Why are Retail Media Networks making all the headlines?

Retail is the New AdTech

With digital advertising landscapes undergoing seismic shifts, Retail Media Networks (RMNs) are quickly taking center stage. Traditional top-of-funnel (ToFu) social metrics and middle-of-funnel (MoFu) search behavior are no longer enough to justify media spend. Instead, the advertising focus is shifting towards transactional metrics—real retail interactions—where RMNs hold a competitive edge. This shift highlights the inefficiencies of paying the Google-Meta "tax" and introduces a new age of retail-powered ad strategies.

What is Retail Media Network (RMN)?

A Retail Media Network is any platform, both physical and digital, where brands can advertise to influence consumer decisions during their shopping journey. RMNs take advantage of the retailer's deep customer relationships and vast first-party data to serve highly relevant ads.

• Retail: Refers to businesses that sell products directly to consumers. These businesses have a direct relationship with customers, allowing them to understand shopping behaviors deeply.

• Media: Refers to the properties where ads can be displayed, which could be physical (e.g., in-store displays, promotions) or digital (e.g., website banners, search results, video ads). The goal is to influence purchasing decisions during the shopping experience.

• Network: A network of owned and third-party properties powered by the retailer's customer data. This network isn't limited to just owned platforms; it can extend to a wider group of publishers, providing a broader reach for targeted advertising.

Ad Spend Trends: A Clear Shift to Retail Media

Ad spend growth in social and search stand steady, while retail media is on an accelerated rise, fueled by companies with deep transactional insights and proprietary data. Here’s how the growth rates stack up, underscoring a shift in spending focus:

• Search: +12% YoY (driven largely by Google Search’s +14% YoY growth) 🔎

• Social Media: +14% YoY (Meta Platforms grew +16% YoY) 💬

• Retail Media: +21% YoY, led by Amazon Ads at a remarkable +24% YoY 🚲

This growth underscores the rising inclination of brands to invest in retail media, where ads are no longer simply impressions—they’re data-driven, targeted engagements tied to actual purchase behavior.

Why Retail Media Networks Are Redefining Advertising

RMNs leverage the vast customer data that retailers hold, capitalizing on each stage of the purchase funnel with precision. Here’s what drives their value:

1. First-Party Data Power: With walled gardens offering limited transparency, RMNs hold a treasure trove of first-party data, especially transactional insights. This allows RMNs to outshine traditional platforms by providing advertisers with concrete purchasing behavior, not just clicks and engagement metrics.

2. Revenue Opportunities for Retailers: For retailers, RMNs represent a new and lucrative revenue stream beyond product sales. Brands are increasingly looking to connect with consumers where actual purchase decisions are made, a point in the shopping journey where RMNs can engage customers with contextually relevant ads.

3. Versatile Ad Formats: RMNs allow retailers to tap into multiple ad formats, both in-store and digital, that provide diverse and effective advertising avenues. From interactive website banners to in-store promotions, RMNs blend digital and physical touchpoints, maximizing ad performance across the customer journey.

The Emergence of Retail Media Leaders

The rise of Retail Media Networks started with Amazon over a decade ago when it launched its Ads Platform, demonstrating the immense potential of leveraging first-party transactional data to serve ads. This bold move set the foundation for retail media, inspiring other major retailers like Walmart, Kroger, Target, Tesco, Sainsbury, and Carrefour to follow suit. These retail giants quickly realized the value of their customer relationships and transactional insights in creating high-performing ad platforms.

Today, the influence of RMNs extends beyond just the traditional retail giants. Regional leaders such as Flipkart in India, Schwarz Gruppe in the EU, and Tokopedia in Indonesia are also making significant strides. These companies often collaborate with third-party platforms like The Trade Desk and Criteo, using these partnerships to scale their retail media offerings and reach wider audiences. These alliances provide RMNs with an expansive network of customer touchpoints, showcasing how retail data can power ads across global markets.

Interestingly, non-traditional players are now entering the RMN space. Companies like JPMorgan Chase, Revolut, PayPal, and United Airlines are recognizing the value of their customer data, transforming themselves into media networks. By capitalizing on their rich consumer insights, these non-retail entities are effectively leveraging their platforms to influence customer behavior through data-driven advertising, proving that the concept of retail media is expanding beyond retail itself.

What Makes RMNs Successful: Core Components

To truly harness the power of retail media, RMNs need the right infrastructure, partnerships, and privacy measures. Here’s what goes into a high-performing RMN:

1. First-Party Transaction Data: Having vast amounts of first-party data, especially transaction data, is crucial. Understanding purchasing behavior gives RMNs a significant advantage in influencing customer choices, ensuring that advertising is tied closely to real consumer actions.

2. Data Activation Infrastructure: Handling vast amounts of first-party data, including transaction data, requires advanced tech to activate insights effectively while ensuring customer privacy. Leading RMNs invest in infrastructure to manage data responsibly, using privacy-enhancing technologies to maintain customer trust while delivering high-performance advertising.

3. Strategic Partnerships with Publishers: RMNs extend beyond owned platforms. By partnering with third-party publishers, RMNs amplify their reach and bring targeted advertising to a broader network, ensuring that ads reach consumers throughout their digital journey.

Retail Media: The Future of AdTech

Retail Media Networks are more than just a new revenue stream—they signal a fundamental change in advertising. As more retailers unlock the value of their customer data, RMNs have the potential to transform businesses into full-fledged media networks, blending owned and third-party properties to reach and influence consumers more precisely than ever before.

In this new age of AdTech, every business with the right customer data and infrastructure can become a media network, making data-driven advertising accessible and reshaping the advertising industry at large.