What Advertisers Need to Know About Retail Media Networks

Written by John Haslinger | Apr 12, 2022 1:10:19 AM

Yet another advertisement technique is changing the way ads are bought and sold, and how brands are promoting their business: through retail media.

Recent studies have projected retail media to reach $41 billion this year, on par with other high growth segments like podcast advertising and OTT/CTV.

What are retail media networks (RMN)? They are essentially retailer-owned promotion services with purchasable ad space. It provides advertisers and brands access to digital assets and the retailer’s first-party data, meaning they can target and connect with the in-market customer of the retailer.

Walmart and Amazon are the most notable retail media networks. When they started to monetize their first-party data, and started to see ad sales skyrocket, other larger retailers like Costco, Home Depot, and Best Buy followed suit. They understood the importance of their own traffic volume, and started to offer partner brands the ability to utilize its first-party data, to advertise both on-site and off the retailer's own digital properties. Major retailers are embracing their roles as ad platforms, ramping up ad sales teams and partnering with DSPs to fill in the gaps needed to further solidify themselves as significant players in digital advertising.

What are the Different Types of Retail Media Networks?

There are multiple selections of retail-specific media networks available today, the main ones being:

Mass retailers (i.e., Target, Walmart)
Digital Marketplaces (i.e., Amazon, eBay)
Intermediators/Delivery providers (i.e., Instacart, Uber, GoPuff)
Wholesalers (i.e, Costco, Lowe’s)

These different types of retailer-oriented media networks are unique in their own ways, but each has demonstrated value and found favor with brands as potential advertising avenues to explore.

What’s Pushing the Massive Adoption?

The massive media network adoption has been catapulted by three main factors:

Higher Online Engagements

For the first time, U.S. consumer spending on eCommerce is expected to reach the $1 trillion milestone in 2022. Although eCommerce has consistently seen positive growth year over year, the pandemic significantly accelerated that growth and the adoption of online activities, and consequentially the use of digital ads on retail-specific sites.

Reduction of Third-Party Identifiers

Google has publicized its plot to shut down third-party cookies for sometime around 2023. The planned deactivation has posed a big threat to third party identifiers, which are critical components of ad-targeting advertising technologies, including audience extensions, retargeting, and frequency capping. These marketing resolutions are likely to end once Google disables third party cookies.

Programmatic Ad Fraud

Fraudulent ad impressions and clicks, and failed deliveries to intended audiences are always a risk with programmatic marketing campaigns running on a general ad exchange. These risks can push brand advertisers to channel most of their efforts leveraging first-party data strategies with merchandising media as the leading channel.

Retail media networks offer guaranteed ad placements, negating the possibility of failed impression delivery. Furthermore, their reliance on first-party data represents a future-proof system that won’t struggle with third-party cookie deactivation or consumer privacy.

The Benefits of Advertising through RMN

First Party Data

The most renowned benefit is first party data – the customer data that can be collected on the retailer’s website, app, or other digitally owned properties. First party data is so valuable because it’s collected primarily at the point of sale, usually originating from a singular source, making it the most reliable and accurate type of customer data. Advertisers can partner with retailers to use such data to extract deep and precise insights into consumer behavior, and better position themselves to develop custom consumer experiences.

Lower-Funnel Audiences

Secondly, retail media gets brands closer to the point of purchase. The buying modes of consumers as they shop on these retail sites make them the ideal audience to get in front of. Consumers are also naturally more receptive to ads during shopping-related activities, and brands will see higher CTR and conversions because of this.

Closed-Loop Attribution

In a retail environment, ads can more easily be linked to purchases by being closer to the point of sale, with fewer steps between an ad impression and conversion. This allows brands to understand what is working and what isn’t, allocating more resources to the more successful campaigns.

Full-Funnel Campaigns

Although primarily used for search campaigns early on, RMNs have lately started to expand and diversify its offering. Like any successful business, retail media has needed to evolve with the changing landscape and the needs of its customers, expanding and diversifying its offerings with more awareness-driving formats, like OTT/CTV, digital video and audio.

Wrapping up:

Retail media is still relatively new and has a way to go, but its promising potential can be seen by all the parties involved. For retailers, retail media opens up a new stream of revenue. Retailers are less likely to increase prices as a result, knowing that lower prices will bring in more traffic, in turn delivering more ad impressions and revenue.

For advertisers, RMN represents a new channel to explore and tap into, and deliver unique, enjoyable ad experiences to valuable, in-market audiences.

Brands have a lot of work to do before they jump in. There are a plethora of networks to choose from, and a lot of factors to consider before investing any resources. The audience and how it aligns with your ideal customer, the advertising suite and key features the retailer offers, the quality of data, the depth of reporting, size of inventory, among other contributing factors, should all come into play when considering any media partner.

Cybba makes advertising on retail networks easy. Each one of our clients receives their own customized media plan with our recommended strategy. We take into account everything from budget requirements, target demographics, ideal customer, historical analytics and past successes, to formulate a media plan that is guaranteed to achieve your goals and objectives.

Book a meeting today to get started!

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