Retail Media Networks: A Full Guide to Opportunities

Fast forward to:

Chapter 1. Retail media network: What’s the buzz all about?

Chapter 2. Retail media network examples taking the shopping world by storm

Chapter 3. How can an RMN make a difference for you?

Chapter 4. Why do retailers build their own retail media networks?

Chapter 5. Approaches to RMN development

Chapter 6. Challenges during RMN implementation and Oxagile’s service offering

Back in 2022, as we explored custom retail media networks (RMNs) and their possibilities with our clients, worldwide retail media ad spending was lounging comfortably at $98 billion. Advertisers and retailers were clearly not hitting the brakes on their enthusiasm, and today eMarketer predicts this figure will skyrocket to $165 billion in 2025, accounting for 20% of total retail sales in the US.

Given the rapid pace of advertising tech innovations and evolving consumer habits, it’s hard to forecast just how much these numbers might surpass expectations.

One thing is obvious. The number of retail media networks and their offerings, just as their capabilities, will continue to grow steadily.

Fine, one more thing is obvious. With great opportunity comes a few bumps in the road, and we won’t gloss over those. But first, let’s get back to the essential building blocks for crafting successful retail media networks.

Retail media network: What’s the buzz all about?

Imagine a digital marketplace where retailers leverage their exclusive first-party data to offer brands highly targeted advertising placements, thereby opening new revenue streams while also enhancing customer engagement.

If you can picture that, then you already grasp the essence of the retail media network definition — an advanced AdTech platform owned and/or operated by retailers, bringing together advertising spaces across retailer websites, e-commerce platforms, and mobile apps.

In a sense, you could think of the RMN ecosystem as of a well-coordinated sports team, as its beauty really lies in the synergy it facilitates:

• Retailers can be seen as coaches, setting the game rules either by creating their own RMN systems or using some vendor’s existing solution’s base, showcasing ad spaces across their digital arenas.
• Brands and advertisers are the star players, leveraging these platforms and the available first-party data provided by RMNs to strategically place highly targeted ads.
• Publishers join the team as coach assistants, adding their own platforms to expand the reach of the RMN and strengthen the team’s lineup.
• AdTech platforms are the support staff and referees, ensuring the game runs smoothly through programmatic advertising and real-time bidding, keeping everything fair and efficient.
• Finally, the fans — consumers — watch and interact with these ads while browsing or shopping, ensuring a winning season for all.

When it comes to the types, retail media networks come in two flavors: onsite and offsite.

Onsite retail media involves advertising directly on retailers’ platforms, such as their websites and mobile apps. This primarily includes sponsored products and display ads integrated within the retailer’s digital environment, allowing for targeted engagement with consumers already interacting with the brand.

Offsite retail media, on the other hand, involves placing ads on external platforms, extending the reach of retail advertising beyond the retailers’ own channels. This can include buying ad space through DSPs, using built-in advertising dashboards on social media platforms like Meta, LinkedIn, and TikTok, or partnering directly with publishers. The primary aim here is to attract new customers and tap into broader audiences who might not visit the retailer’s site directly.

Leading retail media network examples that take the shopping world by storm

The retail media ecosystem is essentially the Hollywood film festival of the advertising world — a parade of high-profile, widely recognized brands that skillfully leverage extensive customer data and digital platforms to provide targeted advertising solutions. Some of these top retail media networks can be categorized based on their key attributes:

E-commerce giants and marketplaces

Amazon, eBay, Etsy, Shopify, Zalando, Bol. These platforms operate massive online marketplaces with extensive customer bases. They utilize sophisticated advertising networks to allow brands to reach consumers directly at the point of purchase. For instance, Amazon Advertising offers on-site and off-site ads, while eBay Ads provides access to over 135 million active users.

Traditional retail powerhouses

Walmart, CVS, Walgreens, Costco, Target, Kroger, Home Depot, Lowe’s, Macy’s and Bloomingdale’s, Petco. These retailers have transitioned into retail media networks by leveraging their extensive first-party data from both physical stores and online platforms. Walmart Connect and Target Roundel are prime examples, integrating online and in-store activity data to provide comprehensive advertising solutions. Home Depot and Lowe’s focus on home improvement categories, using data-driven insights for targeted ads.

Grocery and convenience stores

Instacart, Wawa, Vons, DoorDash. Grocery delivery services like Instacart and food delivery platforms like DoorDash offer unique advertising opportunities by promoting sponsored products at the point of purchase. Wawa and Vons leverage their in-store and online data to support custom ads and campaigns, enhancing the customer shopping experience.

How can an RMN make a difference for you?

When considering whether to invest time and effort into building an RMN platform, it’s smart to assess all the risks and pitfalls, and pleasant to envision the advantages. Naturally, we’ll start with the latter — the benefits of retail media networks.

If you’re a retailer — you’re gaining

1. Significant revenue streams

Retail media platforms were created to become a major helper for retailers to offset the narrow margins on products and services. And they have certainly succeeded in this role. Ad sales within RMNs typically command high profit margins, ranging from 70% to 90%, compared to the narrow profit margins of traditional retail operations which are around 3% to 4%.

Moreover, RMNs enhance cross-selling and upselling possibilities by focusing on customers interested in related products or upgrades, ultimately boosting sales and revenue.

2. Structured first-party data

In a world moving away from cookies, owning first-party data has become essential for retailers looking to improve marketing efficiency and drive growth. RMNs provide direct insights from customer transactions, loyalty programs, and online interactions, offering a comprehensive view of consumer behavior, purchase patterns, and preferences across millions of transactions.

