Four Predictions for Retail Media Networks in 2023
As 2022 has come to a close, my team and I like to take some time to reflect on our learnings and what our focus will be in the new year. Over the past year, retail media networks (RMNs) have blown up and worked their way into the hearts of retailers, advertisers, and marketing services partners. Looking both back and ahead, I can say with absolute certainty that much of our efforts will be dedicated to helping our partners set up this technology.
In case you need a little refresher, retail media networks are advertising platforms established by retailers on their own digital platforms—it’s sort of like in-store advertising, but in digital format. This creates a new revenue stream for retailers, as RMNs enable them to monetize their first-party data through the launch of ad products. Essentially, it’s all about the data, as ad monetization with RMN allows retailers to gather new information on the behavior and interests of their customers, enhance their first-party data strategy, and engage with new audiences by meeting their specific needs. Ever since third-party cookies have started crumbling, RMNs have emerged as the sweet treat that both retailers and advertisers need—and the demand for this solution is rising at an incredibly fast pace.
The tried and tested RMN trend will continue to accelerate in the new year. Here are four developments that retailers, advertisers and digital marketing services partners alike need to prepare for.
RMNs go global. In short, every retailer around the globe is going to have a retail media network, if they don’t already—it’s simply becoming pure table stakes. What started in North America, with Amazon leading the charge, has been rubbing off on businesses in every other part of the world. I can guarantee that only a year or two from now, even small-scale regional retailers will have an RMN, whether that’s in Italy, Thailand or Argentina. Why? Because once the flame of a business trend has been ignited and fueled by a new, but proven economic paradigm, the fire simply has to spread. That said, it is important to note that all of this may seem like a scenario with no downsides, but there is a potential one: if RMNs are not executed well, retailers and advertisers run the risk of diminished customer experience. For this reason, many brands choose to team up with a partner that’s specialized in this technology.
Put creative differentiation at the core. Up until very recently, the game of retail media completely revolved around data and mathematics, with people and technology coming in to better execute what is essentially a quantitative effort. As such, RMNs allowed very little space for creativity. Now, however, we are seeing retailers such as Amazon move up the funnel and into the world where creativity truly matters: branding. When it comes to building brand awareness and bringing in new customers, data definitely counts—but it’s the creative that can make a real difference. So, while you still need the smartest people and the savviest technology to handle quantitative details, retail media is more and more a game of bringing in the right creative. Considering there’s so much more opportunity for creative differentiation, the brands that are best able to bridge data with creativity are the ones that will succeed.
Tailor unified real-time strategies. So far, most brands (and even some of their partners) have been deploying retail media networks per channel, which means that an advertiser’s budget and approach for Amazon may differ from its budget and approach for Walmart. In other words, they have been working in silos and optimizing within the lengths of each different platform. However, this is all about to change. In the near future, I believe brands will view retail media networks as interconnected advertising channels instead of a handful of unrelated platforms. With that, it will become more and more feasible for brands to build a single retail media strategy, which allows them to be more flexible and seamlessly move between different channels. In the same vein, they will start to use unified real-time optimization tactics to capitalize on arbitrage opportunities between various retail media networks. This essentially means that brands will take more of an active daytrading type of approach. While some parts of this process can be automated, many others will still require manual efforts and human intervention in the form of more centralized retail media teams—both at the side of advertisers and their partners.
Deliver dynamic in-real-life placements. As retail media networks—which are currently completely digital—expand, retailers will start to move ads from their online platforms to their offline spaces. For example, Amazon has announced that it will install more digital signage in its Whole Foods stores across the US and connect their DSP to their in-store screens. This will enable the retailer to use first-party data to dynamically serve ads in a previously analog framework and programmatically target consumers, thereby transforming the century-old concept of paid POS into an extension of digital advertising.
In short, dynamic IRL placements can help retailers and advertisers enhance their targeting. However, one issue with this approach is that it’s still based on backward-looking data. Simply put, ad placements are currently based on average demographic numbers. This means that a retailer doesn’t actually know who is in its store in real time. However, with Amazon’s Just Walk Out technology, where cameras and sensors follow customers throughout their entire in-store journey, retailers and advertisers will be able to gather aggregated data of everyone who’s in a particular store in real time. This technology may already be in use in Amazon Go stores, but I believe it will take a few more years before it can scale, especially considering its significant privacy concerns—so I’ll save this prediction for another time.
Teamwork to make the RMN dream work.
Over the last year, retail media networks have blown up and blown our minds. The impact of this technology is far-reaching and will only continue to expand in the coming years. Now, it’s up to retailers and advertisers to dive in and start monetizing their first-party data. As for my final piece of advice, make sure to team up with an experienced partner that can help you along the way—this will benefit every party involved.
Curious to learn more about retail media networks? Get in touch with our team via email@example.com.
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