Table of Contents
- Introduction
- The Genesis of Shopper Marketing
- Why is Retail Media Expanding?
- The Proliferation of Retail Media Networks
- Retail Media Networks: Lower Funnel or Brand Building?
- What Lies Ahead?
- Conclusion
- FAQ
Introduction
Everything around us seems to be taking on a new role—as an advertising platform. Retail media networks, commonly known as the transformation of various platforms into shoppable ad spaces, are rapidly growing. Not only traditional retailers like Amazon, Walmart, and Target are involved, but unconventional players such as Chase Bank and United Airlines are also jumping on the bandwagon. With U.S. advertisers investing billions in this area, it’s essential to understand why and how everything is shifting towards becoming a retail media network.
In this comprehensive blog post, we’ll explore the history, current trends, and future prospects of retail media networks. Whether you’re an advertiser, a retailer, or a curious reader, this overview aims to provide valuable insights into this burgeoning sector.
The Genesis of Shopper Marketing
Retail media, though seemingly new, has its roots anchored firmly in traditional shopper marketing. Before the advent of the internet, this type of marketing focused on in-store advertising, utilizing shelf signage, promotional displays, and in-store television screens to capture customer attention. The concept was simple: engage customers at the point of purchase.
The Digital Evolution
With the internet's emergence, shopper marketing evolved into a more sophisticated form known as digital retail media. Amazon pioneered this shift by utilizing its vast platform to provide a variety of ad products, starting primarily with sponsored search products, and eventually diversifying into video ads and a demand-side platform. This new form of retail media allowed for endless virtual shelf space and more varied ad inventories.
First-Party Data: The New Gold
The importance of first-party data has grown exponentially, especially as third-party cookies face extinction. Platforms with rich first-party data, such as those possessed by retailers, financial institutions, and airlines, are now capitalizing on this treasure trove by launching their own retail media networks to offer alternative revenue streams. Notable entries into this space include Chase Media Solutions and United Airlines' Kinective Media.
Why is Retail Media Expanding?
Several factors drive the expansion of retail media networks. At its core, the shift toward retail media is driven by the desire to monetize first-party data effectively. Because this data is highly valuable for targeted advertising, companies with access to it are turning into ad publishers. This approach allows them to diversify revenue streams while providing better-targeted ad options for brands.
Expanding Beyond Traditional Retail
Initially, retail media dollars came from dedicated shopper marketing budgets aimed at driving sales in retail environments. However, retailers are now increasingly tapping into brand marketing budgets to enhance brand awareness. This shift is facilitated by retailers' expanded ad inventories, which now include creative options like Connected TV (CTV) and social media ads. Retailers like The Home Depot and Albertsons are increasingly positioning themselves to attract more significant ad dollars by promoting brand-building opportunities.
The Proliferation of Retail Media Networks
As of now, there are more than 200 retail media networks. These range from well-known giants like Amazon and Walmart to newer entrants like Saks Media Network and Wawa's Goose Media Network. This growth signifies not just a trend but a structural change in how advertising dollars are being spent.
The Challenge of Budget Allocation
With so many networks to choose from, advertisers face the challenge of effective budget allocation. Companies like Georgia-Pacific have streamlined their spending by consolidating their advertising efforts within a select few networks, underscoring the need for efficiency and measurable impact in retail media investments.
Retail Media Networks: Lower Funnel or Brand Building?
One of the significant discussions around retail media is its positioning within the marketing funnel. Traditionally considered lower-funnel due to its focus on transactional elements, retail media networks are now proving their worth in brand-building as well.
New Ad Units and Opportunities
Advanced ad units such as video and display ads are pushing retail media networks into the brand awareness territory. These new formats allow brands to create engaging and memorable campaigns that resonate with customers beyond immediate transactions, making retail media more than just a tool for driving ROAS (Return on Ad Spend).
What Lies Ahead?
The future of retail media networks is still unfolding. The rapid growth and diversification within this space present both opportunities and challenges. Agencies are navigating this complex landscape by determining which networks provide the best ROI for different advertising goals.
The Maturation Process
As retail media networks mature, they will likely evolve to offer even more sophisticated advertising options, including the integration of advanced analytics and machine learning for better targeting and measurement. The blending of performance and brand marketing is set to continue, providing a more comprehensive advertising platform for brands.
Conclusion
The transformation of everything into a potential retail media network marks a significant shift in the advertising landscape. With roots in traditional shopper marketing, today's retail media leverages digital platforms and first-party data to provide highly targeted advertising opportunities. This evolution not only broadens the scope of retail media but also presents new challenges in terms of budget allocation and effectiveness measurement.
Retail media networks are not just lower funnel channels anymore. They are evolving into powerful tools for brand building, thanks to new ad formats and sophisticated targeting capabilities. As this space continues to grow, staying informed and adaptable will be crucial for advertisers, agencies, and companies alike.
FAQ
What are retail media networks? Retail media networks are digital platforms provided by retailers or other companies that offer advertisers the opportunity to target consumers using the first-party data that these companies collect.
Why are retail media networks important? These networks are essential because they leverage first-party data, which is increasingly valuable as third-party cookies become obsolete. They offer highly targeted advertising opportunities and diverse ad formats.
Is retail media only useful for immediate sales? While traditionally seen as lower-funnel, retail media networks are now proving effective for brand-building as well, thanks to the introduction of more engaging ad units like video and display ads.
How do companies decide where to allocate their retail media budget? Companies often test various networks to assess effectiveness. However, due to budget constraints, many eventually consolidate their spending within a few networks that offer the best ROI.
What is the future of retail media networks? The future will likely see continued growth and diversification, with more sophisticated advertising options, improved targeting, and better measurement capabilities.
This comprehensive guide aims to provide a nuanced understanding of retail media networks' past, present, and future, highlighting the keys to navigating this vital component of modern advertising.
