmart are taking a bite out of Amazon’s share.
How Retail Media Networks Change Brand Advertising
Traditionally, digital retail media was on-site and bottom funnel — all roads led to purchase. Fast-forward to today, and growing retail media platforms are tapping into social media channels, connected TV platforms and other upper-funnel channels that provide a significant impact to brand lift. Now brands can use the retailer’s first-party data to target in a cross-channel environment with unparalleled personalization and measurement through the buyer’s journey.
It’s a significant game changer for marketing impact and media budgets alike. Attribution remains a challenge for brands. But with true closed loop measurement through RMNs, brands can tie media spend to online and offline sales. This creates a space for brands to be agile with budgeting and allocate more dollars to upper-funnel marketing, especially in periods of supply chain bottlenecks.
Considerations for Cost and Complexity
Research shows digital retail media advertising will jump by 31.4% in 2022 to $41.37 billion, marking it as one of the digital ad segments with the highest growth. Brands are always on a quest to rationalize media spend, especially as advertising costs rise. According to Skai, the average retail media cost per click grew from $0.85 in Q3 2020 to $1.04 in Q3 2021. More brands will flock to these networks as their media strategy matures. We can expect the costs for operating in the networks to increase as more brands compete for the same consumers and as retail media platforms advance. Brands should start identifying the players in their primary media portfolio and experiment to refine performance.
It’s important to note that while the surge of new retail media networks creates a wider marketplace for brands to leverage first-party data in hypertargeted media spend, it also creates a bigger rift in fragmented audience data. It will be critical for brands to align with their retail platforms to understand their complexities and leverage the data in a more strategic way. Studies from Merkle found that 96% of CPGs have a center of excellence (CoE) to support retail media networks, up 86% from last year. If brands don’t have this expert bench built internally, they should investigate agency partners that can serve as the CoE partner.
The Future of Digital Retail Advertising
Retail media networks will not just be for commerce giants. The impact of measurement and data in the cookieless world will continue to bring a shift to digital media dollars. Brands are finding the closed loop data through digital retail media networks to be a significant driver in their digital ad strategy. And predictions across ad tech support that retail media networks will lead the pack. Using the right networks for the customer profile can lead to a more significant ROI and brand awareness media channel attribution to point of sale. Learn more about Goodway Group’s ecommerce advertising experience or contact us for a consultation.