And since the retail media ecosystem is supported by numerous AdTech companies, retailers can easily unlock this full potential of their first-party data to:

• Optimize inventory
• Offer personalized recommendations
• Segment their customer base
• Track campaign performance in real-time

3. Closer relationships with consumers

Implementing an RMN platform transforms customer loyalty and engagement by offering endless opportunities to craft personalized experiences. These include tailored recommendations, loyalty programs, and targeted promotions and discounts that appeal to specific customer segments.

And, certainly, serving up content that’s spot-on for what customers want right now scores major points for retailers.

If you’re a brand/advertiser — you’re in for a treat.

Obviously, the more enticing RMNs are for companies looking to buy ad space, the better it is for retailers. The good news? For advertisers, retail media advertising platforms are like a blooming flower attracting buzzing bees, as they get:

1. Accurate targeting with precise data

RMNs give access to first-party data directly from retailers, which means brands can understand their customers better and tailor their marketing strategies accordingly. But it gets even better: brands can bring their own first-party data, merging it with the retailers’ through secure data clean rooms, resulting in even more precise audience targeting.

2. Enhanced ROI

Retailer websites are where shoppers are already in the mood to buy, making them the perfect environment for promoting brands’ products and services and capturing key moments when customers are most likely to make a purchase. They can engage with customers throughout their journey, especially right before checkout.

3. Clear metrics

RMNs offer clear conversion tracking, which means brands can see exactly how their ads are performing and calculate their ROI with precision. This feedback helps them refine their campaigns for even better results.

4. Improved visibility

Partnering with an RMN allows brands to target specific audiences at different stages of their buying journey. Strategic placement within the right retail network ensures they reach consumers who are already interested in their products, enhancing the brand’s visibility and impact.

RMN is no longer a luxury, but a necessity

BIGGER profits, STRONGER customer engagement, SUPERIOR data insights, and just ONE platform to cover all that.

We’ll give you different options of how you can reap every benefit of retail media networks.

Let’s talk

Why do retailers build their own retail media networks?

The trend of retailers, ranging from brick-and-mortar giants to digital-only platforms, launching their own retail media networks is gaining momentum due to several key factors:

• E-commerce boom: The pandemic reshaped shopping habits, driving consumers online in record numbers. The convenience of e-commerce became a lifeline, prompting businesses to enhance their digital operations to meet this new demand.
• Demise of third-party cookies: Retail media networks capitalize on first-party data, offering a wealth of insights for personalized advertising and ways to connect with consumers more effectively and with greater relevance.
• Precision in performance tracking: Retailers now have the power to measure ad campaign success with unparalleled accuracy by tracking customers throughout their whole journeys and seeing campaign outcomes, getting a clear picture of what works and what doesn’t.
• Privacy-first strategy: Retail media networks present a privacy-conscious way to tailor and evaluate advertising efforts with first-party data.

Approaches to RMN development

Companies eager to leverage RMNs have three paths to choose from: developing an in-house solution, selecting an out-of-the-box option, or collaborating with an AdTech vendor. Naturally, there are no strict guidelines, and these approaches can be mixed and matched.

How do you choose the best path for your business? Let us explain.

Approach 1: Building in-house

Approach 2: Using an off-the-shelf-solution

Approach 3: Partnering with an AdTech vendor

Every retailer has unique needs, and selecting the right approach depends on their specific goals and resources. Still, based on Oxagile’s experience, most clients find success with a hybrid approach: implementing certain key elements in-house while outsourcing the majority of the work to a vendor.

This hybrid strategy offers the best of both worlds, balancing speed, control, and customization. It accelerates the launch process and allows for tailored solutions that help retailers maintain a unique edge.

Challenges during RMN implementation and Oxagile’s service offering

The best half, with delightful benefits and exhilarating decisions behind us, it’s now time to shift our focus to the hurdles. In a nutshell, there are quite a few, given the competitive market and the overall scale of any RMN solution. Now out of the nutshell:

• Scalability and integration with other platforms

  Seamlessly integrating Retail Media Networks with other digital marketing platforms and existing technologies requires a strategic view on scalability and integration. Retailers should utilize cloud solutions, microservices architecture, and load balancing to ensure dynamic resource scaling and optimal performance.

• Adherence to evolving regulations

  Keeping up with the constantly changing landscape of data privacy and advertising regulations is a persistent challenge. Retailers must stay abreast of evolving compliance requirements to avoid potential legal and reputational risks.

• Ensuring measurable ROI

  Brands need robust analytics and measurement tools to evaluate the effectiveness of their campaigns and optimize ad spending.

  It means that to ensure successful retail media campaigns, retailers must deliver detailed and reliable measurement and reporting to advertisers. This entails offering aggregated metrics views across various dimensions such as campaigns, categories, products, and so on.

• Intense demands on data handling

  It is crucial to establish a dependable data infrastructure and implement a data clean room solution. This will enhance the utilization of your current first-party data and accommodate the additional first-party data generated by a media network.

  Equally essential is optimizing your first-party data usage and interpretation to accurately track each customer’s entire purchasing journey.

• Highly competitive landscape

  To avoid consolidation and potential acquisition by larger companies, smaller retailers should adopt a strategic approach when building their RMNs. This strategy should encompass innovation, unique value propositions, and excellence in technology.

Obviously, to minimize losses and maximize gains, while ensuring a secure and personalized shopping journey for customers through an RMN solution, retailers can’t afford to overlook any of these challenges.

If you agree with this notion, then firstly, you’re spot on, and secondly, Oxagile would be delighted to bring our expertise, insights, and a customized suite of services tailored for e-commerce companies and retailers. From AdTech consulting to seamless integration services and advanced feature development — including enhanced analytics and attribution models — you’ll get a range of options to make the optimal decision for your goals.