Hardly a day goes by, or so it seems, without a brand announcing it is setting up its own media network. From Uber to Netflix, consumer-facing businesses are creating platforms that allow other brands to advertise across their websites, apps, and social channels, informed by their first-party customer data.  

And retailers are leading the charge in this new media age. Retail media networks, or RMNs, are expanding rapidly, with Group M forecasting global spend will reach $160 billion in five years’ time, up from $101 billion in 2022. RMNs are popular not just because they allow brands to reach audiences with relevant messaging, but because potential customers can be engaged when they are in buying mode. According to our recent report, Beyond the Metaverse: CX Predictions for 2023, 55% of businesses believe RMNs deliver higher conversion rates because ads appear when consumers are actively shopping and willing to spend. 

RMNs aren’t just growing, they’re evolving too. Originally set up for advertising on ecommerce sites, many now allow off-network targeting, with audiences distributed to social channels or demand-side platforms for activation. RMNs are also opening up to non-endemic brands that don’t sell through the retailer but whose products or services are a good fit for its audience.   

So the future looks rosy for RMNs. But there is one thing holding back development, and that’s a disconnect between the retailers standing up these networks and the brands and agencies advertising across them. Both sides have challenges to overcome, and both can have unrealistic expectations of the other, but as the real power of RMNs is at the intersection between these two sides they need to continue refining collaboration models. 

Now is the time for retailers and advertisers to get their houses in order, understand each others’ position, and work collaboratively to create more win-win situations that realize the promise of retail media.           

Advertisers need to understand the purpose of RMNs 

There’s a common misconception among advertisers that the purpose of RMNs is data sharing. CPG brands and OEMs that sell through retail franchises generally have little visibility into who buys their products, because the retailer owns the customer relationship. Put simply, Albertsons knows I live in a Kraft Macaroni & Cheese household, but Kraft has no idea.  

When brands approach an RMN, the hope is that the retailer will hand over this conversion behavior data. But RMNs – even if messaged this way – were never intended as data sharing arrangements. And very few retail franchises are going to provide suppliers with customer data to use in their own data source. Doing so could quickly undermine the retailer’s position in the buying chain, with suppliers going direct to the consumer and cutting out the middleman.

Let’s look at how data sharing works inside an RMN. Transaction data is placed in a privacy-conscious analytics environment purely for the purpose of marketing and media engagement. Retailers, advertisers, and agencies can use data to identify brand loyalists, expose them to media, and measure the effectiveness of that media. They can gain much-needed transparency into the customer base and buying behavior, and can target individuals and households with recommendations, repeat purchases, and special offers. But only within the retailer’s ecosystem. 

Advertisers must understand that, while RMNs are an incredibly powerful mechanism for reaching engaged audiences, they are also inherently self-serving. Which doesn’t necessarily mean that RMNs are all about monetization. The well-established Walmart Connect network, for instance, has always stayed true to its brand DNA. Its purpose wasn’t to generate additional data monetization revenue, but to drive higher sales through the same or lower brand marketing spend (“efficiency”) and to lower costs across the retail franchise by encouraging more effective buying behavior.

New RMNs are continually emerging as retailers accept that media networks are the future. But even these newer networks are unlikely to give away their first-party data. Advertisers can (and should) work closely with RMNs to make the most of the valuable insights they provide, but they can’t expect them to part with valuable customer data for use inside of advertiser managed ecosystems. 

Retailers must consider the needs of advertisers 

So what do advertisers want from RMNs? Largely, the same thing retailers want! And that’s better marketing and media efficiency that drives brand loyalty and higher revenues. 

Top of mind right now is probably the ability to reach audiences with relevant, personalized experiences in a world where the cookie’s days are numbered. Three-quarters (75%) of the businesses we spoke to for our CX trends report believe the end of third-party cookies will make reaching audiences harder.  

Equally important is the ability to do closed-loop measurement within the network. As discussed earlier, brands that sell through retailers have limited access to conversion data, and the ability to calibrate an engagement to a brand loyalist is really powerful. It means brands can use media more effectively and either save dollars or spend the same to drive better results.

But, while the above capabilities are exciting, by far the biggest thing advertisers need from RMNs is scale. And scale is an area where many of the newer networks are struggling.

Advertisers appreciate the power of retail media. But if they have to stitch together four or five smaller networks just to get the scale they need? Well then it may become too complex for them to justify shifting budget to this emerging opportunity. As there is currently no integration between networks, advertisers can’t see person-level and household-level overlap, potentially leading to wasted spend or ad bombardment. And there’s limited market-level views to measure the halo effect of their investments. The transparency and efficiency promised by RMNs quickly becomes fragmentation and inefficiency as advertisers try to work across multiple networks that operate as individual entities.     

To reach a point where media planners are comfortable buying more inventory across even more RMNs, we need a level of integration. Creating the necessary scale will mean partnerships, alliances, and co-ops, where audiences can be de-duplicated at the person and household levels, and universal standards can be applied. 

When the two sides come together 

When retailers and brand advertisers work together, the results can be incredible. In fact, I recently had one of these WOW experiences.

I accepted a personalized invitation to sign up for the Walmart+ trial because it offered  a discount on ExxonMobil gas (among other things). I took the trial and, a few days later, I decided to try out the perk and chose an ExxonMobil station to fill up. When I pulled up to the pump and opened my Walmart app, it already knew I was at the station. All I had to do was verify the location, enter the pump number, fill up my tank, and drive away. The entire transaction was handled seamlessly, and my discount applied automatically, without me having to do a thing.   

For me this was a transformative experience. An example of how well-executed partnerships can drive customer satisfaction and loyalty for both brands. I got the right offer and a seamless experience, all underpinned by a connected ecosystem with the right tech and data. As an industry insider, I was even more impressed with the brands’ ability and willingness to connect complex systems to enable this experience. 

Media networks, whether in retail or other sectors, can unlock this incredible efficiency and value, but they need collaboration and an understanding of the challenges on both sides. Data owners and advertisers must listen to one another and work together to find solutions where everybody wins. The time to act is now – testing, learning, and collaborating while the market is still evolving. Wait another year and the opportunity to compete may have passed you by.

To learn more about how brands, retailers, and consumers feel about RMNs and the wider everything-is-an-ad-network trend, as well as the other trends shaping customer experience this year, check out our report, Beyond the Metaverse: CX Predictions for 2023.