Have you heard the buzz about Retail Media Networks (RMNs)?
The fastest-growing ad-supported digital marketing channel, RMNs are poised to play a significant role in the future of digital advertising. Consider these staggering stats:
- McKinsey forecasts Retail Media will grow to over $100 billion by 2026
- Retail Media makes up 11% of global ad spend
- Ad spending on Retail Media more than doubled from 2019 to 2021
I believe these numbers are worth paying attention to. I also believe Retail Media will only become increasingly relevant to marketers as this exciting advertising channel continues to grow and evolve.
That’s not to say every e-commerce or D2C business should add retail media to its marketing mix (at least not yet.)
In this article, we’ll look closer at Retail Media Networks and their potential benefits to advertisers. Then, we’ll review my two-fold approach for determining whether or not RMNs make sense for your marketing strategy. Let’s begin.
What is a Retail Media Network?
Retail Media Networks (RMNs) are retail-owned advertising services that use AdTech tools to allow brands to purchase advertising across digital assets owned by the retail business.
Brands have long known that in-store shelf space placement affects purchasing decisions. Now, we are seeing this insight extend to online brand placement, too.
What’s the first name to come to mind when you think of Retail Media?
If you said Amazon, you have a good reason. The eCommerce behemoth accounts for 89% of U.S. retail ads, and Amazon Marketing Cloud now generates more ad revenue than Prime, Kindle and Audible subscriptions combined. (Improvado)
Of course, Amazon isn’t the only big player in Retail Media. Other well-known contenders include Walmart, Home Depot, Wayfair, and Target.
But why is Retail Media so alluring to advertisers right now?
Simply put, the importance of RMNs lie in their ability to bring together two major players in the e-commerce space: retailers and brands.
By leveraging retailers' vast amount of first-party data on their customers, RMNs allow brands to target their ads to particular audiences based on purchase history, browsing behaviour, query intent, and more.
The benefit to the RMN is obvious: Retail is a notoriously low-margin industry. Monetising an eCommerce audience with ads is a highly-profitable revenue stream, and online RMNs are driving 70 - 90% margins.
As you’ll see, the benefits of Retail Digital Media to brands are also quite compelling.
Why brands should pay attention to Retail Media Networks
While these channels still play a pivotal role in any digital marketing flywheel, privacy regulation and increased ad costs have made it so that brands must get creative with how to reach their target customers with the right messaging at the right time.
Retail Media is a little different…
RMNs provide a more accurate and holistic understanding of customer intent thanks to first-party data and exact marketplace queries. Advertisers can better target and personalise ads to the target customer’s unique buyer’s journey — and they can do it throughout the entire sales funnel.
In other words, Retail Media allows brands to reach consumers most likely to be interested in their products with more personalised messaging — resulting in higher conversion rates and more effective tracking and analytics.
I like what Nikhil Lai, Senior Analyst, Performance Marketing at Forrester, has to say about it for Forbes:
“Advertisers' use of RMNs encompasses the entire purchase funnel from awareness to point of purchase, and retail media holds the entire funnel accountable for delivering a verifiable revenue impact. In addition, the results of retail media campaigns can inform brands’ pricing, product, packaging, and distribution strategies.”
It’s also worth noting that Retail Media gives brands access to a captive audience of shoppers already in a purchasing mindset. (Rather than when users are scrolling Instagram for a distracting cake baking video or checking Facebook for family updates.)
By placing ads directly in front of consumers at the point of sale, brands can increase their visibility and drive sales.
Now… before you add Retail Media to your marketing mix, there are two questions to ask first.
Ask these 2 questions before you invest in Retail Media Networks
It’s easy to get overwhelmed and distracted by digital marketing trends. However, there is a simple two-question test to determine whether or not your organisation should test Retail Media.
Pro tip: You can use these two questions to analyse the viability of other digital channels, too.
1. Is your target audience on this platform?
It sounds simple. And yet, so many businesses get dazzled by new trends and forget to ask, Is my target audience actually shopping on these platforms?
If you have yet to craft buyer personas, start here. Remember, we don’t want fictional bios based on assumptions and generalisations, but data-backed, researched-based profiles of your target customer.
2. Is the cost to advertise on Retail Media lower than your other media buys?
If you want to streamline your business growth, you’ve got to know your numbers. So, what do your numbers say about Retail Media compared to other paid media?
Don’t just look at the price to advertise, but also your ROI in digital marketing. In other words, how much revenue do you earn for every dollar spent on marketing?
If (1) your target audience is on Retail Media and (2) you can reach them for less than other media buys, then the answer is simple: Give RMNs a test run. Apply growth marketing principles: start small, ditch what doesn’t work, and scale what does.
As retailers continue to invest in data analytics and customer insights, the potential of Retail Media Networks for more precise targeting and measurement capabilities is a compelling and attractive notion.
However, before you abruptly shift your marketing strategy, use the two simple questions outlined in this article to address the viability of RMNs for your business. Your bottom line will thank you.