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You’re not imagining the influx of brand advertisements when buying groceries online at Target.com or seeing sponsored options in the search results when surfing Amazon Prime for a new bathing suit. Those are retail media networks (RMNs) at work.
New RMNs are popping up left and right every day. As of 2022, National Retail Federation (NRF) found that 9 of the top 10 retailers worldwide (by dollar revenue) offer media and advertising opportunities for brands, often promising the capability to target shoppers using full-funnel data they collect through their point-of-sale interactions.
RMNs present an opportunity for CMOs to boost brand awareness, drive conversion and increase revenue, especially those in the consumer goods space. In Gartner’s 2023 CMO Strategy and Spend Survey, consumer products CMOs allocated 7.4% of digital paid media budgets to retail media networks, affiliates and co-op advertising. The benefits of retail media such as first-party data sourcing, precision targeting and quantifiable ROI are apparent, supported by sufficient budget allocation to optimize conversion rates (see Figure 1). As new retail networks launch, more first-mover advantages will occur for brands that invest early and often in these new networks.
Figure 1. CPG Budget Growth Bounces Back
Concurrently, the rapid expansion of retailers launching retail media advertising networks requires CMOs to navigate many siloed systems to optimize media buys. Previously, retail media advertising only supported on-site sponsored search results to improve product page visibility on retailer websites. However, it has since expanded to include everything from social media to over-the-top (OTT) advertising of retailer websites.
Networks provide unique insights to brands based on consumer purchase history. Networks are highly valuable now due to recent privacy law restrictions, and the planned Google deprecation of third-party cookies makes for an uncertain digital media landscape. Retail media advertising has expanded outside of brands that only sell products on retailer websites, as other industries are able to target highly valuable retail customers with their own services.
CMOs must be the driving force to develop their organizations’ retail media advertising capabilities and strategy, especially as the need for differentiation continues as the market gets saturated. Prioritizing retailers, establishing internal team responsibilities and having proper agency support will enable retail media advertising to become a reliable growth channel.
Retailers are running toward RMNs, but challenges persist
