Retail media networks are a relatively new and rapidly evolving advertising territory for retailers and marketers alike—and top retail media network providers are already generating billions in revenue. With an average of 3 to 5 times ROA for advertisers, retail media network advertising will be a key factor for many businesses’ continued growth into 2023 and well beyond.
But that doesn’t mean getting one started is easy, nor as quick as you might expect.
Here at Epsilon, we know how important retail media networks are and what it takes to get the most out of them. We’ve helped countless businesses optimise their reach and leverage customer data with tailored turnkey solutions. Below, we’ll briefly cover what a retail media network is before touching on how long it takes to set up and how to do so effectively.
What is a Retail Media Network?
A retail media network is an advertising platform provided by a retailer that can also grant first-party data to advertisers. That data can prove valuable for targeting specific audiences, placing ads at specific points across the customer’s online shopping journey, and learning more insights about customer behaviours so that marketing strategies can be adjusted.
Amazon has made use of its own retail media network for the better part of the last decade, but more retailers have since adopted them with increasing fervour in recent years.
The following retailers have since become major players in the retail media network scene:
So far, success for these retailers appears to be relatively unanimous. In 2021, Walmart reported $2.1 billion in retail media network advertising sales. During the same year, Nordstrom brought in $40 million in ad sales to other brands during an experimental three-month period.
It’s not just retailers, either—the practice is expanding to other industries that can also stand to benefit. For example, Marriott introduced its own media network earlier this year. On a broader scale, McKinsey survey data from Q2 2022 debunks the myth that retail media networks are solely for consumer packaged goods. Luxury goods, electronics, and beauty retailers (among others) all figure to see an increase in retail media network growth in 2023 and beyond.
What’s Driving Retail Media Network Growth?
The rapid expansion of retail media networks has laid the groundwork for what’s quickly becoming a multi-billion dollar industry—and that growth is far from over.
This year, McKinsey & Company projected that retail media networks have the potential to generate $1.3 trillion in enterprise value by 2026 in the United States alone.
Why that is can be traced to a combination of timing and its built-in advantages:
- Pandemic-driven changes to e-commerce – The onset of the pandemic had a considerable impact on consumers’ shopping behaviours and drove a significant amount of purchases online, and those trends continue. According to the United States’s International Trade Administration, online shopping is more popular in the UK than anywhere else in the world, with 30% of retail sales taking place on eCommerce platforms in 2021 and generating over $120 billion in revenue. That was more than 20% in 2020. As you can see, retail media networks are an opportunity to reach consumers where they are when they’re typically most ready to make a purchase.
- Phasing out of third-party cookies – New privacy regulations being implemented by governments and Google’s plans to phase out third-party cookies means retailers and advertisers alike are desiring new information access opportunities, and retail media networks offer just that.
- High returns – As mentioned above, retail media network campaigns commonly earn 3 to 5 times ROA, if not more, for consumer packaged goods companies (CPG). Those kinds of returns make it hard to turn a retail media network advertising opportunity down.
- New revenue source – In this day and age, it’s increasingly difficult for established businesses to find new revenue sources, making retail media networks a welcome tool for those seeking new areas for growth.
How Long Does It Take to Implement a Retail Media Network Strategy?
Convenient as it would be, there’s no across-the-board answer for how long it takes to implement a retail media network strategy. That said, it does tend to be fairly time-intensive.
And this is particularly true if you were to build a retail media network platform from scratch.
A fairly simple retail media network with a narrow scope might take several months to fully implement, while more complicated frameworks may need to be built out over several years.
Another consideration is that retail media networks are a relatively new opportunity with plenty more room for development. As such, it’s likely for most retailers that curating a retail media network strategy will be an ongoing process rather than a finite one.
Let’s take a look at how you can get yours off the ground as swiftly and effectively as possible.
6 Best Retail Media Network Strategies
There’s rarely been a better time to implement a retail media network strategy. If you’re preparing to set up your own, here are six best practices to keep in mind:
#1 Start small
Multi-billion retail media network strategies aren’t built overnight. They require significant amounts of planning and are often gradually built out over time—especially if you’re expecting its infrastructure to be a long-term source of revenue, as it should. You’ll want to:
Establish a goal – Identify what you want your organisation to achieve by implementing a retail media network, then use this goal to build your strategic roadmap.
Know your strengths and limitations – For many retailers, retail media network strategies will require making use of a whole new set of skills. Determine whether you have the talent in-house to create the platform you want or whether you’ll need to work with a third party.
Focus on one area at a time – Be strategic about the channel(s) or target area(s) you start with. When you’re feeling comfortable about its performance, you can move on to the next.
#2 Build relationships with advertisers
Successful retail media networks don’t exist in a vacuum.
Building a retail media network can offer the opportunity to grow your relationship with existing advertisers and earn a greater share of their marketing budget.
It also gives you all the more reason to initiate relationships with new brands that may benefit from advertising with your retail media platform.
#3 Monitor campaign performances
Retail media networks have a growing reputation for offering high ROAS, so many of your advertisers are likely going to come in with high expectations. As you implement a new retail media network, advertisers will be eager to know how their campaigns are performing with your customers—and they’ll want to see the data that backs it up.
Critically, retail media networks enable effective, easy performance monitoring.
With the right analytics tools in place, your retail media network platform should allow for a straightforward assessment of things like reach, engagement, spend, and revenue earned (i.e., 2x or 3x earnings from their initial investment) in terms stakeholders can easily recognise as pure profit.
So, make sure you’re prepared with the infrastructure you need to track users’ engagements, interactions, and purchases made in connection to ads. Additionally, you may want to share additional insights or behaviours that could inform how they plan future campaigns.
#4 Prioritise customer experience
While implementing a new retail media network comes with its excitement, don’t lose sight of giving your customers the best possible online shopping experience. They’re the ones driving your revenue, and it’s their relationship with you that ensures your business’s overall success.
#5 Build an advertiser support network
To build on the point of developing advertiser relationships above: in addition to your consumers, your advertising partners will soon become another type of customer for you.
As such, they may expect certain resources and services.
For this reason, it may be beneficial to create a department or bring in additional partners that work directly with your retail media network advertisers in key areas, such as:
- Campaign planning
- Campaign reporting
- Content strategy
- General account management
#6 Prioritise consumer privacy protections, too
With great information comes great responsibility.
Before building your network and handing over consumer data to advertisers, you’ll want to perform a data audit to understand what information you’re handling and how it should be protected. Additionally, any third parties you work with should be able to demonstrate they have adequate data protections of their own in place.
Retailers are subject to various legal and industry compliance requirements to protect consumers’ personally identifiable information (PII). Before collecting data, consider whether it’s necessary, whether it should be kept confidential, and how information that is disclosed to advertisers can be shared anonymously without the ability to trace specific data points back to certain individuals.
Organisations that decide to build their own media networks should be transparent with consumers about what kinds of data they will collect and share—and how they will protect it.
Opt-in messages for apps, rewards programs, and other platforms should be clear and concise so users can understand what they’re signing up for. After all, the reason retailers have the opportunities that retail media networks present is because of their consumer audiences.
If a retailer can’t establish trust with its customers, they won’t have much luck building a retail media network strategy, no matter how much time they spend.
Let’s Build Your Strategy to Reach More Advertisers
If you’re hoping to connect with customers and advertising partners to build a successful retail media network strategy, you’ll want to make sure your own marketing strategies are engaging the right audiences at the right times.
Epsilon can help you with that.
Our retail media network platform, CitrusAd, helps organisations maximise their performance by reaching more customers, converting more sales, and generating a stronger identity.
Contact us today to create a powerful retail media network.