If any advertising trend has been stealing the spotlight lately, it’s retail media networks (RMNs), the rapidly growing channel that has given all manner of retailers a lucrative opportunity to enter the ad business. And “lucrative” may be an understatement: In recent years, RMNs have generated tens of billions of dollars for retailers globally, and they are poised to continue to see dramatic revenue growth.

Below, we’ve broken down some of the need-to-know basics of the booming business that is retail media networks.

1. What is a retail media network, anyway?

Historically, most retailers have acted solely as media buyers, snapping up ad inventory to hawk their wares and services. But over the past decade, both online retailers such as Amazon, and traditional big-box retailers including Walmart and Target, have started playing the role of ad seller, giving outside marketers the opportunity to advertise on their websites, apps and other owned media properties. (Amazon launched the first major RMN in 2012; Walmart and Target followed in, respectively, 2015 and 2016.)

In many ways, retail media networks are a win-win for both parties: Retailers are raking in cash by offering ad space that’s often higher-margin than the products they sell to consumers, and marketers get to take advantage of the RMNs’ unparalleled first-party data and comprehensive analytics systems — while also reaching shopping-minded consumers where they are, so to speak.

2. Retail media growth is on a tear

Retail media networks have exploded recently in terms of scale, saturation and revenue. Research company Forrester forecast that U.S. retailers would collectively sell about $40 billion worth of their own advertising inventory in 2022, up sharply from $29 billion in 2021.

And a recent report from WPP’s GroupM suggested that global retail media spending was set to top $100 billion by the end of 2022, representing a 15% increase over 2021. Additionally, the firm found that retail media networks currently account for nearly 11% of the world’s total ad spend.

3. An increasing number of retailers are getting in on the action

RMNs are now a well-established channel that bring in more than $100 million per year for at least a quarter of the retailers that operate them, Epsilon reported at the end of 2021. With revenue that robust, coupled with profit margins that can be as high as 70%, it’s hardly a surprise that more and more retailers are clamoring to launch RMNs of their own. In fact, Merkle Co., a performance marketing agency owned by Dentsu, found in a 2021 study that a new retail media network is created every one to two months on average.

Beyond Amazon, Walmart and Target, high-profile retailers that have entered the RMN space in the U.S. include: mass-market chains such as Costco, Sam’s Club and Dollar Tree; specialized retailers including AutoZone, Lowe’s and Petco; and grocers including Albertsons, Kroger and H-E-B. In short, virtually any advertiser — regardless of vertical — is now likely to find a relevant RMN that fits their specific niche.

4. The available consumer data is second to none

One of the factors that makes retail media networks so attractive to marketers is the wealth of customer data — including zero-party data (often through loyalty programs) and first-party data — that many retail operators have access to, and the ability that data gives marketers to hyper-target. RMNs offer marketers a sort of golden ticket, bundling comprehensive knowledge about their audiences’ demographics and spending habits with advertising inventory. Then, either working with their own insights or with a third-party analytics platform, RMNs can offer clients a full breakdown of how their ads performed.

“Leveraging first-party data from our retail media network partners allows us to break the tug-of-war between volume and efficiency that most digital marketing tactics encounter, and improve both sides of the equation,” explained Blake Kidd, director of search and marketplaces with Quad’s digital agency Rise Interactive. “Any digital advertiser ought to take notice of these game-changers, whether or not they sell on a retail media network.”

5. Retailers’ ad offerings are expanding

Retail media networks have historically operated with fairly straightforward offerings: website banner ads, embedded content in an email blast, and so on. But increasingly, as retailers compete for marketers’ ad dollars, they’re rolling out additional ad formats and opportunities such as shoppable livestreams and in-store digital video and audio.

As RMN operators ramp up their offerings, many are also simultaneously working to streamline the buying process. Target’s Roundel, for example, offers programmatic advertising options that let marketers assemble their own target audiences based on prior purchase behavior.

The bottom line

The explosive growth of retail media networks over the past 10 years has transformed the advertising landscape. As RMNs expand their offerings — and as more retailers enter the space — the opportunities for advertisers to hyper-target consumers will only continue to grow.

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