Retailers have the data to know what sells, and advertisers need this data to refine their brand strategy. A win-win comes from collaboration between the two: retail media networks (RMN). Retailers have the opportunity to turn their first-party data and ad spaces into new revenue streams. However, many aren’t taking their chances and, as a result, miss out on a massive new source of revenue.
Retail media networks are when retailers establish an advertising platform on their own digital platforms—kind of like in-store advertising, but in digital format. This creates a new revenue stream for retailers by monetizing their first-party data through the launch of ad products. Though all of this is conceptually clear—every retailer wants to increase its revenues—the market is still reluctant to implement this solution. Retail companies either rely on selling their products and services rather than tapping into ad monetization, or they lack the right infrastructure and skills to build and run retail media networks. For most retailers, the latter is the issue. Some stick to what they know, whereas others outsource the work.
Only a few players have a clear focus on creating their RMN units, even though there’s so much potential. That’s why we have developed this solution within Media.Monks and implemented it for clients in the retail space.
The Business.Monks—Media.Monks’ business consulting category—focus on uniting strategy with experimentation, value creation with performance, and consulting methodologies with agency crafting. Given the high potential, it’s time to start building your retail media network, here’s why.
5 reasons why retailers should set up their retail media network.
RMN provides a new and very profitable revenue stream. “We’re talking about a new revenue stream with a margin between 60-90%, so it’s huge,” says Cacau Lima, Business Consulting Manager for the Business.Monks in São Paulo. Just look at Amazon Ads—in 2021, it reached over $31b in revenue, which is nearly 5% of Amazon’s total revenue. Additionally, RMN has a huge impact on the bottom line, with Onsite Campaigns yielding up to 90% of EBITDA.
Advertisers want clear-cut solutions. Digital marketing is all about measuring the impact in sales. Though brands can measure clicks and impressions, the bottom line impact has always been estimated. With RMN, however, advertisers have the ability to measure bottom line conversion and optimize their media spend based on the increase in sales.
This solution is growing really fast. Today, $1 in every $6 is spent on media networks, and in about two years, it is projected to represent 20% of all digital media spend, according to Insider Intelligence. Currently, 82% of CPGs have already invested in Amazon Ads, while only 39% has invested in the second biggest retailer. This shows us that there are huge opportunities to increase investments in RMN.
It’s all about the data. Since third-party cookies have crumbled, RMN is the sweet treat that both retailers and advertisers need. Through ad monetization with RMN, retailers can gain new insights into their customers’ behavior and interests, elevate their first-party data strategy, and engage audiences by giving relevant recommendations that suit their needs. As for advertisers, they can access the retailer’s precious first-party data and gather important information.
We’re in the era of Everywhere Commerce. As CX and brand experiences become ever bigger and better, it’s crucial for advertisers to have control over how to engage with their consumers in every digital touchpoint. RMN ultimately creates the space and opportunities for advertisers to do so. On top of that, this business solution is beneficial to retailers, advertisers and consumers alike. “Between brand awareness and conversion, there’s typically a messy middle. RMN creates a one-stop shop, allowing customers to find a brand, get to know its history, and then convert in one go,” says Galera.
Translating skills into solutions.
“In order to solve complex problems, we need to be able to speak different languages—that of media, social, data, and so on. So, we’ve built a team that can speak all these languages by mixing experts from different professional fields, who together give shape to an unbelievable diversity of mindset and innovative thinking,” says Helena Curado, VP Business Consulting LATAM, Media.Monks.
To secure future success in this space, businesses—both retailers and brands—need to adapt to the ever-changing landscapes of commerce and consumer behavior, and it’s best to do it sooner than later. Taking the leap can be scary, but just take a look at the numbers—they show it will be worth it.
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