With the rise of e-commerce, retailers have been presented with new opportunities to monetize their digital presence. One such opportunity is retail media networks. These allow brands to advertise products and services to customers while they shop.
Simply put, a retail media network is an advertising platform on a retailer’s website, app, or other digital platform. It is often within their company network. This way, marketers can target customers even as they shop- it is digital advertising while in-store.
It has the massive advantage of a captive audience since the marketer knows that a customer can shop on a particular platform. Their intent is already identified, so this is the smartest way to sell them more products.
However, before choosing a retail media network, there are several factors that retailers and brands should consider. They need to be clear on the target audience, the cost of advertising, and the level of control over the advertising content.
According to the Global Retail Media Networks Market 2023–2032 report by Custom Market Insights 2023, the retail media network market was valued at USD 4.4 billion and is expected to reach USD 7.3 billion by 2032.
This article discusses the importance of retail media networks and the things to consider before choosing one.
What is a Retail Media Network
Retail media network enables digital advertisers to market their products and services to customers, even as they shop on digital platforms. It has become increasingly popular as more retailers realize their potential and the opportunities it presents for advertising.
Retailers can use data from customer transactions, browsing history, and other metrics to create targeted and relevant advertising.
For example, if a customer has recently purchased a new camera, the retailer can display ads for related products, such as lenses or accessories.
The benefits of retail media networks are numerous. For retailers, it gives a new source of revenue, as they can charge brands for advertising space on their website or in-store. It also allows retailers better to understand their customers’ preferences and buying habits. This can also help them create well-targeted and effective marketing campaigns.
Importance of Retail Network
Retail media has become essential for retailers and brands to reach target audiences and increase revenue.
Retail media networks allow brands better to understand their customers’ preferences and buying habits. This helps to augment the effectiveness of advertising campaigns and drive more sales.
Another important benefit of retail media is that it provides a new source of revenue for retailers. Retailers can charge brands for advertising space on their website or in-store. They can thus generate additional income and boost their profitability.
This is particularly important for brick-and-mortar retailers, who face competition from online retailers. Currently, they face huge competition from digital stores. This could be a great way for them to raise revenue. and must find new ways to increase their revenue.
One of the main advantages of retail media is that it provides a more seamless and integrated customer experience.
Retailers can create a more personalized and engaging shopping experience. They can display ads relevant to the customer’s interests and preferences. This can help to improve client loyalty and increase customer lifetime value.
Things to Consider Before Choosing a Retail Media Network
Before choosing a retail media network, there are a few things that retailers and brands should consider.
Target Audience
The first thing to consider is the target audience. Retail media networks allow brands to access a highly engaged and relevant audience. But, the brands need to ensure that the network’s audience matches the brand’s target audience.
For example, if a brand sells luxury products, it may want to choose a retail media network that caters to a higher-end audience.
Data Collection and Usage
Data collection and usage are also important considerations. Retail media networks use data from customer transactions, browsing history, and other metrics to create targeted and relevant advertising for their customers. It is essential to ensure the network is transparent about collecting and using customer data. Retailers and brands should ensure the network complies with data protection laws and regulations.
Ad Placement
The placement of ads is also an important consideration. Retail media networks offer various ad placements on the retailer’s website, in-store, or mobile devices. Choosing the right ad placement is important to reach the target audience effectively. For example, mobile ads may be the best option if the target audience is tech-savvy and mobile-focused.
Cost
Cost is another important consideration when choosing a retail media network. Retailers should consider the network’s cost, including any applicable fees or commissions. Brands should also consider the cost of advertising on the network, including per click or impression.
Ensuring the cost is reasonable and provides good value for money is essential.
Reporting and Analytics
It is important to consider the reporting and analytics the retail media network provides. Retailers and brands should ensure that the network offers various detailed analytics and reporting. This will make it easier to track the success of their campaigns. This data can be used to optimize all campaigns and improve ROI.
