Amazon's on-site ads business, in which brands pay the online shopping behemoth to have their products spotlighted, was a masterstroke when it debuted a decade ago. Amazon's website already excelled at sales, and now the ads business folded in an entirely new revenue stream as brands paid for access to coveted audiences—just like they had long bought ads on TV, radio, and media websites.
It was the first retail media network, and its success inspired a wave of other large retailers such as Target, Walmart, Costco, and Kroger to follow suit by launching their own similar networks. Such networks can potentially deliver big-time value for both the big retailers and the featured brands. That's mainly because they leverage not only the retailers' on-site traffic to drive on-site conversions, but also target ads to highly specific audiences comprised of that retailer’s first-party shopper data across the open web.
What does the data say?
So Amazon proved the efficacy of the retail media network, and now everyone benefits. Right?
Not so fast. There's one big problem with the broad rise of retail media networks: in the minds of agency and brand executives who control marketing spend, Amazon remains king.
About one in ten of said executives reports making a "large" or "very large" investment in Walmart's retail media network, for example. In contrast, more than half are spending either a "very small" amount or "none."
And Walmart is the success story. Target finished a few points behind Walmart, and investments in networks owned by the likes of Kroger, eBay, and Best Buy are vanishingly small.
Worse, those executives are even growing skeptical of Amazon's media network. Brand execs reported much lower confidence levels in Amazon as a marketing channel than alternatives such as Facebook, Instagram, and online display ads. Agencies weren't quite as pessimistic but likewise voiced less confidence in Amazon than in display ads and established social-media channels.
The value proposition behind retail media networks hasn't changed. These networks retain their potential to connect brands with high-value customers at ideal moments. Yet it's also clear that not enough of that potential is being realized for brands.
So what can the operators of retail media networks do to turn the tide? The key is lean into the things that have the potential to deliver unique and powerful value to the brands and agencies they need to woo. Success in the next phase of retail media means maxing out the value in seven key categories:
Maximize the website's earning potential
Choosing how and where to display retail media ads should be approached thoughtfully, with great care given to how retail-media products differentiate from other recommended products. However, creative marketers can find ways to preserve balance and differentiation while still maximizing retail-media opportunities.
Maximize off-site monetization
The first-party data that large retailers collect from shoppers on their own sites is enormously valuable in delivering a targeted on-site experience and can enable them to be similarly effective in reaching (and converting) similar audiences off-site. Of course, off-site targeting is not just limited to on-site visitors – not by a long shot. Off-site advertising allows a retailer to expand the monetizable pool of shoppers brands can reach to include every retail shopper, including in-store purchasers, email-list members and loyalty account-holders.
Pulling this off may require collaboration with data-focused partners on both the supply and demand side of the ad-tech ecosystem. Still, it has the potential to emerge as a powerful—and profitable—strategy.
Maximizing brands' spend
It's an adage of business that it's easier to increase spend from an existing customer than to win a new one, and it holds true in retail media. While trying to win over those skeptical brand execs, retail-media networks should also aim to expand the presence—and spend—of the brands who already are on their networks.
An example of maximizing a brand’s spend might be introducing new audiences or channels; it could also be increasing spend by providing the return on ad spend of a brand’s investment so they feel secure investing more if the numbers are promising.
Maximizing the value of each shopper
This means dialing in the last mile of the customer journey from the perspective of a retailer's other customer—the brad advertising on their retail media network. In turn, that means doing everything possible to facilitate a purchase, and perhaps even a long-term relationship, between shoppers and the brands they're encountering via the retail media network.
Maximizing the value of each shopper starts with understanding the shopper. This means knowing what they browse for and buy when they’re not at the retailer, what their lifestyle is like and what they truly need as a consumer. Then, using that information, it’s possible to provide relevant and interesting advertising that makes the shopper feel understood and not intruded upon. This enables the creating of a relationship with a shopper based on respect and understanding that will last longer than a single point of sale interaction.
Maximizing the power of first-party data
Large retailers have big online audiences, which makes it easy to confuse the value proposition of a retail media network with that of a traditional media network. But there's a big difference, and it lies in the potential of first-party data. Retail media network operators shouldn't miss out on the chance to use that to its greatest possible effect, which will lead to retail-media customers reaching their ideal shoppers, creating the sort of high-value connections that will lead to greater loyalty and spend.
Maximizing the shopper base
Expanding your on-site shopper base is good for core business because it drives sales. It also benefits retail media networks because it increases their overall audience and makes them more attractive to marketers. Acquiring new customers who act and spend like your best customers by reaching them with personalized messaging is key.
Retail media networks—other than Amazon, anyway—haven't yet fully convinced brands and agencies of their value. Yet their potential remains vast, and it's up to retailers to dial in their offering so that they can win over the skeptics.
If you're looking to get more out of your retail media than ever before, Epsilon may be the right partner for you. With a solution that adds up to maximum performance, retailer and brand partners alike will quickly see gains in shopper reach and incremental revenue.