The Rise of Retail Media Networks

By Jay Kulkarni

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Retail media networks (RMNs) are becoming essential to the modern digital marketing landscape. These advertising platforms run on the digital properties of specific stores, allowing brands to reach consumers near the closest point of sale. For example, a brand like Lay's or Tostitos can leverage a grocery chain's RMN to advertise to consumers searching for snacks on the retailer's website or app.

Retail media advertising spend is expected to rise to $52.21 billion by 2023
-eMarketer

Thanks to the success of Amazon's RMN, which launched in 2012 and has surged in growth over the past few years (they reported a whopping $2.1 billion in ad sales for 2021), retailers of all types have been hopping onto the RMN bandwagon. This includes superstores such as Walmart and Target, grocery chains like Kroger and Albertsons, and drugstore and beauty supply shops like CVS, Sephora, and Ulta Beauty.

So, what's behind the recent explosion of these retailer-owned advertising platforms? And what makes them so beneficial for brands and retailers?

A Goldmine for First-Party Data


One of the reasons RMNs have surged in popularity in recent years is because they collect a wealth of first-party data. This type of data is extremely valuable to brands who need it to drive targeted advertising, especially as third-party cookies become a thing of the past.

Brands that partner with RMNs are given access to this first-party data, which can be leveraged to target audience segments more effectively. It can also be used to measure ad ROI more accurately, so brands can optimize their campaigns and improve performance. Additionally, first-party data can track return on ad spend (ROAS), allowing brands to identify and address shoppers' needs at every stage of the buyers' journey.

The kinds of first-party data collected vary depending on the RMN, but most capture key information that can provide brands with valuable consumer insights. Many RMNs have loyalty programs, for example, that collect robust demographic and biographic info, as well as information on buying behavior both online and in stores.

As for retailers, they benefit from launching RMNs because the monetization of first-party data creates new (and very healthy) revenue streams. And consumers find the platform appealing because it provides a simple and highly personalized shopping experience that's convenient and relevant to their interests.

In 2021, a quarter of retailers reported receiving more than $100 million in revenue from their media networks.
-Forrester

The Perfect Place, the Perfect Time


As previously mentioned, RMNs allow brands to advertise in an ideal spot — the point of sale. Most visitors to retail websites are browsing to research and/or buy products, so it's the perfect time and place to advertise — when consumers are in shopping mode, on the verge of checking out, and conversion is just one or two clicks away.

Brands can also use RMNs to extend their omnichannel marking strategy and connect with new customers. Today's consumers frequently shop on retail websites and apps and running targeted ads on these platforms generates more customer touchpoints to increase conversions.

81 percent of consumers have registered a digital account with a retailer and 53 percent of consumers notice sponsored products or ads on retail websites.
-TheTradeDesk

Enhanced Performance Visibility and Personalization


Because sales occur directly on the platform, RMNs make it easy for marketers to track purchases to specific campaigns and evaluate the performance of their ads.

First-party data collected by RMNs allows brands to create highly personalized, omnichannel campaigns that both boost ROI and improve the customer experience. Grocery chain Kroger, for example, says that it tracks 96 percent of its in-store sales through its loyalty program. Armed with this valuable shopping info, brands can retarget customers via digital ads based on their in-store purchases, as well as measure ROI to determine whether these retargeting tactics are successful.

RMNs: A Big Opportunity for Brands


RMNs make it easier for brands to target consumers with highly personalized ads powered by robust data. In today's cluttered digital marketing landscape, this is essential — campaigns must be data-driven to be impactful.

At the same time, retailers benefit big time from RMNs because they give them the opportunity to diversify their revenue streams. As more and more major retailers launch these lucrative platforms (and report big earnings), RMNs are only expected to grow. If you're looking for a way to boost brand awareness and increase your business's sales, it might be time to tap into this powerful trend.


The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.


Jay Kulkarni is the founder and CEO at Theorem.