According to a report by TechRadar, Retail Media Networks (RMNs) have turn into one in all the fastest-growing channels in digital promoting. RMNs are ad platforms owned by retailers, they usually play a task in how brands connect with shoppers during their buying journeys.
RMNs offer an alternative choice to traditional media. While TV and mainstream digital platforms used to dominate awareness and conversion campaigns, that’s now not the case. With online habits shifting and the rise of channels like social media shopping, customers now not follows a standard path. People research online, buy in-store, and move between platforms continuously – a pattern often called the “ROPO” effect (Research Online, Purchase Offline).
The change has opened the door for retailers to supply ad space on their web sites or apps, in stores and partner platforms. What makes this especially priceless is retailers access to high-quality first-party data through loyalty programs – something many advertisers want. As a result, brands are spending more on RMNs to succeed in audiences more precisely.
Globally, the retail media market is predicted to succeed in $179.5 billion in value by the end of 2025. In the UK, spending on retail media is projected to surpass TV ad spending in the same timeframe. Amazon leads the market by far, bringing in around $60 billion in retail media revenue in 2024, with Walmart next at roughly $4 billion revenue. The gap shows each the scale of Amazon’s dominance and the room for other players to grow.
With margins in traditional retail often quite slim, RMNs are attractive as their ad revenue margins can exceed 70%. TechRadar notes that greater than 200 RMNs have launched in recent years as retailers seek to tap into higher-margin ad revenue.
What makes a retail media network work
Most RMN spending by brands still focuses on bottom-of-funnel ads – like sponsored product listings or display ads – placed on retailers’ web sites and apps. But there’s a broader opportunity to turn into full-funnel platforms by supporting brand awareness and consideration campaigns online and in physical stores.
Many retailers are beginning to expand to recent channels. They’re adding in-store screens, placing ads on connected TVs (CTV), and partnering with platforms like TikTok and Google. For example, Walmart has teamed with TikTok, and Tesco has partnered with ITVX to supply integrated ad services. The moves help RMNs cover more of the customer journey – from discovery to buy.
To make the most of this model, retailers need the right structure and tools in place. That includes:
- A transparent operating model with well-aligned retail and media teams
- Strong first-party data that may segment audiences effectively
- A combination of ad formats in digital and physical channels
- Tools to measure results in channels, using machine learning when possible
- Data clean rooms to mix internal data with partner data securely
- Self-service tools and managed services to plan and run campaigns
- A testing platform to run A/B experiments
- Real-time performance metrics, including ROAS, iROAS, sales lift, and brand impact
- Standardised ways to define and measure success
In physical stores, having the ability to track ad performance is essential. Metrics like impressions shown or view time may be matched with sales data to assist brands understand if their campaigns are working.
When well executed, RMNs give brands a clearer view of customer behaviour in multiple touchpoints, helping targeting and personalisation, and improving campaign performance.
Challenges that also need solving
Despite the opportunity, many retailers struggle to show their RMNs into consistent revenue drivers. One common problem is that retailers operate with a buyer mindset, while running a media business requires a seller’s approach. Teams may lack the experience or tools to administer ad sales and campaigns effectively.
Other gaps include poor data quality, limited ad formats, and the absence of self-service tools for advertisers. Brands may feel omitted of the planning process, especially when there’s no joint business planning between retailer and advertiser. And without clear measurement tools, it becomes difficult to point out true ROI.
On top of this, competition is intense. Many retailers are entering the space, but just some will succeed in turning their networks into real ad businesses.
Thinking like an agency
For RMNs to compete with giants like Amazon, Google, or Meta, they’ll need to point out they’ll deliver results. That means acting more like media agencies – offering guidance, sharing performance data, and using tools like machine learning to assist brands understand what’s working.
Retailers also needs to view RMN earnings as being fuelled by ad spending somewhat than product sales. Those who can shift to this mindset can be higher positioned to win more of brands’ budgets.
(Photo by H&CO)
See also: Martech mistakes are costing brands their customers
Find out more about the Digital Marketing World Forum series and register here.
Read the full article here