If you’re in the advertising industry, you’ve heard about the rise of retail media networks. Retailers are expanding their sphere of influence, diversifying revenue streams, and transforming the ability to reach new and valuable audiences. According to a recent eMarketer report, after almost 50% growth in e-commerce channel ad spending during 2020, advertisers increased those allocations by another 27.8% in 2021. One in eight digital ad dollars went to advertising on e-commerce properties.
Further, Boston Consulting Group stated in a recent report that, “big retailers are already racing toward a $100 billion high-margin annual revenue prize in retail media.” So why are retail media networks (RMNs) so hot right now? The reasons lie in these five benefits.
5 benefits to building a retail media network
1. Retain shopper marketing dollars.
Shopper dollars have historically been spent on end caps or in-store marketing. With the ongoing rise of delivery and on-demand services, those methods become less valuable and effective. Retailers can maintain and grow shopper dollars by diverting spend to their online placements. Even better, by using first-party data, both retailers and brands benefit from delivering more accurate and relevant marketing to shoppers. With a media network, retailers are in a position to take advantage of the shift in where dollars are spent.
2. Capture consumers where they shop.
Through placements on a retailer’s owned & operated (O&O), brands can reach their buyers in a digital context. Not only does on-site advertising drive new site traffic, but retailers and brands can also reach existing customers at the most opportune time—while they are shopping. Additionally, retailers can help brands find and connect with new customers. Targeted off-site advertising helps identify and reach new online shoppers, ultimately providing more customer touch points and conversions.
3. Increase e-commerce profitability.
With the rise of free shipping, many retailers are in the red with online sales. Retailers can make e-commerce a profit center again by selling product placements and ad inventory on their O&O sites. Retail media enables retailers to establish new and high-margin revenue streams.
4. Drive product development.
Retailers benefit from brand data to enhance customer intelligence and better understand changing consumer needs. More than ever, today’s consumers expect personalized products and messaging that serve their interests. Ultimately, retailers and brands are able to meet shopper preferences with tighter research and development. Trail-blazing partnerships will be able to iterate quickly, reaching interested markets with innovative offerings and products.
5. Deepen supplier relationships.
Retailers can surface unparalleled insights to increase sales and grow brand relationships. For example, brands can leverage closed-loop measurement to improve persona profile definition, audience targeting, and campaign optimization, which will lead to:
- Enhanced awareness of brands and products sold in retail stores, driving traffic to stores and online properties
- Greater levels of consumer loyalty and membership
- Increased consumer share of wallet and shopping cart
Right now, retailers have a variety of tools at their disposal to improve profitability and customer engagement and drive higher rates of loyalty and overall spend. With a focus on building infrastructure that gives more control over the customer experience and better visibility into their actions and trends, retailers can develop a greater competitive advantage. It’s not a question of if, but when.
For more information on building a retail media network and how LiveRamp can help, check out our recent e-book The 5-Minute Guide to Retail Media Networks.