How Retail Media Networks Pose Challenges To Brand-Customer Relationships

  • by , Op-Ed Contributor, March 9, 2023

Retail media networks are the digital channel du-jour, with revenue expected to hit $52 billion this year as brands look for ways to connect with online shoppers. While these channels represent a valuable opportunity to reach customers, their emergence fits within a long-standing trend of retailers taking over the consumer journey.

The shift to retailer control over the consumer relationship has happened over the course of decades where brand building investment has shifted to more short-term focused trade promotion and in-store activation. For instance, trade promotions now represent at least 70% of a CPG brand’s overall budget. The emergence of retail media networks as a viable advertising channel has only quickened the shift towards a retail “walled garden,” as it gives retailers another way to demand a higher share of the wallet and demand more investment from brands.

Previously, brands had power because they were creating the relationship with the consumer and their marketing was driving the consumer to purchase. A retailer was simply the “fulfillment center” for the consumer’s purchase of the brand. With every retailer looking to capitalize on the trend and compete with major players like Amazon and Walmart, advertisers must now engage with each of these channels to reach their customers. In fact,ANA research found that a majority of brands utilizing retail media networks are currently working with five or more different channels.



As a result, retailers have taken over the consumer relationship. They now have all the leverage and are the gatekeepers of the relationship. They own the data, and, as a result, they understand consumer behavior better than the brand owner. By engaging with these channels, brands have ceded control over the consumer relationship to retailers, losing control over their customer data and the technology to reach them. This also guarantees that more and more retailers will enter the fray to monetize demand for this data.

Beyond that, the proliferation of retail media channels has made it difficult for brands to fully understand where and how their dollars are being spent. Each channel has its own specific standards, meaning a certain amount of dollars might not go as far in one channel when compared to others. For example, the same type of advertisement might cost twice as much on Amazon as it would at Lowe’s or Kroger. For brands already questioning the value of their ad buys, going through a retail media network will only further muddy their visibility into ROI.

As brands look to balance their budgets in the current environment, where they’re shrinking instead of increasing, they can’t afford to blindly throw their dollars around. Since retail media networks are not currently part of traditional marketing mixes, brands are trusting that their investment in an unknown channel will pay off. There is a major risk here that can have a major impact on brand image should the investment backfire.

So, how can brands ensure that they are not hurting their long-term brand equity and are making the most of their investment?

To start, brands need to devise a plan that maximizes their spend on the channel. This can be accomplished by determining their target customers and the online channels they frequent. With that information, a brand can then decide whether it makes sense to invest in one retail media channel or to spread out their dollars across a number of retail networks.

At this point, it’s important that brands consider the tradeoffs between losing access to customer data and the technology needed to reach them. By investing in numerous networks, a brand risks losing ground long-term to these retailers– both data and dollars. Every time an incremental dollar goes to a retailer, the brand loses out.

Retail media networks have the power to be a valuable sales driver for brands. However, to maximize their investment, brands need to do their due diligence to ensure that they’re not ceding ground in the customer relationship to retailers. At the end of the day, whoever owns the data and technology will win the long game and own the customer journey.

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