In the past, media was media, and retail was retail. Media companies used content like print, radio, linear TV, digital, and social media to attract consumers, collected audience data through cookies, and monetized the content by selling ads and subscriptions. Retail companies used products to attract customers, collected customer data at the point of sale, and monetized by using first party customer and loyalty data to increase product sales.
As time went on, omni-channel giants like Amazon, Walmart, and Target drove the growth of ecommerce and the two worlds (media and retail) began to collide. But then, the COVID-19 pandemic suddenly thrusted ecommerce to the forefront of every brick-and-mortar business causing retailers to quickly move into the media space. And this was just the beginning. Thanks to increased privacy regulations and the death of the third party cookie, brands needed new, targeted strategies to connect with consumers, and ecommerce businesses emerged with new first party data solutions to close the gap. As a result, retail media was born.
Today, businesses that have an online presence can become like media companies by collecting first party data from their customers’ engaging with them online, and then monetize these audiences in multiple ways to increase revenue. Retail media now goes beyond retailers and promotes the entrance of new mixed-industry companies like UberEats, DoorDash, and Marriott, into the market and enables a new revenue stream that goes beyond the products and services which businesses are built on. This new revenue stream focuses on two capabilities 1) collecting and protecting first party data and 2) implementing ad solutions to increase revenue, while enhancing customer relationships.
What is a Retail Media Network? (RMN)
A Retail Media Network is an advertising platform that allows brands to buy advertising on other retailers’ websites and apps and grants advertisers access to first party data. First party data is data that is collected and owned directly by the website owner – in this case, retailers. First party data is owned by the company and collected through their software systems. This data is then used to sell targeted ads to customers throughout the purchasing process. Nine out of ten of the largest retailers in the nation have brought retail media in-house, creating their own retail media networks (Marketing Brew).
Consumers and Their First Party Data
Retail media networks (RMNs) make products discoverable by giving advertisers access to retailers first party consumer data, which allows brands to connect with consumers, therefore driving conversation and increasing return on ad spend (ROAS). Changes in data-collection methods and new privacy laws, specifically the push towards ‘cookieless’ browsers, are causing retailers to move towards first party data.
Marketers use first party data to create tailored ads which guide customers through the purchase process and elevate their shopping experience. These ads include banner ads and display advertising, email sponsorship, custom audience segmentation, search, and more.
RMNs allow retailers to tap into an extra revenue stream by selling personalized advertisements at a higher cost per thousand impressions (CPM). In the US alone, retail media ad spends jumped 53.4% from 2020 to 2021 and continues to rise (UARK). Advertising directly on retail sites and apps is set to increase another 31.4%, bringing $41.37 billion in 2022 sales (Insider Intelligence). Forecasters predict the retail media market will grow by 25% per year to $100 billion over the next five years and will account for 25% of total digital media spending by 2026 (UARK). Large retailers such as Amazon, Walmart, Target, have created their own RMNs such as Amazon Advertising, Walmart Connect, and Roundel. Amazon Advertising leads the charge with $31.2 billion in 2021 sales (Fast Company). Walmart Connect and Roundel are newer players in the game, both reeling in a couple billion each in 2021 (Fast Company)(Target).
So, as ecommerce and retail media continue to grow, now is the time to take advantage of digital advertising to connect with consumers as they shop. Retail media will drive more revenue into your business by empowering companies to expand products and services with partners to enhance customer experience and keep up with new marketplace trends.
For more information on retail media, talk to our professionals to deliver more relevant and valuable experiences to your customers and increase your revenue today.