In the last quarter of 2022, retail media networks have made it clear why they are the future of retail media. It’s no accident. Retail media networks and their powerful capabilities, both online and offline, have the industry positioned to power forward into 2023. The COVID rebound is over. Now, massive expansion is in the cards as the world’s biggest retailers of food and consumer goods once again change the way we buy.
An example of a retail media platform can be anything from a company’s website, search results, in-store media networks, and social media platforms. The idea behind retail media networks is that every platform should feel connected and seamless from a customer point of view.
Imagine starting your shopping journey via a shoppable post on Instagram that takes you to a retailer’s website. From there, you add a few other items to your cart thanks to contextual ads on the site’s margins. You decide to pick up your items in-store, where you provide information to join a loyalty program that will keep you interested in the retailer for years to come. Every part of this journey could be considered a part of the retail media network. Each platform is unique but connected and seamlessly designed to capture, keep, and direct a customer’s attention.
Retail media networks are the way that advertisers and brands will collaborate to create excellent customer experiences. This phenomenon is evidenced by the tremendous increase in retail media spending we’ve seen in the last few years. Retail media now accounts for 11% of all ad spending, and is expected to grow another 60% by 2027. This rapid growth happened because RMNs offer an unprecedented combination of contextual ad placements and consumer data that no other channel can compete with. Not only do these large retail operations have more first-party data thanks to their popular loyalty programs, but eliminating third-party data sources means data is more secure and reliable than ever before. This is a win-win-win for consumers, brands, and advertisers, which is why the future of retail media is RMNs.
Retail media works on many fronts, which is part of why it’s so appealing to every stakeholder. The concept is simple yet wide-reaching, which means it has many viable growth levers that retailers are exploring en masse. Here are a few examples of how retail media works:
There is no doubt about the utility of RMNs for online shopping. Yet, when we think about what will really shape consumer shopping habits, especially when it comes to groceries, it’s clear that in-store retail media will be the driver of expansion. To prove the industry is moving in this direction, take the recent announcement of the merger between Albertsons and Kroger. The deal is not finalized and may never be since some in Congress have raised anti-trust concerns that could squash it. Regardless, it’s the logic of it that we want to explore. These two grocery giants would combine to represent more than 85 million customers. The prospect of building a high-margin retail media network on the back of this massive consumer base was one of the main value propositions driving the deal, according to the companies themselves. What did Kroger and Albertsons realize about retail media networks that made merging an attractive prospect? Here are 5 factors we’ve uncovered that shed light on the ways large grocery chains and other retailers are looking to use RMNs in the future.
Personalization has been one of the hottest retail media trends in the past few years. In general, consumers enjoy seeing advertising that is contextual and relevant to them. This includes ads that recommend items they’ve bought previously, or ads for products that might go well with items in their cart. This level of personalization is just right: it’s not too intrusive and doesn’t give off any big brother vibes. However, advertisers using RMNs have been holding back when it comes to personalization. And for a good reason. It’s possible to have too much of a good thing! Advertisers using retail media marketing could offer a level of personalization that would definitely be off-putting to the average consumer. Demonstrating too much knowledge about their lives and grocery habits would turn consumers off and could negatively affect a retailer’s brand image. This means retailers have to strike a balance between optimizing personalization and not being overly intrusive. Retailers also want to take advantage of the data their rewards programs generate to design sales and ad campaigns that matter to their in-store customers. The data and experience customization that RMNs allow for means retailers can more easily find this balance.
Marketers have long understood that today’s customers prefer to research before they buy. To adjust to this, content marketing and online customer experiences have been curated to provide seamless transitions between online platforms and checkout screens, as well as keep track of the data generated during this journey. However, these online platforms didn’t do much for shoppers who prefer to browse in-store. These customers perform the same research in the same way but make purchases that are difficult or impossible to track. This meant it was also difficult or impossible for retailers to understand how to advertise to these customers. The future of retail media is improving the customer experience and closing the gap between online and in-store ads. Thanks to the improved ability to attribute purchasing data to shopper behavior and preferences, advertisers are having an easier time designing relevant content for these shoppers. This not only tightens the efficiency of ad spending but improves the in-store customer experience as well. We believe this feedback loop is one of the main growth drivers for brands looking to interact with these burgeoning retail media networks.
The original RMNs like Amazon and Walmart paved the way for the current generation with their formidable search offerings and insights into online shopping habits. However, the fact is that 90% of grocery purchases are currently happening in-store. This isn’t going to change soon, since customers are always likely to want to be able to see food products they’re interested in before buying them. Since in-store grocery shopping will continue to be the preferred method for consumers, advertisers need a way to track these on-site retail media statistics with a similar level of detail to their online counterparts. Retailers are creating these opportunities through their RMNs that include innovative new features like smart carts, in-store path to purchase info, and checkout-less purchases like Amazon’s Just Walk Out technology, which launched last year. Technologies like Just Walk Out use a combination of computer vision, customer WIFI data, and in-store sensors to track the routes customers take through their stores. They use this to learn the order in which customers select items, and even how long they spend reading a label before putting an item in their cart. All of this data is then made available to brands looking to design marketing materials.
RMNs are enabling a fundamental shift in the way retailers view in-store experiences. Instead of an end goal, retail shopping is now viewed as a full-funnel media channel unto itself. Here are a few key reasons for this:
Take Walmart with a claim that 90% of American households shop at their stores. What other advertising platform can promise access to such a massive proportion of U.S. consumers? It’s not just access to these customers either, but an ability to target ads and omnichannel methods, which will drive massive expansion. These methods include traditional formats like video and images, but also new formats like smart displays and creative in-store experiences like augmented reality. RMNs are no longer a tactic to be aware of. They are rapidly becoming the best platform for all brand advertising on par with legacy mass-awareness platforms like TV and streaming.
Another result of more accurate data is the rise of tools like Crisp, which help retailers and brands track location-level stock information. This information was hardly available before, or it was hidden under slower and harder-to-read retailer reports. This meant brands and retailers had a more difficult time determining which items were selling well at different locations and adjusting supply chains. With the rise of RMNs and the technologies they enable, location-level spending habits among consumers are now easier to track. Thanks to this update, designing sales and optimizing supply chains is yet another growth lever that RMNs are facilitating. We think Crisp is just one example of the multitude of new technological innovations that we’re going to see in the RMN era.
If you’re excited about the possibilities that the future of RMNs represent, you’re not alone. At E29 Marketing, we founded our agency on the principles driving RMNs forward today. We believe in driving the digital advertising world forward with improved personalization, shopper data analytics, and marketing innovation. E29 Marketing Can Be Your Entry Point Brands of all sizes face challenges when it comes to RMNs.
The large number of networks existing on the market today means that brands have to
1) be able to choose the right ones to market their products on,
2) understand the unique ways advertising needs to exist on each of these networks and
3) implement the programs, aggregate and analysis the data from numerous RMNs.
Since retail media networks are initiatives undertaken on the retail side, brands and advertisers may feel like they’re being left out of the development process. The only way to ensure you’ll have a voice is to get involved now and help shape the future. If you’re wondering how you’ll manage to work with these diverse and promising networks, E29 Marketing can help. We’re already familiar with the process of analyzing and marketing on retail media networks. We’re certain we can help your brand succeed with one of the industry’s most exciting growth opportunities to date.
Want to learn more about how E29 can help you prepare for the future of retail media networks? Contact us today.
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