In 2022, advertisers are expected to increase their spend on retail media networks (RMNs) with retailers such as Amazon, Walmart, and Kroger. In fact, eMarketer predicts that spend on RMNs will increase by $10 billion, to $41.37 billion.
Some marketers have shied away from RMNs because they view them as fragmented.
But while it’s true that each retailer operates its own network, it’s also true that many RMNs offer expansive reach, combined with troves of first-party shopper data — making them an incredibly valuable tool for advertisers.
Let’s take a closer look at that premise.
Size and Data
While retailers got their start in advertising with lower-funnel performance ads, it’s important to understand that they’ve successfully expanded into brand-building.
With Amazon leading the way, RMNs offer several display formats, including OTT video.
What gives retailers the right to play in the brand-building space? That’s simple: Millions of real people visit their digital properties every day.
According to Statista, Amazon has more than 2.5 billion monthly visits, Walmart has 410 million, and Target, Best Buy, Home Depot and Lowes each has more than 100 million monthly visits. For comparison, the most-watched TV show, “Sunday Night Football” on NBC, averages 16 million viewers per week.
Combining the traffic with first-party shopper data is what makes RMNs especially effective. RMNs allow advertisers to target based on search terms, look-alike audiences, or even imported customer databases. This means that advertisers reach the right person, with a message that’s delivered at the right point in time.
But does it scale?
There is no solution for working with multiple RMNs simultaneously, which means they don’t offer scale in the way that other digital advertising solutions do. That was the promise of programmatic advertising: Spend your money in one place and reach your target consumer anywhere they go on the internet.
When people say that RMNs don’t offer scale, what they really mean is that advertisers may need to dedicate teams to work with individual RMNs.
According to Merkle, 86% of CPGs have a center of excellence dedicated to RMNs, and we believe that this investment will pay off. To see why, you need to focus on results rather than scalability.
First, let’s look at the effectiveness of programmatic advertising.
Marketers have spent the past decade listening to people on the sidelines tell them how wasteful and fraud-ridden programmatic advertising is. PwC recently reported that 70% of programmatic ad budgets never reach consumers.
While the problem is clear, the closest thing to a solution that has been recommended is to turn off digital advertising, as with the famous case of Uber turning off $100 million in programmatic ad spend and seeing no measurable decrease in performance.
But if your job is to do digital marketing, turning off digital media sounds more like another problem than a solution. Reallocating that ad spend elsewhere is a much more palatable solution.
Since many RMNs are easy-to-use, self-service platforms, organizations don’t need technical skillsets to understand the innerworkings of a DSP. They can shift their focus to campaign effectiveness and have employees with marketing skillsets partnering with analytics teams to work on RMNs.
The return on investment with RMNs will outpace that of programmatic, even when accounting for some increase in headcount to work with RMNs.
Of course, several RMNs are offering DSPs of their own. That’s an option worth investigating, but advertisers should be vigilant to ensure that these DSPs don’t end up having the same issues that we’ve seen with other programmatic networks. That means employing data scientists that can understand the data reported by the DSP at the most granular level.
Elevating the Marketing Conversation
RMNs also offer the opportunity to level up the conversations that digital marketers have with their leadership.
They can move from tracking impressions, clicks and video plays to tracking incremental revenue and new customer acquisitions. They can stitch together omnichannel customer journeys, tracking both online and in-store growth.
A company that identifies a new cohort that buys their products on Kroger.com that hadn’t bought their products in-store previously will draw positive attention from Wall Street.
As advertisers develop effective campaigns that leverage a retailer’s customer data, they will indeed acquire new customers and increase sales.
In short, RMNs will only grow in importance, and brands that learn to harness their power sooner rather than later will have a competitive edge.