Retail Media Networks, or RMNs, are advertising platforms operated by retailers using their first-party data to connect brands with targeted consumers. RMNs may be valuable to brands, giving them access to high-intent audiences, often from large corporations with a large breadth of customer data.
However, what was celebrated early on is now creating a retail industry hangover as the RMNs mature into something other than what was initially expected.
Before brands dive into advertising through RMNs, they should learn how they work, and how they may or may not benefit your advertising strategy through brand marketing and e-commerce sales.
What are Retail Media Networks?
Retail media networks include websites, apps, and other channels owned by retailers and used to sell digital advertising to other brands. RMNs act as a conduit between their loyal customers and the external brands that are advertising.
Advertisers can use retailers’ valuable data to expand their reach, achieve measurable results, and possibly improve ROI. For these reasons and many others, retail media network solutions are one of the fastest-growing ad sectors. According to various sources, the retail media industry is projected to reach a $231 billion valuation by 2030.
This growing line of business allows RMNs to generate additional revenue by selling their first-party data and ad space to brands looking for additional advertising options. However, they aren’t selling direct access to their customer data; instead, they are allowing brands access to their audiences in a controlled environment, enabling them to be in the right place, at the right time, and in front of the right consumers.
This advertising strategy allows brands to measure the effectiveness of their campaigns, tracking conversions directly from ad impressions to purchases within a closed-loop attribution system. Yahoo has attributed 20% annual growth in brand awareness to brands that advertised through the RMN strategies.
Amazon, Walmart Connect, and Target’s Roundel are some of the top retail media networks for advertisers. Brands may also work with networks like Home Depot’s Orange Apron Media, Kroger Precision Marketing, and Costco.
The biggest difference working with RMNs rather than conventional ad platforms is the use of the RMNs’ first-party data rather than other ad platforms’ third-party data. For instance, traditional TV advertising lacks access to first-party data, relying solely on 3PD. Retail Media Networks can offer more accurate targeting, efficiencies, and overall effectiveness than traditional ad platforms can.
Benefits of Retail Media Advertising for Brands
This form of advertising may give brands access to high-intent, first-party data, offering precisely targeted advertising. It also allows the advertiser to find their prospects where they are comfortable on a familiar website or app, or use cross-platform targeting on other digital sites shoppers may visit.
Brands are able to create more personalized ad messaging, which may lead to higher conversions by improving the customer experience with more relevant advertising. The networks should also provide real-time analytics and measurable results to inform campaign outcomes.
Dr. Chad Walding, Co-Founder and Chief Culture Officer at NativePath, had a positive experience using RMNs to promote collagen supplements. “We accessed a retailer's network and real transactional data, which provided us with a 27 percent sales lift within a span of six weeks. There was an increase of repeat purchases by 19 percent. The RMN provided us a real sense of what works when we could observe how the changes we introduced into our offers were received by live shoppers. Thanks to real-time data, we were able to test and pivot, and move money directly to the ads and products that demonstrated that they could sell. No guessing. Only sales.”
Advertising through these networks may also offer omnichannel advertising approaches, connecting online and offline experiences, which should increase ROI in advertising with a more targeted media strategy. McKinsey research found that 73% of advertisers planned to spend more in 2024, estimating 10-15% of their total media spend going to RMN advertising.
Challenges in Retail Media Networks
However, nothing is perfect, and retail media network ad programs still present some hurdles. With the speed at which RMNs are growing, brands may expect cost increases and high competition for the most popular networks.
Some brands are labeling RMN tactics as a “money grab,” with retailers receiving the majority of the benefits and brands not realizing the ROI they had expected.
RMNs contract with brands and then work to encourage brands to increase their spend within their network; in some cases, this involves hinting at a potential loss of prominent shelf space and position if the spend is not increased.
Brands are directed by the guidelines and constraints of the retailers’ ecosystems. There are also data privacy concerns and regulations that must be followed.
Due to the limited standardization of data sources and measurement methods when advertising with retail media networks, brands may experience inconsistent services and quality, as well as difficulty comparing performance measurements.
Dr. Walding experienced performance measurement difficulty when working with multiple networks. “By having four dashboards, each with different metrics, we needed our analysts to determine which actually drove sales. The same revenue increase was attempted to be claimed by three networks. Brands that are interested in controlling their own development must have visible partners and should contribute their own measurement.”
RMNs are complex ecosystems, and brands need transparent, strategic alignment, demanding incrementality to make it worthwhile.
How to Use Retail Media Advertising
RMNs are a link between the advertiser, consumers, and their digital platforms. Allowing advertisers to purchase access gives them a direct connection to the network’s customers on a familiar platform while consumers are actively shopping. This process connects the brand advertiser to the shopper when they are in buying mode.
An example would be a brand like WeatherTech continuing to sell on its website but taking advantage of an RMN like Amazon’s to get in front of its preferred audience.
This data-driven advertising model uses the RMN’s first-party data accumulated over many years through customer shopping habits, demographics, location data, and browsing history to assist the external brand in targeting potential customers. The network’s data management systems offer tailored targeting to specific customer segments.
Advertisers have options for ad formats, including display ads, sponsored products, and video advertising. Brands are also not limited to advertising on just the retailer’s site. They can also use the RMN’s first-party data to advertise on social platforms and CTV, which may include shoppable ads.
When placed on the retailer’s platforms, these ads are often located at the point of purchase, featured in search results, or as a product listing. Based on the customer’s search and purchase history, they can also be shown as recommended products.
RMNs, like most marketing and advertising tactics, are continuously evolving. What may have worked for a brand yesterday may not be beneficial tomorrow. Brands need to stay in front of the RMN world and track the continual changes, compare them to the organization’s goals, and constantly evaluate whether they provide the right benefits.
What Marketers Should Know
RMNs will only continue to grow, with more independent and regional retailers joining in to take part in the financial boon. Smaller retailers may work together, building larger networks to compete with the behemoth Networks. There may also be more in-store opportunities for brands to advertise.
Retail Media Networks are not for every brand. With the continued growth of this sector, retailers will need to ensure they have implemented clear guidelines and focus on data privacy regulations to continue growth in the market.
Focus on high-performing categories and experiment with ad formats to optimize engagement and outcomes. To leverage the networks’ focus on high-performing categories, don’t rely on just RMNs; test and learn, making it a part of your omnichannel and full-funnel media strategy. And don’t rely on a single network; explore your options.
Make sure you have clearly outlined your goals, whether they relate to brand building, lead generation, sales, or all of the above.
Before you get started integrating retail media networks into your marketing strategy, have a conversation with your media buying partner to fully understand the process, pros, and cons. Vision Media also has strategies and capabilities beyond RMNs to help you achieve your goals.
