What Does It Take to Succeed as a Retail Media Network?

The Retail media network is on the rise, with projections showing they could grow another 60% by 2027. While the concept has already taken hold among businesses in the retail and hospitality industries, it’s still relatively uncommon — and untested — within other verticals, like financial services and travel.

What will it take to get those verticals to follow suit and realize the opportunity with media networks?

That’s a question posed by the global technology company Lotame in its latest survey, released just this week. Researchers from Lotame polled 200 marketers and found that more than two-thirds (67%) believe more technology companies should launch their own media networks.

“Despite the headlines of tightened budgets, marketers have healthy appetites for experimentation and are open to exploring new ways to meet consumers where they are, wherever they are,” says Fred Marthoz, vice president of revenue and global partnerships at Lotame. “Of course, this testing approach may come at the cost of reducing spend in other underperforming channels.”

Somewhat surprisingly, 60% of marketers said they believe more financial services companies should consider launching media networks, and 65% believe sports and entertainment companies, as well as travel companies, should do the same.

“Media networks are experiencing a surge in popularity,” Marthoz says. “These networks enable companies to become publishers, leveraging their audiences and first-party data to compete more effectively in the market, enhance consumer engagement and generate new revenue with higher margins through advertising.” 

Advertisers are attracted to retail media networks because of their wealth of first-party data and the ability they offer to reach consumers at the crucial moment of purchase.

Despite the clear opportunity, Marthoz remains unsurprised that the majority of organizations in verticals like financial services and entertainment are hesitating in launching their own media networks. He says launching a successful media network requires that companies know their audiences, both customers and advertisers, and that they have a clear understanding of what their network offers that advertisers can’t get anywhere else.

“Will your customers embrace advertising, or will it disrupt their experience on your properties?,” he asks. 

Standardization, transparency, and measurement are not small challenges to tackle, and Marthoz says companies that hope to launch their own media networks need to set up to be successful in these areas, and to give marketers what they want.

Spending on retail media is rising fast, but not all growth is equal. For example, Instacart has experienced a massive boost in retail media ad spending this year, growing by 44%. Retailers like Amazon, Walmart, and Etsy have also seen positive growth. However, eBay’s retail media program is reportedly struggling, with ad spending expected to decline by 12%. 

“A retail media network works for Walmart because they are a marketplace for many different brands, and the value exchange for both the brand and retailer is clear,” Marthoz says. “Gap, on the other hand, was not successful, because they predominantly sell their own brand, resulting in less advertising opportunities that wouldn’t be competitive to Gap.”

The same thought pattern applies to other verticals, like travel and hospitality. Kayak has an opportunity to sell advertising space onsite and off to airlines, rental car companies, and hotels. Hotel chains like Marriott, on the other hand, would need to make sure that they never offer advertising opportunities to competing hotels, even though they could advertise complementary travel services they don’t sell into.

“The ‘set it and forget it’ approach is the straightest path to failure. This is an enormous investment of a company’s time, resources, and effort to stand up and maintain,” Marthoz says.  “Building a tech stack in-house may make sense for the Amazon’s of the world, but for smaller players partnering is a faster, smarter, and easier path to growth.”