Are Retail Media Networks the Future of Digital Ads?

Are Retail Media Networks the Future of Digital Ads?

Retail media is exploding. In 2023, it’s become the second-fastest growing digital advertising channel, outpaced only by CTV. There’s simply more inventory, meaning brands and retail media alike have unprecedented opportunities. And the timing couldn’t be better; wise brands and advertisers are preparing for a cookieless future.

Web browsers that once enabled brands to track consumers via third-party cookies have pulled or will pull the plug on this increasingly disdained (and in many cases, legally unsound) advertising practice. Retail media networks (RMN) rely on first-party data collection rather than antiquated third-party data sourcing.

In the absence of first-party data, contextual data is a powerful way to target an audience. The huge profit margins for first-party data means that retailers will keep the best data for themselves, meting out only the data that won’t be beneficial to competitors. 

Advertisers  saw digital real media advertising spend reach $41.4 billion in 2022. This figure will only increase as more brands choose to rely on RMNs and phase out third-party advertising strategies. 

What are Retail Media Networks?

Retail media networks (RMNs) are digital ecosystems run by retailers—these can be web pages, apps, and other digital platforms—on which brands can advertise. Basically, a digital store that can sell ad space to brands is considered a retail media network: retail-owned digital spaces that sell ad opportunities to advertisers. 

Brands generally sell products with these retailers (but not always). These spaces are something like digital versions of their brick-and-mortar locations. Except, in these spaces, advertisers can show shoppers ads at each leg of their buying or browsing journey, from first click to checkout.

However, retailers must have sophisticated-enough tech infrastructure to support RMNs; a simple web presence isn’t enough. Third-party brands rely on retailers to create relevant ad campaigns across targeted digital media channels.

Succinctly, retail media networks are retailer-driven ad networks. They consist of advertising infrastructure offering a series of different digital channels, such as apps and multiple web pages. Retail companies offer retail media networks to third-party brands based on their ad purposes. Brands buy ad space on these networks because they’ve become an essential part of their digital marketing efforts.

And brands are investing heavily, and will continue to do so; between 2018 and 2023, brands increased their collective ad spend by $25 billion

One of the key reasons brands spend more on retail media network ads is that these networks help them reach buyers at different stages of their journey. For example, readers (potential buyers) are more likely to be open to ads when they’re actively looking to buy, rather than when they’re just browsing or otherwise performing a non-buying online activity. In this case, it’s a no-brainer for many brands conscious of their brand suitability—showing relevant ads to audiences on relevant and appropriate websites. 

Contextual data and a robust taxonomy of product offerings allow for custom targeting, even when audiences may be obscured by networks.

What's Possible with Retail Media?

As first-party data slowly supplants third-party practices, both brands and retailers benefit. However, brands can breathe easier, as RMNs offer more brand-safe and -suitable space than many other digital spaces. 

Across much of the internet, brands must consider where their ads show up across other digital channels, especially when advertisers use third-party data to influence their placement. With RMNs, though, brands can confidently place their ads on retailers’ sites; few brands fear a branding fiasco by having an ad shown next to virtually any item listed on a pharmacy’s digital store, for example. Essentially, retailers sell products and don’t produce harmful, hateful, or otherwise unsavory content to tarnish a brand’s reputation. 

Still, brands want their ads placed next to relevant products across retailers’ digital spaces. Basically, brands are concerned about retailers’ appropriate product categorization, or taxonomies. Just like in-store shopping, brands want to be sure that retailers’ digital shelves are properly organized; no brand wants to see its ad next to a product explicitly unaligned with its product or service. 

If brands (and, in turn, retailers and RMNs) can find success across retailers’ digital space, each can expect to gain net-new customers. This is a massive win in the post-third-party cookie world—especially as some brands and retailers alike remain hesitant about (or in denial of) the inevitable pivot to a cookieless future. 

Contextual brand safety and responsibility data solutions can be employed alongside Retail Media Network data , giving advertisers the confidence that their Retail Media Network campaigns are just as safe as through other inventory sources. Solutions for brand suitability, made for advertising, and fake news ensure brand safety when using retailers’ data. Custom solution using keywords, or URL lists,  can also be included

How Can Retail Media Networks Help Advertisers?

Advertisers and retailers alike must remember that today’s digital customers are savvier than ever; many have at least a general idea of how and why ads follow them around the internet—ads that are often irrelevant to their current page views. However, most audiences do want to see ads, so long as they’re relevant. 

Retail media networks make it much easier for advertisers to show relevant ads to increasingly niche audiences by offering growing, sophisticated first-party data solutions. This means equally niche brands have more power than ever to place their ads in front of target audiences, and advertisers have opportunities to place these ads. 

Retailers (website owners) collect first-party data, which offers more reliable (and increasingly popular with consumers) data than third-party approaches; it’s collected at the point of sale, which offers advertisers greater insight into their customers’ behavior. 

With a sound strategy and robust network, retailers have incredibly promising potential to sell more brands increasingly lucrative opportunities across expanding platforms. 

Why You Need to Shift to Programmatic Advertising

We touched on this briefly, but it bears repeating: the death of the cookie is imminent, and now’s the time to plan for a post-cookie digital world. Whether prompted by legislation or consumers’ chorus of pro-privacy solutions to their invasive digital experiences, all advertisers should make the move. 

Fortunately, it doesn’t have to be painful. Programmatic advertising makes the post-cookie pivot much easier and imparts significant benefits besides more consumer privacy and aligning with a growing number of legislative measures stateside and abroad. Advertisers can achieve maximum scale by working with a pre-bid programmatic partner, as well as expanding to off-platform networks for maximum reach, like SMS pushes, emails, and in-store screens.

Are Retail Media Networks the Future of Advertising?

Like all successful digital marketing strategies, a multi-pronged solution is key to success. Relying solely on RMNs or a single, other alternative, won’t solve all issues for advertisers and brands; RMNs have their limitations. For example, we’re seeing more walled gardens, as large retailers create their own RMNs. This isn’t inherently bad, but brands must be acutely familiar with their customers’ buying habits and locations—which isn’t all that helpful with RMNs, as that information is rarely available.

That’s why relying on a programmatic advertising partner like Peer39 can help you create a multi-pronged solution to get the most ROI out of your marketing strategy. Reach out to us to learn more about how our solutions can make the switch to programmatic seamless.