Why Retail Media Networks Are at an Inflection Point
Retail media networks (RMNs) are garnering big buzz and, in some cases, big bucks. Consulting firm McKinsey, for example, projects that RMNs will rack up $100 billion in advertising by 2027.
While brands and retailers are investigating and investing in these technologies to target consumers, a new survey from Inmar Intelligence and Ascendant Network shows that there are some growing pains accompanying the growth potential with these technologies. For example, even as spending on retail media leaped 50% in the fourth quarter of 2023, the line items around them aren't always clear.
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“There are a lot of topics around RMNs, and there is a huge one around where the money will come from,” Leah Logan, general manager of retail media at Inmar Intelligence, told Progressive Grocer in a recent interview. “I think we all believe in the growth of RMNs, but there are mixed opinions on where it will be budgeted.” In some cases, she adds, investment could come from a national media budget, and in others, monies could be taken from trade budgets or shopper budgets.
On that point, the report surmises that some of the money will come from organic growth in digital spend, a shift from other segments like traditional print media, linear TV and less effective digital media efforts. The allocation of trade dollars may move around a bit to help shore up retail media efforts.
Wherever budgets land, it’s clear that retailers and CPGs see value in RMNs. Fielded last fall among RMN general managers and CMOs at CPGs, the survey found that many drivers are fueling the pursuit of RMNs. More than half of those polled (55%) said that the ability reach new or incremental audiences is the main reason for investing in such technologies, followed by the ability to leverage retailers’ first-party data (52%), the strong performance of RMNs (48%), access to highly engaged audiences at the point of sale (45%) and the ability to leverage customer data and knowledge (45%).
What’s Next for RMNs?
Respondents also see value of RMNs across their business, with omnichannel a focus for brand advertisers and RMNs as they augment existing digital initiatives through in-store advertising. According to Logan, many of those surveyed frequently mentioned in-store as a big push, even if it is aspirational at this point. “In store is being looked at as part of RMN channels – to monetize all of the potential impressions in the store,” she said.
Logan underscored the importance of engagement across channels to help advertisers and retailers meet their goals. “How can we create more relevant and authentic connections? One of the things we can do is to integrate creator content in retail media creative," she says, noting that Inmar has worked on such projects with Walmart and other retailers. “More and more, RMNs are looking at creative as a differentiator. And it’s not saying, here is a set of ads, let’s pump them out on every channel we can. There is a need to talk to people in dynamic ways with differentiated creative.”
Another major inflection point in the current and future use of RMNs is tied to metrics. According to the research, advertisers indicated a need for improved transparency and measurement capabilities around ROI. “These conversations have become connected. As retail media revenue grows, the goals grow for the retailer,” Logan pointed out. “The decisions are more contemplated with the lens of ‘Where will I get the greatest return, and then how do I compare retail media networks with each other?’”
She continued, “I’d like to see more connection between overarching retail KPIs – what are your goals and strengths, whether it’s driving purchase frequency or new households, and connecting all of those levers together.”
Open to Success
Ultimately, the report and Logan conclude, collaboration is integral to the ROI in RMNs. “To create win-win-win situations, it takes open lines of communication and partnership. For a long time, I felt there were walled gardens and, but some of the barriers are breaking down,” Logan declared.
The full Inmar/Ascendant report is available online
