As more and more consumers prioritize online shopping, major retailers are capitalizing on this trend by launching their own proprietory advertising platforms. Known as retail media networks, these platforms enable their partner brands to advertise via curated properties on their websites/ apps and a bouquet of newsletters, campaigns, and other digital properties.
Naturally, retail media networks have emerged as a lucrative means to drive a whole new revenue pipeline for retailers; partner brands view them as a more effective advertising platform than, say, traditional media publishers.
A premium opportunity for brands
Literally every action taken by a consumer on a retail website or app translates to a data point, and collectively, multiple data points reveal a lot about customer behavior, interests, and aspirations.
Traditionally, brands have advertised across a slew of digital publishers based on market audience fit and relevance. However, brands are now prioritizing programmatic advertising on retail media networks over third-party data-based models.
As more and more consumers shop online, retail media networks can offer real-time first-party data of captive audiences. Since customers log in using their email ids, phone numbers, and other details, that translates into more specific information on a customer's profile.
This data is extremely relevant for brands, as they're able to not only access shopping insights but also shape their communication and drive sales in a targeted manner via this digital advertising avenue.
Don't leave money on the table
Retailers are continuously looking to diversify their revenue streams. While retail media networks are emerging as a growing revenue stream, they are still a highly under-optimized revenue stream.
Retailers are leaving money on the table by not fully leveraging the scope of this commerce advertising revenue stream. They need to invest in getting the business model right, addressing scalability challenges early on, and also building operating platforms that offer data transparency.
These are some building blocks for retailers to put in place when growing their media business.
Build a comprehensive ad network
Shaping the offering to be diverse and specific will help retailers capitalize on the media business. A major focus should be on getting the value proposition right.
Retails must also gradually grow the number of channels available for brands to pick and choose based on budgets and the outcomes they are trying to drive.
For instance, giving brands the tools to build strong product pages, using video, images, and reviews, alongside the opportunity to advertise via newsletters, and campaigns, will drive more value for them and incentivize them to invest more in this avenue.
Create a strong operating model
The lesser time brands take to operate their inventory, the easier it is for them to update and use it in real-time. And retail success is literally based on the ability of thousands of retailer partner brands to be able to respond, simultaneously, in real-time to continuously evolving consumer behavior.
Building robust operating platforms with strong content management capabilities makes it easy for brands to view data, track metrics, and access merchandising opportunities, all at once. The success of a retailer's media business model also lies in the strength of the algorithm itself.
Ease of use is another key aspect for retailers to look into. Brands love to leverage demand-side platforms to get the most bang for their buck, and retailers must offer a competitive experience that replicates this convenience and value.
Strengthening these aspects early on will help retailers build a strong foundation for their media business success.
Solve challenges that come with scaling up
Scaling up efficiently has been a key issue faced by news publishers and one that is also replicated in retail media networks. Since retailers are new to this business, it may take them some time to understand the challenges involved.
Accepting that this is a whole new business is the first step towards paving the way for building efficiency as they scale up.
For example, trust is a core value when building consumer relationships. Monetising data comes with a certain responsibility, and retailers will need to establish data protocols on how they plan to assimilate and share data with advertisers in a way that does not violate consumer trust.
Balance control with the open market
A core challenge that retailers continue to face is how to monetize media inventory without completely losing control of their monetization potential. Traditional publishers invested in direct sales, and they also built operational capabilities.
However, retailers are taking a different approach and going the programmatic open market route. This means less investment in sales and operational capabilities while also enabling a faster time-to-market.
The risk with this approach is that it can lead to undercutting the retail inventory value and does not maximize CPMs received for each ad impression. It also exposes retailers to brand safety issues, which can have long-term repercussions on brand trust.
This is where automation with easy-to-deploy technology can play a role. Retailers must invest in an open-market tech stack, which will empower them to achieve their targets with lean sales and operations teams.
Establishing retail media networks is almost a natural progression for online retailers looking to diversify and build multiple revenue streams. Early investments are already paying rich dividends for retailers who have capitalized on this opportunity, and it is predicted that retail media networks are poised to grow rapidly in 2022.
According to a report, 74% of brands already have dedicated budgets for retail media networks, and over the years, these budgets are set to grow. More and more marketers today are studying retail media networks closely and looking to leverage them to reach potential consumers via relevant advertising.
The easier and more effective it is to use the retail media network platforms, the more likely partner brands will come back and keep leveraging them. This is not just another ad network for them.
The analytics they receive as part of the package is extremely attractive. However, when coupled alongside advertising opportunities and a shortened time-to-market life cycle, it becomes especially attractive to marketers looking to capitalize on higher Return on Investment opportunities.