The days of popular search engines like Google at the forefront of the online shopping experience are coming to an end. Currently, less than half of consumers start their online shopping journey using a search engine and instead turn to retail websites and social media to kickstart them. Right now Amazon dominates the online shopping market, with 61% of consumers indicating that their first online stop is Amazon. Of the roughly $41 billion spent advertising on retail media networks (RMNs) in 2022, Amazon garners $75% to 80%, but other retailers are growing their shares quickly. This year that spending is projected to grow by $10 billion and another $10 billion in 2024.
Retail Media – a mutually beneficial relationship
Further, many retail sites now display advertisements for products sold directly on that site. Target, Macy’s, Dick’s Sporting Goods, Home Depot, Wayfair, Staples, Sephora, and CVS are a few of many popular retailers who offer featured brands the opportunity to advertise directly on the retailer’s site.
This new and strengthened relationship between the brand and retailer is mutually beneficial. Brands can take advantage of retailer first-party data (which is always the most reliable form) and use this first-party data to best identify target audience segments. In addition to past purchase behavior and potentially previous searches, most retailers have loyalty programs that gather more data on their customers. With this information, brands can further fine-tune their customer targeting and ad placement. Advertisers have a greater opportunity to personalize their ads.
Separating yourself from the competition.
Because a majority of consumers start their product searches on retailer websites, brands need to be able to differentiate themselves from the immense collection of competitors. Advertising on RMNs can help brands achieve this differentiation because it is effective at all points of the purchase journey.
- Introducing the product into consideration when the consumer first reaches the website
- Further along the journey when the buyer has decided they want to make a purchase
RMNs offer the brands a closer relationship with the retailers, which creates positive impacts for offline marketing as well. Retailers directly benefit by generating revenue through advertising sales, at a much higher margin than product sales generate. This achieves the ultimate goal of increasing product sales for both retailers and brands.
Future of RMNs
RMNs are becoming more complex and sophisticated, expanding beyond online advertising into offsite display, CTV, or even out of home. Additionally, new entrants like Instacart, Uber, and Door Dash are moving into retail marketing. They can offer consumer targeting data across multiple stores. At the same time, many networks are just at the beginning of their learning curves. Some networks have developed their own technology in-house and others are relying on outside providers such as Criteo and The Trade Desk.
The following questions help brand advertisers address major factors critical to achieving the most effective RMN campaign:
- Which retail media network(s) will be the best fit for my product? Do I want to reach the widest audience, or do I want to place my ad on a niche site more compatible with my product category?
- How targeted do I want to be in terms of consumers? How much can I drill down into my target audience to find the most likely buyers? How advanced are the targeting capabilities of the network?
- Are there offline advertising opportunities related to online ones? Are there in-store promotional options
- What performance measurement capabilities does the RMN provide? Will I be able to measure the return on ad sales?
- Conversions? How are sales attributed?
We are here to help!
Marketsmith’s retail media gurus can help you address these questions and avoid the pitfalls to create a retail media plan that will deliver on your campaign goals. Contact us today to find out more.