The rise of media networks in the digital world marks a turning point in the way brands engage with customers directly where they shop. With retail media networks, brands can have more visibility and customer engagement while using the retailer’s digital platform to serve targeted ads to shoppers. In this article, we’ll discuss the importance of retail media networks and how they can be transformative for your brand’s reach and help you reach marketing milestones. For the fundamentals, refer to the first blog in this series on the basics of retail media networks.
What is a retail media network?
A retail media network connects retailers with advertisers by allowing brands to place ads directly on ecommerce sites, apps and even in brick-and-mortar stores. These networks use extensive customer data to precisely target ads to the right customers. The result: a higher likelihood of sending ads to customers that are ready to make a purchase. Key components of retail media networks include:
- On-site advertising: Ads that are shown on the retailer’s own platforms, including sponsored product listings and banner ads
- Off-site advertising: Ads that display on external platforms but direct shoppers back to the retailer’s site
- Data analytics: Tools that analyze consumer behavior, helping advertisers refine their targeting and advertising strategies
What are the advantages of using retail media networks for retailers and brands?
Advantages of retail media networks for retailers
The advantage of retail media networks for retailers is twofold: monetization of their websites and access to valuable customer data. Online stores have traditionally been used for the sole purpose of selling products. By turning their online stores into advertising spaces, retailers can generate significant new revenue streams. For example, a major retailer like Walmart or Target can offer various placement spots across their websites and app to brands at a premium rate due to high traffic volumes.
What’s more, the data collected from customer interactions with ads allows retailers to gain valuable insights into shopping habits, preferences and trends. This data can be used for everything from improving targeting for future ads to optimizing the overall shopping experience. How exactly does this look in practical terms? If data shows high click-through rates for kitchen-appliance ads, the retailer might then decide to promote these types of products more across its platforms or increase inventory levels in response to these observations.
Advantages of retail media networks for brands
For brands, retail media networks serve as advertising options that are likely to get them a lot more bang for their buck in terms of ad spend. Why? By advertising on a platform where consumers are already in a shopping mindset, the chances of conversion are much higher. A brand like Nike, for example, could use a retail media network to target customers already searching for sneakers or athletic wear on the retailer’s site, showing ads that are extremely relevant to the shopper’s current buyer journey.
The customer data collected by these networks also allows brands to serve more personalized and relevant advertising. Using this data, brands can create tailored messaging based on a consumer’s shopping history, interests and behaviors. For example, a coffee brand could target ads for coffee machines to people who have previously purchased coffee.
The growth of retail media networks
Retail media networks are rapidly expanding, with major retailers like Amazon, Walmart and Target at the top of the list of retail media networks, and many more following suit. These networks offer a lucrative income stream for retailers and advertising by placing advertising directly into shopping experiences that are already in action. This integration of ads into real-time shopping increases the likelihood that ads are not just seen, but acted upon, given their proximity to the purchase point.
Recent trends in the growth of retail media networks
The growth of retail media networks is being driven by several recent trends:
- Omnichannel integration: As advertising technology continues to advance, more networks are using an omnichannel approach in which online and physical ads are integrated to create a cohesive customer experience. For example, Best Buy integrates ads across their online platforms and in-store digital display screens.
- Data privacy and transparency: Networks are improving transparency and compliance with regulations like GDPR and CCPA due to an increased focus on data privacy. These practices result in clearer customer consent protocols and data usage disclosures.
- Collaborations and partnerships: Retailers and tech companies are partnering to create even better advertising solutions. Wamart’s collaboration with TikTok, for example, combines social media with direct shopping, enabling TikTok users to purchase products seen in videos directly on the app.
These trends show that retail media networks are constantly evolving to incorporate technological progress and meet customer needs, allowing for more effective advertising.
The interconnected growth of online shopping and retail media networks
As online shopping continues to capture more and more spend worldwide, retail media networks, too, have grown in popularity among brands looking to capitalize on this boom in online shopping. The connection is derived from the mutually beneficial cause and effect of the following sequence of events:
- Sneaker brand places ads on retailer’s site
- Customer shopping for sneakers on retailer’s site sees ad and purchases sneakers
- Retailer earns revenue from advertising spend
- Brand earns revenue from sneaker purchase
- Customer is pleased with the relevant sneaker recommendation and continues to shop on retailer’s site
The inherently symbiotic relationship between online retailers and brands who use them is changing the world of digital advertising.
