The rise of digital platforms and data has disrupted traditional advertising models. Retailers are now leveraging their vast customer data and digital properties to build their own media networks, presenting new opportunities for brands.

What is a Retail Media Network?

A retail media network refers to the media properties owned and operated by major retailers where they sell advertising space and sponsorship opportunities to consumer brands. These networks allow retailers to monetize the large audiences browsing and shopping on their websites and mobile applications.

The pioneer of retail media was Amazon with its Amazon Ad Solutions platform launched in 2014. Since then, retailers like Walmart, Target, Kroger and others have invested heavily in growing their own retail media networks. Some key aspects of retail media networks:

- Audience Data: Retailers have access to granular purchase histories and browsing behaviors of their customers giving them a unique understanding of purchasing habits and preferences.

- Integration with Shopping Experience: Ads run within the retailer's owned properties allow brands messaging to be directly contextual to the shopping experience.

- Performance Metrics: Retailers can offer robust advertisers' performance metrics like view-through conversions since they have visibility into online and offline purchases.

- Lower CPCs: Generally retail ad space comes at lower cost-per-click rates compared to search and social platforms due to lower campaign setup costs and ability to directly track ROI.

Growing Reach of Retail Media Networks

Over the past few years, retail media networks have expanded aggressively as retailers invest in growing their digital assets and monetization capabilities. According to eMarketer, retail media ad spending in the US will grow at a CAGR of 33% between 2020-2024 to reach $11.9 billion.

Walmart has emerged as the leader with its Walmart Media Group (WMG) which launched in 2020. WMG has quickly onboarded hundreds of brand partners and generated over $1 billion in revenue in its first year. Meanwhile, Target's advertising business has crossed a $1 billion valuation.

Retailers are expanding the scope of their media platforms beyond banners and native ads. For example, Kroger established a content studio to create branded video content for advertisers. Amazon has supercharged growth by opening its inventory to third party sellers, which now account for over half of its sales.

Brands are allocated significant shares of online ad budgets for retail media as they can effectively target relevant customers and directly measure return on ad spend. Grocery and drug store chains have also seen increased ad dollars as consumer packaged goods brands shift more dollars to performance channels as the space heats up.

Benefits of Retail Media for Brands

For consumer product brands, retail media provides an efficient way to reach in-market customers with a high intent to purchase in a brand safe, contextually relevant environment. Some of the key advantages include:

- Highly Targeted Audiences: Leveraging first party shopper data, brands can hyper-target ads to customers matching their ideal demographics, past purchases and browsing behaviors leading to better returns.

- Integration with Shopping Mission: Contextual ads distributed across owned retail properties ensure brand messages are in sync with customers' shopping needs and goals driving awareness as well as conversions.

- Omnichannel Attributions: Retailers can attribute both online and offline sales to ads, giving brands the ability to optimize spends across channels based on true impacts on total business.

- Performance Transparency: Ad performance metrics provided by retailers are standardized, allowing for apples-to-apples measurement and comparison of campaign ROI across initiatives.

- Better CPA/ROAS: On average, retail media delivers 25-50% lower CPA and 50-100% higher ROAS than search and social platforms for CPG brands.

- Scale: Large retail networks like Amazon, Walmart, Kroger provide national reach allowing brands to capitalize on broad as well as niche, local opportunities.

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