Since Amazon launched its retail media ad network in 2012, several online retailers have gone on to launch their own ad networks. This emerging business model is proving to be a lucrative revenue stream for online retail businesses.
While a demand-side platform, a programmatic advertising format allows advertisers to bid on the inventory of a wide range of publishers, retail media ad networks allow advertisers to only bid for the inventory of that specific online retail platform.
Essentially, online retailers are monetizing the online traffic on their platforms through their in-house retail media ad networks.
With so many online retailers pursuing this business model, the key to success lies in their ability to deliver a robust operational model to partner brands.
In March 2022, Insider Intelligence and eMarketer released The Retail Media Networks Perception Benchmark 2022 report, in which a mix of digital ad buyers evaluated the top 11 retail media networks in the US on 13 key attributes.
A total of 145 US advertising agencies and consumer goods advertisers in multiple product categories - from grocery, household products, and consumer electronics to home furnishings, participated in the B2B survey and rated the retail networks on a 5-point scale.
The list of retail media networks comprised Amazon Ads, Kroger Precision Marketing, Best Buy Ads, Costco Wholesale, Instacart Ads, eBay Ads, The Home Depot Retail Media+, Macy’s Media Network, Roundel (Target), Walmart Connect, and Wayfair Media Solutions.
The Value Proposition for Brands
Today, partner brands leverage retail media ad networks not only to sell products but also to drive other outcomes. These include raising brand awareness, introducing new products and campaigns, etc.
The main draw is the opportunity to reach consumers where they are already present. Additionally, brands are able to capture real-time first-party data, which enables them to be more targeted in their consumer campaigns.
The sheer variety of digital advertising inventory on retail media ad networks is attractive to digital advertisers. These include a spectrum of opportunities such as video marketing, web interstitials, displays, search ads, and influencer marketing.
With retail media ad networks investing in building strong operational models, ad buyers are able to manage and measure campaigns through superior front-end and back-end interfaces that are on par with programmatic advertising models.
The Top 3 Questions
The Retail Media Networks Perception Benchmark 2022 report aimed to answer 3 key questions:
- How important are retail media networks’ various capabilities, offerings, and attributes to advertisers?
- What are advertisers’ perceptions of specific retail media networks’ attributes?
- How do retail media networks rank according to these attributes?
The Top 4 Pillars of Retail Media Networks
The survey invited participating businesses to rate the retailers on four core pillars as follows:
- Traffic: This pillar explores whether consumers visiting the retail platforms meet the advertisers' marketing objectives and drive sales.
- First-Party Data: Advertisers were invited to judge the quality of first-party data accessible on the platforms, as well as the insights available.
- Targeting and Measurement: This pillar addresses retailers’ ability to reach specific consumer audiences and measure the impact of ad exposure
- Platform Experience: This pillar comprises the overall platform experience for brands and digital advertisers, from the variety of formats available to ease of use.
The 13 Attributes of a Successful Retail Media Network
Each pillar is further divided to encompass multiple attributes that are important in the context of commerce advertising. The results reflected that the highest web traffic is not the only parameter that delivers value for digital advertisers.
Here is a list of the 13 attributes:
- Traffic quality
- Traffic scale
- In-store/omnichannel sales data
- Audience targeting capabilities
- First-party consumer insights data
- Return on ad spending (ROAS)
- Reporting metrics/key performance indicators (KPIs)
- Ad relevance
- Ease of use
- Closed-loop sales attribution
- Ad load
- Variety of available ad formats
- Off-site targeting capability
While the importance of parameters varies across advertisers, traffic scale did emerge as the most important attribute for digital advertisers.
And the Winners Were...
Based on the survey findings, online retailers were ranked as follows:
- Best Buy
- Home Depot
- Walmart Target
eBay emerging as a winner surprised the digital advertising community. Here's a deeper look at the top 4 retailers in the lead:
The Top-Ranking Retailers
- Though Amazon ranked first in terms of traffic scale, it ranked fourth in first-party data, and this pulled down its overall rankings to the second spot.
- Even though fewer advertisers bought ad space on eBay, the experience was top-notch. Hence, eBay ranked high on parameters like platform experience, first-party data, and targeting and measurement.
- Macy’s, which gained the third position, led on two attributes, i.e., off-site targeting capabilities and closed-loop attribution.
- Best Buy, which emerged in fourth place, was at the top spot for in-store/omnichannel sales data.
- The traffic scale ranked highest in terms of priorities for most digital advertisers. However, categories like consumer electronics, home furnishings/decor, and home did not rate as high since they place a premium on quality, not volume.
- Interestingly, attributes like in-store/omnichannel sales data, audience targeting capability, and first-party consumer insights data ranked much higher for digital advertisers than return on ad spending (ROAS).
- The quality of first-party data and the insights derived from it proved to be a major value driver for advertisers.
- Advertisers in the home furnishings and decor category ranked first-party consumer insights data as the most important attribute. Brands in this category are keen to understand consumer behaviors and aspirations and build strategies to drive purchases of higher ticket sizes.
- Advertisers seek a superior overall platform experience, which includes enabling easy back-end management, execution, and measurability of campaigns, as well as in-depth real-time insights that help them improve consumer targeting.
As the retail media ad networks space gets more competitive, digital advertisers will have more options to choose from.
Relevance to the category, traffic quality as well as the quality of first-party data, among other parameters, will nudge advertisers to choose one or two retail networks over others.
Retailers will need to make more investments in innovating and strengthening their models, while digital advertisers experiment and get a better understanding of what attributes are most important and which retailers can deliver on them.