Learn all about online, offline, and omnichannel retail media networks, and discover how leading brands are making the most of the retail media opportunity.
In 1994, the advertising industry was turned on its head when AT&T bought one of the first online ads in the history of the web. The advent of digital advertising revolutionized an industry that had long relied on expensive TV commercials, billboards, and direct-mail campaigns to market to consumers. And many businesses that were lucky enough to get in on the ground floor were catapulted into the stratosphere by the unprecedented reach of the web.
Now, a new promotional innovation has burst onto the scene: the retail media network (RMN). Everybody and their brother, it seems, is talking about retail media networks and the transformative impact they’re having on the advertising world.
But what exactly are retail media networks? How do they work and what do they entail? What are some of the strategies brands are using to make the most of retail media? And how can smaller businesses get into the retail media game?
Read on to find out what the retail media fuss is all about and to discover some of the key trends poised to shape the future of retail media in the years to come.
Retail media networks (RMNs) refer to advertising platforms that let third parties promote products and services on a retailer’s network of websites, digital apps, and brick-and-mortar stores, or on the digital properties of partner brands. Retail media networks give retailers the opportunity to enjoy an additional revenue stream, and allow advertisers to target retailer’s customers at the point of purchase.
Depending on the channel or platform, retail media can be:
Retail media advertising can include promotions for products carried by the retailer itself (so-called “endemic” products), or for external goods and services, not sold by the retailer (“non-endemic” offerings). Since consumers typically visit stores and e-commerce websites in order to learn about new products and buy things, retail media offers advertisers a chance to reach shoppers when they’re primed to buy.
When implemented properly, retail media networks can be a win-win-win, offering advantages for retailers, advertisers, and consumers alike.
The retail media network made its debut online in 2012, when Amazon first began allowing third party sellers to promote their offerings on its website. The incredible value proposition became immediately apparent, and other e-commerce platforms soon followed suit. What could be better than a business model that offered retailers an easy new way to monetize their websites, and let advertisers reach highly targeted audiences just as these audiences were actively searching for relevant products to buy?
Today, Amazon still dominates the $100 billion retail media landscape, commanding just over a third of the industry’s market share. But many other brands – including Walmart, Target, and Instacart – are giving Amazon a run for its online retail media money. Online RMNs offer brands a range of digital advertising opportunities, including things like:
But while the online RMN space is thriving, more and more retailers are recognizing the vast untapped advertising potential of their physical stores. Many chains still receive most of their traffic offline – and the lines between physical and digital retail are becoming increasingly blurred. At the same time, location intelligence capabilities are becoming more sophisticated, making it easier than ever to conduct detailed analyses of physical visitation patterns. (More on that below.)
Against this backdrop, chains across categories are embracing innovative strategies to reach offline visitors with their retail media offerings. Some of these include:
Still, data sufficiency remains a challenge for retailers and advertisers alike – especially when it comes to offline RMNs. On the web, it’s relatively easy to track shoppers’ visitation patterns and interests. But gaining the same kind of accurate and granular insight into offline consumer behavior and preferences can be much more challenging. To succeed at brick-and-mortar retail media, retailers and advertisers have to be able to answer questions like:
Today, location intelligence tools powered by AI and machine learning allow retailers and advertisers to bridge the offline data gap. Advanced location analytics can be leveraged to create highly targeted, in-store RMN campaigns:
Another big challenge for in-store retail media is accurately assessing promotional impact and ROAS – especially for non-endemic offerings. Impressions are important, but most brands that utilize retail media networks also want to see concrete improvement in lower-funnel metrics such as conversions and sales. And the ability to quantify ROI and ROAS is key to convincing CPG companies and others to allocate advertising dollars to retail media channels.
Location analytics can enhance the ability of both retailers and advertisers to evaluate campaign performance. Imagine for example that you run a gym and want to advertise to shoppers at a local health food chain. Offering discounts to new customers that scanned an onsite QR code would allow you to keep track of new leads generated by the campaign. But foot traffic data offers additional and more comprehensive means of assessing the campaign’s full impact:
To read more about how location analytics are transforming the analysis of offline retail behavior in 2023, and how Placer.ai can help retailers take RMN activity to the next level, check out more of our Guides here.
All of that being said, RMNs are not a magic bullet. Making the most of the retail media advertising opportunity presents both retailers and advertising partners with several important challenges:
First, retailer data is often limited to actual sales, and fails to capture offline visits that do not lead to purchases. And as we’ve seen, accurate visitation metrics are critical for properly targeting and assessing offline ads.
In addition, first-party data can’t provide comparative benchmarks or insight into consumer behavior across chains and markets. Relying entirely on retailers’ data shifts the power balance, making advertisers entirely dependent on the information retailers choose to share.
Incorporating a variety of data sources into the process can reduce advertisers’ dependence on big retailers, which makes it easier for advertisers to choose between competing networks or work with smaller players. Leveraging additional forms of data can also pave the way for smaller retailers to break into the RMN game.
Looking ahead, retail media networks will likely continue to thrive – both on- and offline. For chains, stores, and advertisers, the tremendous profit potential of retail media is simply too big to pass up. And for consumers, too, receiving offers for products and services closely tailored to their needs and preferences has become a welcome part of the shopping experience.
But as the RMN industry continues to mature, both retailers and advertisers will need to innovate to maintain their competitive edge. And by leveraging location intelligence, they will be able to stay ahead of the curve.