Retail media is reshaping the advertising space in a big way: The retail media sector is now a $45 billion market, up from $13 billion in 2019, according to eMarketer.
Large retailers like Amazon and The Kroger Co. have become their own data companies. Their owned retail media networks (RMNs) use consumers’ first-party data to target, deliver, and measure ad campaigns for brand partners, often incurring a significant cost.
A case for RMNs in a cookieless world
Purchase data is the key to connecting marketing outputs to marketing outcomes. To brands, this level of insight is worth billions, so it’s no surprise RMNs have seen explosive growth in the wake of third-party cookie deprecation. With their ability to provide brands with first-party data, including purchase data, RMNs help advertisers reach consumers and measure the effectiveness of campaigns while remaining compliant.
RMNs undoubtedly benefit brands, but they also require considerable budget and manpower to execute. This begs the question: Is it time for an evolution of RMNs? Read on, and decide for yourself.
For all its benefits, the current retail media network system is flawed in part because brands that buy into an RMN can only see one slice of overall spending. This leads to fragmented strategies across retailers, requiring brands to piece together multiple datasets from RMNs to get a more accurate view of their customer.
Furthermore, eMarketer reports that there are more than 40 RMNs in operation, creating a crowded landscape. Each retailer network also requires different asset specs and standards, making the creative process inefficient across platforms.
Transparency and standardization
RMNs often provide unsatisfactory home-baked performance metrics and don’t typically measure incrementality that accounts for ecosystem-wide media buys. As a result, brands don’t really know how their campaigns measure up to their non-RMN strategies.
To solve for the frustrations of RMNs being largely ungoverned, industry groups like the Association of National Advertisers and the Interactive Advertising Bureau have been enlisted to help build standards of measurement and transparency.
High premium, low yield
Retailers have a stronghold on first-party consumer data in their networks, creating a captive market. Experts posit that some RMNs charge three times above the industry standard for access to their network’s data, as reported by AdExchanger in February 2023.
But premium costs don’t necessarily lead to premium outcomes, as some RMNs today cannot deliver transparently on basic industry-standard metrics.
So, can brands truly justify the cost of engaging with RMNs long-term when retailers still hold all the cards?
The future for RMNs
Third parties and advertisers are looking to the future for novel ways to democratize data access, standardize measurement, and institute more transparency. All of this is leading to a retail media landscape that is set to become media- and retailer-agnostic—a system that offers unfettered visibility and optimization potential throughout the campaign lifecycle.
While there’s still a long way to go, retail media is evolving with an eye toward better outcomes for retailers, advertisers, and consumers alike.
To learn more about opportunities in retail media, register now to attend eMarketer’s upcoming Meet the Analyst Webinar, “Retail Media: Essentials for Making the Most of This Booming Channel” on Wednesday, June 14 at 2pm ET.
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