Retail media networks and everything you need to know about them

The question of why retail media has grown to the size it has isn’t a complicated one to answer. In fact, it can be answered with a single word. Money.

Historically the profit margins in retail tend to be quite slim. Which means that even with billions in sales the profit tends to be in the millions—usually in the 3-4% range. With ad sales, however, the case is usually the opposite. Here the margin usually lies somewhere between 70% and 90%.

Take Walmart’s RMN, for instance. Walmart Connect, as it is called, is now responsible for 12% of the company’s total profits.  And it’s not just across the pond that retail media ad spend is growing. The same thing is happening in Europe, where the total retail media ad spend is expected to exceed €20 billion by 2026.

What is retail media advertising?

The term retail media refers to ads placed within a retail network which could include the retailer’s website, customers apps or digital screens in brick-and-mortar stores, to allow brands to promote their products directly through the retailer.

The primary difference between advertising through a retail media network and a more traditional line of advertising such as television, radio or online services, is that retail media advertising is enriched by the first party data collected by the retailer, and that they offer a more direct line towards customers than other media providers, simply because they are exposed closer to the moment of purchase.

Retail media vs traditional media properties

In essence, retail media is just another media property offer for brands to spend their money. But there are two key differences between retail and traditional media properties, and in both cases retail media comes out ahead, which may be why retail media ad spend is expected to grow to over $150 billion over the course of 2024.

Unlike traditional media properties, retailers have access to the customer’s purchase data, and in a world where cookies are no more, this data becomes a huge asset for brands as retailers use that data to guide advertisers towards a more effective ad spend.

Secondly, most retail media ad types sit on the retailer’s sites, in their apps and in their stores. This means that where traditional media placements such as Google Ads or television ads act as distraction during another activity, retail media advertisements tend to reach customers when they are in a shopping mindset.

And on top of that, RMNs can hit their target with much greater precision—”You’re looking for make-up? How about some skincare products to help round out your beauty routine?.”

You can find more retail media statistics in our overview of the state of retail media.

What is a retail media network?

A retail media network is the retailer's advertising platform. It is the collection different channels that brands can purchase ad placements on through the retailer in question. Exactly which channels and advertising formats a retail media network gives access to, depends on the retailer and the retail media network in question. 

For instance, a dedicated e-commerce retailer will not be offering in-store ad placements. On the other hand, a more traditional retailer with hundreds of brick-and-mortar stores may not be as focused on on-site web ads.

Here are a few examples of the different advertising formats retail media networks usually offer: 

• Ads and promotions through the retailer’s organic social media channels
• Ad placements through the retailer’s paid social media channels
• Ads and promotions through the retailer’s email newsletter
• Off-site web ads powered by the retailer’s first party data
• On-site web ads usually placed in the retailer’s webshop
• Ad placement on in-store screens
• In-store promotions and events
• Discount leaflet ad placements
• Games and offers through app
• Ad placements in app.

How to get started building a retail media network

With the benefits related to retail media you might be wondering what it would take to build your own retail media network. And to be frank, it doesn’t actually take a lot. Building a successful retail media network, on the other hand, can be quite difficult.

To help you we’ve collected a couple of tips on what to keep in mind during the first steps of your retail media journey.

1. Start small, then scale

Looking at the different offerings other RMNs have may leave you thinking that you should include everything from day one as well, but this is likely one of the quickest ways to set up your retail media network for failure.

Instead, focus on what you already do well as a retailer. 

Do you have a strong organic traffic to your website? Start with targeted banners or in-purchase suggestions.

Do you have a strong social media presence? Offer promotions as organic or paid posts to help boost brand awareness for your partners.

Or maybe you have a weaker online presence but a high number of stores spread out over the country? Then you could look into digital screens and in-store ad placements.

Once you’ve launched your first offering and are seeing interest from partner brands and results from their campaigns you can expand your offering. Either in collaboration with the brands, by reacting to what they want from you, or by going down the list of channels where your specific retail-chain is strong.

2. Technology and clean data is the key to success

While you’re probably not new to keeping your customer data clean, launching a media-agency, which is essentially what you are doing with a retail media network, requires a different kind of data.

You need to be aware of how many views, clicks, sales or sign-ups your advertisements are generating. Not only do you need this information for yourself, when you are pitching your retail media product to potential brand partners, the brands who subscribe to your retail media network also need this data to justify their retail media spend internally.

Now, this may not seem like a first priority when you launch your RMN, but a year or two down the line, you are going to be kicking yourself if your data cleanliness wasn’t established on day one.

3. Collaborate with the right partners

This is a tricky subject. Choosing which brands to allow onto your media space is actually a pretty big deal, especially if your specific brand of retail is a niche, such as beauty, fashion, health, DIY, home decor or something else.

There are two reasons this matters. 

First off, it’s got to do with the consumer. If your webshop, in-store screens or social media presence is suddenly flooded with irrelevant product suggestions, it will ruin the buying experience and could end up hurting your bottom line of the retail side of your business.

Secondly, brands in niche spaces such as beauty are usually very concerned with how their brand is perceived. They want their retail media ads to appear not just in the right place, but also surrounded by the right competitors and not just any and every product.

So, while the quicker route to get more brands to take advantage of your retail media network may seem to be allowing any brand with money to advertise, this may not be the best route for your RMN in the long run.

What do retailers need from their retail media network solutions?

Retail media as a concept is so young that it is impossible to say that the perfect solution has been invented yet, but most retailers agree that there are four key areas their retail media network needs to cover:

1. It needs to be an all-in-one platform. This not only makes it easier to manage but it is also easier for brands to buy into
2. It needs to be self-service to reduce the amount of manual tasks you put on your team
3. It needs to include real-time reporting. You need to know who is in the market and who just purchased
4. It needs to be customizable and flexible. What works for you today may not be the perfect fit tomorrow.