Concerns over an impending recession have forced retailers, brands, and consumers to brace themselves for budget cuts. Whether its consumers taking a closer look at their purchases, brands scrutinizing their ad spend, or retailers looking to maximize their profitability, everyone is adjusting their financial outlook.
Retail Media Networks (RMN) have become a popular way for retailers and brands to optimize their wallets during this time. In fact, despite the economic headwinds, eMarketer predicts retail media networks are expected to see double-digit growth for the next several years.
The time is ripe for a retail media explosion. With an increased focus on consumer data privacy and security, as well as shrinking access to third-party data, retail media networks provide another avenue for retailers and brands to collect first-party information, and use it to build their bottom line.
What is a Retail Media Network?
A retail media network is a proprietary advertising network created by a retailer across all of their digital sales channels. Retail media networks give second-and-third-party brands the ability to purchase ad inventory and market to customers across their owned channels with an extremely targeted approach. It’s similar to in-store advertising, but done digitally.
Shoppers are often more receptive to advertisements when they are already on a retailer’s site. The proximity and relevancy of retail media networks provides a convenient way to target customers throughout their buying journey, and deliver the right offers, at the right time.
Benefits of Retail Media Networks
For retailers, retail media networks do more than drive incremental sales; they also create a new, highly profitable revenue stream through data monetization of owned first-party data. With the right customer data and insights, retailers can offer targeted advertising that benefits both themselves and their customers, leading to increased customer loyalty and brand advocacy.
This enables retail brands to narrow their target audience and optimize their customer journey. Many retail media networks allow retailers and their suppliers to share customer data in a privacy-focused way. As a result, retail media networks give retailers access to vast amounts of customer insights that help them better understand their customers.
Even stores that are traditionally brick and mortar, like Target or Best Buy, have benefited by creating new and exciting touch points for customers who prefer to shop online. Brands can do this in a number of ways.
- Digital Shopping Experiences. Digital ad placements on owned web and mobile app properties open up new ways to personalize customer experiences with hyper-relevant content and product promotions. Strategic product promotion can also help increase cross-sell and upsell opportunities at checkout.
- Brick-and-Mortar Experiences. Retail media networks extend beyond just digital channels, as digital media begins to proliferate in-store locations. With geolocation and transactional data, retailers and partner brands can optimize promotion based on shopping behavior and demand across specific regions, or store locations.
- Omnichannel Experiences. Online and offline channels, of course, don’t exist in silos. With connected customer data, retailers can orchestrate seamless customer journeys that tap into individual buying behaviors.
- Campaign Optimization. Brands are also able to leverage inventory on retail media networks to test ads, see what works, and who it reaches. Once brands receive access to this data, they can scale successful creative campaigns, and gain valuable first-party data in the process.
Connecting CPG and Retail with Data-Driven Insights
CPG brands have been open to using retail media networks because they create an opportunity to advertise to specific customers at scale. Rather than large scale media buys, the brands can be more targeted in their approach and optimize spend, which is critical to maintaining sales in a slower economy. Partnerships between CPG and retail brands can improve the quality of products and services delivered by both parties.
For example, one Japanese retailer launched a marketing lab that made their consumer data available to CPG partners that sold products on its B2C website. The CPG brands were able to use this data to optimize promotions, and make smarter decisions about inventory and future product development. The wealth of consumer behavioral data helps the brands understand how to improve packaging, pricing, and other product extensions, as well as determine new product launches in partnership with the retailer.
Unified Customer Data is Essential for Retail Media Network Success
While retail media networks have proven to be a powerful tool for marketers to reach customers at the point of purchase, there is still room for further optimization and improvement. Retailers must also be aware of data challenges that may exist when preparing to launch retail media network initiatives, and how to overcome them.
Develop a Strong First-Party Data Strategy
One of the biggest benefits of retail media networks is the reduced reliance on third-party data, and the ability to monetize and activate on first-party data effectively. Retailers should ensure they have a strong first-party data strategy in place to continue to build direct relationships with shoppers. This will ultimately lead to reduced reliance on external agencies, as data management operations move towards owned data as a priority.
Create a Connected Customer Identity
Like any omnichannel marketing strategy, establishing a connected customer identity is essential for accessing the insights needed to make real-time decisions about the customer journey. This means breaking down data silos to create unified customer profiles that can be shared across the organization, and strategically with brand partners.
Identity resolution is able to reconcile identifiers across online and offline channels, and enrich customer profiles with more accurate data. This gives greater visibility across both known and unknown audiences, and reduces risk of inaccurate or redundant customer data when managing promotions across brands.
A holistic view of the customer journey sets the stage for omnichannel customer journey orchestration and automated campaign activation,, which can then be optimized over time.
Treat Customer Data with Respect
Building first-party relationships with shoppers starts with establishing trust. With data privacy a growing concern, shoppers expect brands to manage their data safely and securely. Retailers should ensure consent and privacy preferences are integrated into customer profiles, and that data access permissions are managed appropriately across teams, brands and partners.
Data clean rooms are also becoming a more compliant way for retailers to securely manage data exchanges with partner brands. Learn more about how data clean rooms work here.
Making the Most Out of Retail Media Networks
Retail media networks are becoming an established alternative for digital advertising, while reducing reliance on third-party networks. Large retailers are already seeing initial success from these efforts. As more brands follow suit, only time will tell what new marketing strategies will emerge.
Learn more about how brands can create new revenue streams with data monetization here.