Retail Media Ad Types
Retail media has gained significant traction as a more effective way for brands to reach their target audience. Here are some of the most popular ad types on retail media platforms.
Sponsored Products
Sponsored products are the most common ad type on retail media platforms. These ads appear in the search results of online marketplaces like Amazon, Walmart, and Target. They are usually placed at the bottom or top of the search results pages and are marked as sponsored.
Sponsored products are highly effective because they are placed in front of shoppers who are already in a buying mindset.
Display Ads
Display ads are visual ads placed on the sides or tops of web pages. They come in various formats, including banners, pop-ups, and interstitials.
Retail media platforms offer display ad options that are specific to their platform. For instance, Walmart’s display ads appear on Walmart.com and other partner websites. Display ads are effective in improving brand awareness and driving traffic to a website.
Video Ads
Video ads are like display ads but more engaging. Video ads can showcase a product or service, explain how to use a product, or tell a story about a brand. Retail media platforms like Amazon and Walmart offer video ad options in search results, product detail pages, and other partner websites.
Sponsored Brands
Sponsored brands showcase a brand’s products and are crafted to be more visually appealing.
They usually appear at the top of search results, driving brand awareness and sales.
Sponsored brands are powerful because they allow brands to showcase multiple products simultaneously. This way, they create a consistent brand message across all their products.
In-Store Ads
In-store ads are ads that are placed in physical retail stores. They can be anything from shelf talkers to display signs to interactive kiosks.
In-store ads effectively drive sales because they are placed in front of shoppers already in the store and looking to buy.
Challenges of Working with Retail Media Networks
Retail media networks can benefit all parties involved. However, several challenges must be met to implement and operate these networks successfully.
Balancing the interests of all parties involved
One of the biggest challenges of working with retail media networks is balancing the interests of all parties involved. Retailers must consider their advertisers’ needs. But, they also need to ensure their brand and customer experience are not compromised.
Conversely, advertisers seek maximum exposure and return on investment, sometimes creating tension with the retailer’s objectives. Finding a way to balance all these competing interests can be difficult. However, it is essential for the network’s long-term success.
Manage and analyze large amounts of data
Another challenge of working with retail media networks is managing and analyzing large amounts of data. Retailers must be able to track and measure the effectiveness of their network accurately. Only then they can make informed decisions about future investments. This requires robust data analytics capabilities and sophisticated reporting tools.
Advertisers also need access to detailed data to assess the performance of their campaigns and make adjustments as needed. With higher adoption, the data generated by retail media networks will grow rapidly. Managing and analyzing this data will become an even more significant challenge.
Maintaining transparency and trust
A related challenge is maintaining transparency and trust between all parties involved in the retail media network. Retailers must ensure their advertisers do not engage in unethical practices or compromise their reputations.
Conversely, advertisers need to trust that the data they receive from the retailer is accurate and reliable. Maintaining transparency and trust requires open communication and a commitment to ethical practices from all parties involved.
Need for Constant Innovation
Competition for advertising dollars will increase as more retailers enter the retail media network space. Retailers must continually innovate and improve their networks to remain competitive.
This may include investing in new technologies, expanding the scope of the network, or developing new partnerships with advertisers. Keeping up with the competition requires a willingness to take risks and a commitment to ongoing improvement.
Adopting higher and more relevant technologies and tools will be a critical need.
However, these challenges can be overcome with careful planning and a commitment to ongoing improvement. Retailers can continue to benefit from the revenue generated by retail media networks.
Summing Up
According to the report, Retail media is expected to grow 8.3 percent in 2024, continuing its rapid rise by the Current; in 2023, retail media totaled an estimated USD 119.4 billion in spending. It is expected to expand to 8.3 percent by 2024.
With the right network, retailers and brands can create integrated and seamless shopping experiences for their clients. This will increase customer loyalty and lifetime value, ultimately driving more revenue for their businesses.
As the retail industry evolves, brands need continued innovation and growth in retail media. They can provide new opportunities for retailers and brands to reach the target audience and increase their revenue.
