Concerns over an impending recession have forced retailers, brands, and consumers to brace themselves for budget cuts. Whether it’s 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. What exactly is a retail media network? An RMN is a proprietary advertising network created by a retailer across all of its digital sales channels. RMNs allow brands to purchase inventory across their channels and market to customers in an extremely targeted approach. It’s similar to in-store advertising but done digitally.
While RMNs 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. In fact, despite the economic headwinds, eMarketer predicts RMNs are expected to see double-digit growth for the next several years, and are anticipated to exceed $60B by the end of 2024.
The Reason for the RMN Boom
The time is ripe for a retail media explosion. With increases in data privacy and security as well as shrinking access to third-party data, the RMN provides another avenue for retailers and brands to collect first-party information. In addition, shoppers are more receptive to advertisements when they are already on a retailer’s site and thus provide an even better way to target customers throughout their buying journey. The value proposition is real.
The Hidden Benefits of RMNs
Many RMNs enable retailers and their suppliers to share customer data in a privacy-focused manner. As a result, RMNs give retailers access to vast amounts of customer insights that allow them to better understand their customers. This enables retail brands to narrow their target audience and optimize their customer journey. Even stores that are traditionally brick-and-mortar, such as Target or Best Buy, have benefited by creating new and exciting touchpoints for customers who prefer to shop online.
The Quid Pro Quo of RMNs
CPG brands have been open to using RMNs 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 allowing them to optimize spend, which is critical to maintaining sales in a slower economy. Brands are able to leverage inventory on RMNs to test ads, and 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.
For retailers, the RMN does more than drive incremental sales; it also creates a new, highly profitable revenue stream. As an added bonus, retailers can also use RMNs to monetize their customer’s behavior and first-party data. By leveraging their customer data and insights, retailers can offer targeted advertising that benefits both themselves and their customers, leading to increased customer loyalty and brand advocacy.
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