Top retail media networks
While the list of retail media networks continues to grow, the top 8 retail media networks according to Adweek are:
- Best Buy Ads
- Instacart Ads
- CVS Media Exchange
- Kroger Precision Marketing
- Orange Apron Media (Home Depot)
- Roundel (Target)
- Walgreens Advertising Group
- Walmart Connect
Understanding the impact of retail media networks
Using retail media networks for programmatic advertising is becoming table stakes. Far from a passing trend, they are changing how marketing and advertising strategies for brands take shape and are becoming critical pieces of the media mix for ecommerce. However, it’s clear that these networks are more than just advertising space; they allow the advertising spaces to serve as strategic and data-driven influences on the customer’s shopping journey.
Building a successful retail media strategy
To effectively use retail media networks, brands should:
- Set clear marketing goals: Clearly define your campaign goals and review your prior data (this can include order data or site traffic) so that you can measure the impact of new campaigns through retail media networks.
- Identify the right target audience: Leverage the available shopping history data of retail media networks to target ads to consumers who have a higher likelihood of purchasing your product. Those may be consumers who have browsed for items in your category, previously purchased similar products or have purchased products that are complementary to yours.
- Allocate budget strategically: Maximize reach by spreading your ad dollars across multiple networks.
- Plan and be thoughtful: Give yourself time to plan a thoughtful campaign without rushing a disjointed promotional calendar. Leverage in-store and digital mediums to build a cohesive campaign.
Best practices for maximizing retail media network ROI
In order to maximize ROI from using retail media networks as advertising platforms, campaign managers should think strategically when it comes to ad formats and data use.
- Effective ad formats: Sponsored products and display ads are typically the most eye-catching for potential customers.
- Use of data analytics: Analyze performance data to continuously refine and iterate your advertising plan. By iterating over time, your targeting will become more precise based on data gathered.
- A/B testing: Serve multiple variations of ads or products to shoppers and test different messaging strategies to nail down what resonates best with your audience.
Common challenges (and solutions) with retail media networks
Retail media networks have given brands an effective means of finding new customers. However, they are not without pitfalls and challenges for both brands and retailers. Some common obstacles for brands are:
- Cost of advertising space. Solution: Brands can consider negotiating bundle deals, longer-term contracts or performance-based agreements (such as pay-per-click or pay-per-conversion) with retailers to establish better price points. They can also explore using cost-effective ad formats and timing their campaigns to fall during lower-demand periods during which ad space might be cheaper.
- Limited on-site ad space. Solution: Use dynamic or interactive ad formats to capture shoppers’ attention while still using smaller ad space. Brands can also explore cross-promotion strategies with other brands to maximize use of ad space.
- Difficulty in accessing performance data. Solution: Before signing on to advertise with retail media networks, brands should advocate for performance data transparency within the terms of the agreement. It’s also important for brands to establish clear KPI goals and regular performance check-ins as part of their contracts with the networks.
Some common obstacles for retailers are:
- Growing competition. Solution: Retailers can differentiate themselves from competitors by offering unique ad formats, bundles, or better price points. Retailers who establish themselves as having superior data analytics tools and transparency around data will also come out on top.
- Privacy concerns. Solution: Retailers should regularly assess whether their data collection and advertising practices comply with all data protection regulations such as GDPR in the EU or CCPA in California. They should also invest in advanced cybersecurity technologies to ensure customer information can’t be accessed through data breaches.
As retail media networks continue to evolve, they represent a critical component of modern digital marketing strategies, particularly for retail brands. By understanding how these platforms work and how to use them optimally, brands can see significant shifts in their overall performance.
Leveraging retail media networks with Cart.com
Cart.com can help you develop a tailored retail media network strategy by analyzing market trends and identifying target audiences. We'll optimize ad placements and creative content to maximize visibility and engagement. Our data-driven insights and performance metrics refines campaigns and ensure continuous improvement. To learn more about Cart.com's marketing services, contact our team today.
