Retail Media Networks: A Complete Guide

Learn all about online, offline, and omnichannel retail media networks, and discover how leading brands are making the most of the retail media opportunity.

Retail Media Networks: A Complete Guide

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.

What are Retail Media Networks? 

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: 

  • A sponsored product listing for a new sci-fi book that pops up on an e-commerce website when a user searches for “books about time travel”.
  • A TV screen in the electronics section of a department store that displays ads for popular smartphones. 
  • Digital signage in a supermarket snack aisle promoting a new brand of microwave popcorn.
  • A targeted ad on a beauty chain app showcasing lipsticks that would go great with other items a customer has purchased. 
  • An in-store QR code that shoppers can scan to get a discount at a local gym.

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. 

Key Benefits of Retail Media Advertising

When implemented properly, retail media networks can be a win-win-win, offering advantages for retailers, advertisers, and consumers alike. 

  • Retailers can benefit from additional revenue: Retail media networks let retailers monetize their digital and physical properties to generate additional revenue streams. For a sector with notoriously low profit margins, diversifying revenue sources beyond traditional retail sales can yield significant benefits. 
  • Advertisers can reach highly targeted and engaged audiences: For brands seeking to reach new audiences, retail media is a no-brainer. Retailers’ first-party data, combined with location analytics insights, can be harnessed to create incredibly targeted promotions. Ads for new dog food brands are much more likely to drive sales when served to shoppers searching for “dog food” on e-commerce sites. And digital signs advertising protein bars are more likely to convert when placed in health food stores and positioned to catch the eyes of health-conscious consumers close to the point of sale. 
  • Customers can enjoy an enhanced shopping experience: Retail media advertising can also be good for consumers. Introducing customers to products and brands that are closely aligned with their preferences and habits can improve their shopping experience. And giving retailers additional ways to monetize their digital properties and offline fleets can help offset inflationary pressures and keep prices down. 

Retail Media Networks Online

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:

  • Sponsored product listings and display ads on a retailer’s website or mobile app.
  • Branded influencer content (think TikTok videos).
  • Off-site digital ads (i.e. ads on digital properties not belonging to the retailer, such as social media sites, YouTube, and the websites of partner brands).

In-Store and Omnichannel Retail Media Networks

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:

  • TV wall and self-checkout ads: In addition to the standard digital RMN fare, Walmart’s Walmart Connect offers brand partners the opportunity to reach customers in-store through ads displayed on TV screens and at self-checkout counters. And since the company estimates that some 90.0% of American households shop at the popular superstore, Walmart’s multi-channel reach allows brands to connect with millions of shoppers. 
  • In-store radio ads: The Walmart Radio Network has been a thing since the nineties, with broadcasts that reportedly reach some 140 million shoppers each week. And in 2023, the chain announced plans to begin experimenting with audio ads – letting partners catch customers’ ears as they browse the aisles. 
  • Digital promotions for physical shoppers : Together with Walmart, Target is estimated to have captured 36% of the retail media market. The big box behemoth’s retail media efforts, powered by in-house media platform Roundel, remain largely digitally-focused. However, the company notes that some 76.0% of Target shoppers report using the chain’s website and app while in-store. And Roundel touts measurement solutions that allow advertisers to trace in-store sales to digital promotions.
  • In-room hotel ads: Last May, Marriott International, Inc. partnered with Yahoo to launch the hospitality industry’s first media network. While Marriott is not a retailer per se, the principle is the same: The hotel chain is leveraging anonymous visitor data to let external brands advertise to its customers. And when fully rolled out, the network will include in-room television and digital screen promotions. 
  • Gas pump ads: In 2023, Casey’s General Store – the popular Midwestern c-store –  rolled out Casey’s Access, a retail media network featuring digital, in-store, and at-pump advertising opportunities. And with over 2,400 stores across 16 Midwestern states, the popular c-store is well positioned to help vendors reach a huge offline audience.
  • Branded displays for local services: H-E-B, the popular Texas cult grocer, recently partnered with online home services directory Thumbtack to offer in-store shoppers easy access to local pet care providers. H-E-B visitors can scan on-premises QR codes to access Thumbtack’s listings – and in some locations shoppers can get discounts on cleaners and other home care professionals. 
Casey’s foot traffic growth makes it particularly well-positioned  to help advertisers reach new audiences 

Nailing In-Store and Omnichannel Retail Media With Location Intelligence

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:

  • How does a chain’s physical reach compare to that of other retailers? And how many unique visitors does a chain attract on a monthly, weekly, or daily basis? When it comes to in-store advertising, unique visitors – the offline equivalent of unique impressions – are key. 
  • When do people tend to visit the retailer, and how long do they stay in-store? Are there significant variations across regions or individual venues? 
  • What are the characteristics of a retailer’s customer base? Do the retailers’ stores attract singles or families with children? What about fitness fans? Where else do a chain’s customers like to shop?
Tracking unique visitors lets chains measure actual promotional reach

Creating Highly Targeted and Effective In-Store Retail Media Campaigns

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:

  • Foot traffic data can be used to compare visitation patterns within and across chains and venues. This helps brands assess the relative reach of different chains and identify peak hours and days of the week when campaigns will receive more unique impressions. Retailers can leverage this data to attract advertisers and optimize pricing within their networks. Advertisers can also use this data to choose between networks and to schedule promotions so as to maximize exposure.
Foot traffic data can be used to identify peak hours and days of the week when campaigns will receive more exposure
  • Foot traffic data can be used to identify the True Trade Areas of a chain’s locations and analyze the demographic and psychographic profiles of their captured and potential audiences. This enables advertising partners to focus their efforts on specific markets or venues within a network that align with their target audience. 
With foot traffic data advertisers and retailers can create detailed audience segmentations for individual locations

Assessing the Performance of Offline Retail Media Promotions 

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:

  • Data on customers’ cross-shopping habits can be used to evaluate changes in the share of shoppers to the health food store that also visit your gym – both on a chain level and for specific locations targeted by the campaign. Comparative cross-shopping metrics from before and after the campaign can serve as a concrete indication of the promotion’s success. 
  • If the promotion was targeted to a particular demographic – say, older professionals – foot traffic data could be used to track visits by this group before and after the campaign.
  • Foot traffic data can be used to identify the True Trade Areas of the specific health food store locations where the campaign was active, and assess whether there is a corresponding increase in visits to the gym over time from the relevant zip codes. 
  • Foot traffic data can also be used to examine visitation patterns during the specific times the campaign was active, quantify impressions, and understand the demographic and psychographic profiles of consumers  exposed to the promotion.

To read more about how location analytics are transforming the analysis of offline retail behavior in 2023, and how can help retailers take RMN activity to the next level, check out more of our Guides here.

Challenges for Retail Media Networks 

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:

  • Preventing customer distraction: One way to broaden the range of potential promotional partners is to include non-endemic offerings in RMN advertising. But the last thing retailers want is to interrupt the customer journey with advertisements that may distract them from purchasing the retailer’s own merchandise. Finding highly relevant non-endemic offerings that truly complement the shopping experience is key. 
  • Minimizing ad fatigue: Let’s be honest – while being offered the right product at the right time can enhance the shopping experience, nobody wants to be inundated with promotions. If shoppers become overwhelmed with ads, they may just start to ignore them. As retailers find new and creative ways to monetize their on- and offline properties, it will be critical to refrain from overkill. 
  • Countering data insufficiency: The ability to leverage retailers’ customer data, which offers vital insight into what people buy from individual retailers, is part of what makes RMNs so attractive to brands. But first-party data also has its limitations. 

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.

Retail Media Networks: Looking Ahead

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. 

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