Retail Media Networks – Opportunity vs. Reality
Retail media networks have grown in popularity amid the growing emphasis on ROI across today’s complex consumer purchase journeys and recent restrictions on third-party cookie usage. Many advertisers are eager to take advantage of retail media’s unique targeting opportunities. These include a blend of online and offline data gleaned from retailers themselves and available within a retail media network (RMN).
This promise of performance, efficiency, and clear data provenance marks a big step in the right direction for brands delivering targeted advertising – but also shines a light on the many factors advertisers should consider when exploring retail media.
How retail media works
Retail media is the practice of large-scale companies — mainly retailers — packaging their shopper data into targetable segments, then allowing advertisers to reach these consumers via advertising inventory on the retailer’s own website, mobile app, newsletter, or physical location.
Retail media blends online and offline purchase information to form segments. This is critical, as 84% of consumers made an in-store purchase in the past year, while only 68% had a product delivered to their home. Therefore, capturing in-store purchases enhances the data compared to online-only behavioral segments.
Retail media’s fortunes, which are fueled by first-party source data, have dovetailed nicely with PR campaigns from tech giants like Apple and Google that push their own definitions of online privacy. In doing so, these companies have cast third-party data in a bad light, with some marketers (erroneously) following suit.
The unique opportunities
Retail media networks have clear appeal. Combining purchase shopper data from both online and offline sources is a great way to home in on intent and identify consumers who are in-market and actively shopping for a product.
The partnership between a brand and retail network is strengthened through closed loop measurement, which allows the brand to see the direct impact media efforts are having on products and in-store sales numbers at the retailer location, often at the SKU level. Multifaceted partnerships that were once about putting products on a retailer’s shelves are now deeper and stronger with media.
With agencies, retail media provides a new offering. Agencies with experience in the retail ecosystem can guide brands into these new areas, while agencies that work directly with RMNs can build relationships for greater advertising and activation potential, monetarily benefiting both sides.
The realities of retail media networks
For all of these positives, there are some realistic drawbacks to consider. With only so much inventory available on each network, retail media has limitations on scale. Too many buyers activating on the same inventory ultimately dilutes the marketing impact by oversaturating competitive messaging to the same pools of consumers. Advertisers need to determine if enough of the right target consumers are available as they look to scale multichannel marketing efforts.
Logistics are a concern too. Many retail networks still require individualized ad buys similar to other “walled gardens.” This calls for additional strategy considerations, staffing, management time, and attribution syncing that many marketers are not quite ready for.
Finally, RMNs struggle to help advertisers connect with net-new or off-platform customers who may not be familiar with or have loyalty to a specific retail brand. This is especially concerning with the emergence of the so-called “zero consumer” who is no longer loyal to stores, brands, and channels.
All of this makes RMNs one step forward in the media space, but multiple steps backwards in harnessing the power of the open internet.
Let’s evaluate and consider retail media alternatives
The promise of retail media is huge, but the bottom line is it should be complimentary to an overall strategy, not dominating one. The ability to target customers who have demonstrated a clear sign of intent using first-party data is always going to make brand marketers’ ears and wallets perk up. This has solidified RMNs as a dynamic form of media that has true staying power. It will be interesting to see how these networks continue to evolve through the use of data and as more retailers and other categories enter the fray.
For brands and agencies that want enhanced targeting capabilities, but see too many headwinds with RMN’s scale and buying logistics, there are other alternatives. Strategies that use broader sets of data based on real-world transactions can also unlock these high-value consumer shoppers in a different way, while also offering scale across channels. High-quality second and third-party sourced data along with accurate predictive modeling can serve as the foundation to an effective multichannel targeting strategy across the open web.
The future of media is moving towards a more open, customer-centric space rooted in standardization that breaks down silos. Therefore, brands and agencies aiming to take advantage of retailer’s new platform offerings need to weigh the real-world opportunity vs. reality – and also remember that third party data isn’t necessarily a dirty word.