Retail Media Networks: What Are They, and How Do They Work?
In the rapidly evolving world of digital marketing, retail media networks continue to rise in prominence. But what are retail media networks, and how can you ensure you’re making the most of them?
If you have ever shopped in person or online, you have interacted with some form of retail media. In-store, it may have been an in-aisle coupon dispenser – you remember those, right? Online, it takes the shape of sponsored display on your screen promoting a brand or a specific product. Whether in-store or online, retail media is designed to hook consumers near the point of purchase to convert a sale, and overall, it’s quite successful.
What is Retail Media?
Simply put, retail media is advertising products or brands at or near the point of purchase. Before ecommerce, retail media presented itself (and still does) as end-cap displays, sampling tables, in-aisle coupons, and more in physical stores.
But in 2012, the folks at Amazon took what we knew about in-store retail media and applied it to the digital world, creating the first retail media network. When we talk about retail media today, we are typically referring to banner and display ads found on a retailer’s store site or mobile app, and it’s expected to account for 25% of total digital media spending by 2026.
The Pandemic’s Effect on Retail Media
There is no denying that the COVID-19 pandemic reshaped consumer behavior. As we slowly ease into a post-pandemic world, you can expect pandemic shopping behavior to stick around. Even with shoppers heading back into stores, Bazaarvoice reports that 64% use a hybrid in-store and online shopping method, while another 30% globally still shop online at least once per week, making investing in retail media just as important as other traditional advertising levers.
All in all, retail media allows brands to buy digital “real estate” on a retailer’s site to get their product(s) in front of shoppers.
How Does Retail Media work?
Brands can use retail media to advertise themselves or their products on their retailers’ sites through native (search) or display ads. Every retail media network is different, but you can count on most of them to offer sponsored products and sponsored display ad types to promote a brand and its products. Sponsored products typically appear when a shopper searches for something, and the ad will show alongside other products with a small “sponsored” sign indicating that it is an advertised product.
Sponsored display ads are usually banner ads that can show up on a homepage or product detail page.
In addition, some retail media networks (like Amazon’s demand-side platform (DSP)) allow other types of verticals (such as financial services) to advertise their service to the retailer’s audience. For example, while scrolling on Amazon, you may see a display ad advertising a bank offer.
Why are Retail Media Networks Important?
Besides the obvious benefit of increased exposure, retail media has a bountiful list of benefits for brands who choose to utilize retail media in their marketing strategy.
First-Party Data + Personalization:
As we venture into a cookieless world, advertisers are looking for ways to get in front of their target audience based on actual consumer behavior. Retail media networks can offer this data because the purchases come directly from their platform. This first-party data is much more valuable than third-party cookies because it’s based on actual consumer behavior and purchases. Not only does this data allow brands to target the right audience, but it also opens the door for more personalized targeted ads.
Relevance + Timing
Because of its nature, advertising through retail media networks allows brands to target their audience while they are already shopping. Shoppers are more likely to convert to the ads shown within their shopping experience (versus just seeing an ad while scrolling through social media) because they are already searching for products to buy.
Advertising with retail media networks paints brands a clear picture of how their ads perform because all behavior is tracked within the retail media network’s platform. Brands can use this data to fine-tune their strategy to make the most significant impact on ad revenue by allocating budget to the campaigns that perform the strongest against their KPIs.
By now, you should have a basic understanding of what retail media is, how it works, and the most significant benefits of utilizing it. While retail media got its biggest boom over the last few years thanks to the global pandemic, it’s never too late to hop on board. If you’re curious about how to get started with retail media or are ready to dive in completely, reach out to us today! We’d love to hear from you and are always here to help.
Tori is an Account Coordinator at Adlucent. She is a data-driven marketing professional with years of experience across social and retail media and is passionate about helping businesses thrive in the digital landscape.
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