Are Retail Media Networks Right For Your Brand?
By: Warren Howe, Platforms Supervisor.
If at the start of 2020, you predicted that the perfect storm of tracking loss (i.e. iOS 14) and accelerated digitalization of the retail industry due to the COVID-19 pandemic would bring about the rapid growth of retail media networks, I have a few more mystical questions for you. But assuming you didn’t, let me tell you, that’s exactly what happened. In that moment, retailers opportunistically leveraged their sudden wealth of customer data in a data-scarce marketplace to launch their own media offerings. That’s advertising in a nutshell, isn’t it? One side has an audience worth getting in front of and the other will pay money to do just that.
Fast forward to 2023 and retail media is the second-fastest-growing major ad format tracked by eMarketer, and most major retailers have their own media network which generally offer the following capabilities:
- 2nd-Party targeting: Retail media networks tap into the vast audience data that they’ve accumulated over the years, enabling advertisers to deliver targeted and relevant ads in an era of increased tracking limitations. The ability to leverage retailers’ rich data sets allows advertisers to finely segment their audiences and tailor their campaigns accordingly. For instance, a beauty brand may utilize data from a retailer to identify and target consumers who frequently purchase skincare products, increasing the chances of relevant ad engagements and conversions
- 1st Party targeting: Brands can also bring their own customer data to the table and either overlay it onto inventory on the retailer’s owned properties, or they can use their first party data in combination with the above second party data and target users across the web. This approach enables advertisers to concentrate on the users that matter most to their business, thereby maximizing campaign efficiency and return on investment. For example, a fashion retailer may use its first-party data to re-engage previous purchasers with personalized offers and product recommendations.
- Diverse ad inventory: Retail media networks offer a wide range of ad formats, including display ads, sponsored products, rich media, and dynamic ads. These ads are strategically placed on retailer-owned and operated sites as well as third-party sites, ensuring maximum exposure and engagement with the target audience. For instance, a pet food brand could display sponsored product ads on a popular pet care blog, reaching pet owners who might be interested in trying their products.
- Advanced reporting and measurement: The ability to track user actions and measure the success of advertising efforts is critical for any brand. Retail media platforms provide comprehensive reporting capabilities that allow advertisers to evaluate the performance of their campaigns based on various metrics, such as placement, product, keyword, and category. This level of granular data empowers brands to optimize their strategies and allocate budgets more efficiently. For example, a consumer electronics manufacturer could analyze the performance of its ads based on specific product categories and make data-driven decisions on future advertising investments.
But in advertising we’re always asking, what is the takeaway and is this actionable?
The Allure of Targeted Addressable Audiences and Measurable Results
Retail media networks have certainly carved out a valuable role for themselves in the advertising space because they have a couple things that we’re always after: a targeted addressable audience, and measurement of your advertising against those audiences. Being able to reach just about any audience we want across the internet is something that was taken for granted, at least to a degree. But because retail media networks have purchase data tied to specific users (thanks to things like loyalty programs), that makes them useful for advertisers.
And what else do most advertisers also want to know? They want to know whether their ads are driving sales, which again is something retailers have. Like many platforms these days, retail media networks offer reporting of sales within their ecosystem and may also offer sales lift studies to measure incrementality. This all adds up to a clearly useful tool that is being leveraged by a variety of advertisers. Advertisers have indeed taken notice, making retail media one of the fastest growing sectors in digital media ever.
Consideration and Limitations
But like any new advertising space, there is still work to be done and drawbacks worth taking into account as you ask yourself if this is right for your brand. Here are a few key considerations and limitations to be aware of:
- Fragmentation: As more retailers launch their media networks, advertisers may find themselves having to navigate various platforms, each with its own unique offerings, targeting options, and reporting systems. Managing multiple campaigns on diverse platforms can be time-consuming and may require specialized expertise.
- Cost considerations: While retail media networks offer a valuable audience and robust reporting capabilities, the cost of advertising on these platforms can vary significantly. Some retailers may demand higher prices for premium ad placements and audience targeting, which can impact the overall advertising budget.
- Channel fit: Retail media networks are not equally suitable for all types of advertisers. For instance, B2B lead generation advertisers may not find the targeted B2C audience offered by retail media platforms aligned with their goals. However, for CPG brands, fellow retailers, and most B2C advertisers, retail media platforms offer a valuable opportunity to reach their desired audience effectively. Somewhere in between would lie D2C advertisers who may require case-by-case approval to run on retail media networks but may still find value in targeting these audiences and inventory
Retail media networks almost certainly haven’t taken their final form and do have some potential considerations for advertisers, but they’ve certainly made the most of their moment and aren’t to be overlooked