Retail media refers to any advertising or media that’s located near the point of sale (i.e., within a physical store or on an e-commerce platform). This could be a cardboard cutout in a grocery store, or a “suggested product” ad on Amazon.

RMNs allow retailers to monetize their customer data through large scale advertising. From Walgreens to Sam’s Club to Ulta, many of the largest retailers have recently announced and advanced their own retail media platform offerings.

RMNs range from in-house platforms with unique self-service capabilities to private marketplaces where data from multiple retailers is uniquely available to specific advertisers. Many of these advertisers are already longstanding retailer partners or suppliers, but others are digital natives that can provide a net-new revenue stream.

Self-service retail media networks

Self-service retail media networks allow brands to choose their own advertising campaign parameters—including location and audience attributes—based on an internal pricing algorithm.

For example, Albertsons Media Collective created its own self-service offering, and Walmart Connect’s partnership with The Trade Desk allows it to do the same.

According to Velez, over time, RMNs will continue to migrate toward more in-house and self-service models that aid both local and national advertisers. It’s more efficient for ad buyers as they get full control of their spend—including closed-loop reporting—while also allowing retailers to scale.

In the past, retailers were very hesitant to monetize their transaction and loyalty data, creating a gap in an advertiser’s ability to deterministically measure the efficacy of a campaign.

The market shift away from cookie-based audiences corresponds with retailers’ increasing comfort with using their first-party data for advertising. This creates a unique opportunity for retailers to become publishers, directly capturing more ad dollars through strategic data monetization via retail media networks. The result is a major uptick in the overall number of networks themselves, with several new networks created every year.

On many platforms, including Apple’s, marketers’ ability to track consumers via third-party cookies has already been diminished. In 2023, Google will follow in the footsteps of most other platforms. These changes create a higher emphasis on first-party customer data—both for the retailer and the advertiser—increasing the value of a retailer’s data monetization opportunities for their owned and operated properties.

Deterministic closed-loop measurement is the biggest perk driving the value of retail media networks compared to other digital advertising. RMNs can connect digital advertising campaigns to actual purchases at an individual level, which Google and Facebook can’t inherently offer without the retailer sending their transaction files to those third parties.

Another retail media network benefit is the retailer’s ability to bridge customer in-store shopping habits to their online purchasing patterns, offering another unique differentiation from other channels.

For example, as digital signage continues to grow within physical channels, retailers are striving to monetize those screens by using their first-party data assets. Many retailers are adding in-store digital signage as a media network channel option to their offering, expanding their ability to speak to customers at critical decision moments.

“How do I automate the sales of digital signage in my stores as part of a retail media network? How do I ensure consistent customer experiences in-store and online with signage in a way that’s intuitive for customers? These are questions clients will continue to ask,” Velez said.

The future of retail media is no longer about defining the value or creation of retail media networks—it’s about taking them to the next level through digital transformation.

How will retailers make their networks stand out in 2023 and beyond?

Facing a drop in brand loyalty after the emergence of COVID-19, consumer packaged goods (CPG) brands are looking for solutions to stand out to customers in any way they can.

While initially RMNs could stand out with the quantity of customers and traffic to their e-commerce sites, retail media quality is becoming the best way to lure in marketers.

Retailers like Ulta and Sam’s Club, with strong legacy loyalty programs that store years of high-value customer purchase data, can offer advertisers information to personalize ad placement and content.

“The digital ads brands were buying are not as effective anymore,” Velez said. “Third-party cookies have depreciated, and it’s going to get worse. If you build a media network, the revenue gain is amplified by reversing signal loss and creating more signal through additional impression opportunities with customers. The increased impressions improve customer understanding and make loyalty more effective.”

There are many different channels that retailers haven’t yet integrated into their networks, like digital signage, connected TV, Google, TikTok and many others.

“Many retailers are prioritizing on-site because of the ability to maintain control over their first-party audience data, creative and destination. However, when retailers run an off-site advertising campaign that drives more traffic back to their owned and operated properties, it increases their monetizable inventory and adds more signal into their customer identity graph,” Velez said.

Walmart recently partnered with Roku to offer TV commerce, or shoppable ads, on their programs. While this isn’t yet a major channel for retail media networks, it’s a future avenue that other retailers will soon follow—bringing more data to personalize the customer experience.

“Consumers are getting more and more demanding. They don’t have time to come in and browse around your site. They want things very specific to them,” said Sudip Mazumder, senior vice president and retail industry lead at Publicis Sapient.

Often, RMNs have not yet connected on-site and off-site audiences to programmatic demand-side platforms (DSPs). However, as retailers are increasing their self-service platform capabilities, some are considering opening a portion of their retail media inventory to programmatic buys. This means the process of buying ad space will be fully automated for some advertisers on most successful RMNs moving forward.

According to Mazumder, the gold standard after self-service will be AI and machine learning algorithms that can determine the “next best step” for consumers through ad recommendations.

So far, Amazon’s recommendation algorithm is the most advanced when it comes to personalization, and other successful retailers will continue to advance their platforms in this direction.

For over a decade, retailers outside of Amazon have slowly transitioned to in-house models to create networks with staying power instead of relying on third-party companies to run their networks. This gives retailers more control and capability to scale their networks for the future.

According to Velez, if you outsource your network to a third party, they don’t build out your internal capabilities, and it might put you in a hole when it comes to advanced functionality.

In the short term, outsourcing can help build, launch and operate retail media networks. As RMNs advance along the maturity model and become a core part of the business, retailers can think about decoupling from their outsourced relationship to own the entire end-to-end solution. Successful in-house integrated technology stacks and organizations can ensure that your personalized offers are synchronized with media network impressions across all customer touchpoints.

While in-store retail media has traditionally ranged from cardboard displays to video screens, RMNs are working to integrate interactive digital touch points to create a closed-loop omnichannel measurement system for networks.

These touchpoints range from interactive kiosks, Wi-Fi tracking, smart end caps or any type of physical ad unit that can connect to a customer profile. They allow retailers to track customer behavior and purchases through more interactive data exchanges and connect them to online purchases and profiles.

“Solving for identity in-store is still a challenge that retailers are striving to overcome. Even being able to match credit cards or other attributes with identity at the physical point of sale makes a huge difference,” Velez said.

Retail media networks are built on customer data, and retailers will continue to improve the quality of this data, specifically around commercial intent.

This effort will increase the value of advertising real estate for CPG companies and other marketers that are using RMN data to connect with their customers.

Retailers that don’t already have consolidated CDPs with 360-degree customer profiles will look to create them. Those that do will further integrate their data into a golden customer record and connect it to their retail media offerings. CDPs that have 360-degree customer profiles will have the data co-ops and technologies to future-proof against signal and cookie loss.

This is also an important opportunity to look at the connection between customer data and modern privacy, progressive consent, and preference management technology. This is critical to continuing to hold customer trust and stay compliant with the changing privacy and regulatory landscape.

RMNs will continue to evolve with trends through investing in their digital capabilities, especially as more networks enter a saturated market.