Retail Media Networks Are a Must for Today’s Retailers

Remember the days when brands only needed to advertise on a handful of TV channels, in print newspapers and magazines, and that was enough?

These were the primary media for brand building for generations. However, with the decline of print media and the explosion of streaming content providers for video entertainment, these channels are no longer enough, or particularly effective.

Now the most viewed television show pulls in approximately 10 million viewers, and top 10 shows may attract fewer than 5 million. Meanwhile, there are U.S. grocery retailers that have tens of million transactions daily. So, in this age of truncated attention spans and increasingly fragmented media, retailers and brands have discovered a relatively new and highly effective way of reaching shoppers — retail media networks.

Though approaches vary, the idea is simple enough: Consumer packaged goods (CPG) companies pay retailers to promote their products directly to their customers, leveraging information that stores have on past purchases.

For shoppers, this seamless shift has meant targeted deals on products that they enjoy — and perhaps a reason to favor certain retailers over others. Who doesn’t love a deal? Likewise, consumers have been introduced to new products that become household favorites, while also being reminded of staples. Perhaps it’s time to purchase dog food again, dear shopper.

For savvy retailers, retail media networks have become an essential way of communicating with shoppers closer to the point of purchase. In fact, I would argue that retail media networks are no longer optional for retailers. They’ve become absolutely necessary.

If you’ve been dragging your feet, now is the time to embrace both the present and the future. But first, here are some things you should know about retail media networks, or as we call them in the industry, RMNs.

What Retail Media Networks Are — and What They’re Not

Retail media networks are not all the same. They’re not simply digital advertisements on a website or app. Yes, that’s part of it. Shoppers might see a banner ad on whatever website they’re on for a product they’ve enjoyed in the past. They might see a promotion or a rebate pop up on an app.

However, the real magic happens in the store itself. Retail media networks are also the signage at the shelf, shelf blades, floor decals and window clings. So, it’s online, it’s on your phone, but it’s also the physical manifestation in-store. In fact, in-store signage significantly boosts the effectiveness of digital promotions.

Sampling is also an important part of retail media networks. Product demos are a great way to eliminate the risk of buyer’s remorse, particularly in inflationary times. If you can taste before you buy, you can know you love it before it goes in your cart. Customers love to find new favorites, and especially love deals on them!

Why They Matter

Of course, the largest retailers in the U.S. were the first in on retail media networks. And in just a few years, CPG companies — although initially reluctant — saw proof of their results. The return on investment on those marketing dollars improved significantly because the large retailers became very good at using consumer information in a responsible way to offer great deals.

Despite this run of success and proven results, many retailers remain on the sidelines — particularly smaller and midsized regional retailers. These retailers already lack the purchasing power of the largest retailers. If the largest retailers are also bringing in tens to hundreds of millions in alternative revenue from RMNs, these regional and midsized retailers must gain their fair share of RMN funding.

To them, I’d say: Now is the time to get off the bench and invest in retail media networks to drive more foot traffic to your stores and boost revenue.

CPG companies are on board, and they want to speak directly to your customers and bring them great deals to build their brands.

The numbers don’t lie: Globally, retail media spending is projected to reach $128.2 billion this year, and will overtake traditional TV in just a few years, according to Warc Media’s latest Global Ad Trends report.

Why RMNs Alone Aren't Enough

Here's where I pump the brakes just a little bit. The hype around retail media networks is justified: RMNs have become one of the primary profit drivers for retailers. However, with most of this new revenue from the biggest brands, retailers are also at risk of selling the same items as their competitor down the road and becoming more homogenous — or interchangeable.

We all know that differentiation is key. How do you differentiate if you’re selling all the same items? Do you discount price to where you’re not making as much money? Or are you able to complement your successful retail media network with private label offerings that shoppers simply cannot live without?

Winning retailers know that there’s no one solution in today’s marketplace.

This much is clear, though: Retail media networks are no passing fad. They’re here to stay. They’re now part of our daily lives. And there should only be one answer as to whether to dive into these waters — splash!

Gil Phipps is the senior vice president of global customer solutions at Advantage Solutions. He’s worked in grocery retail, consumer packaged goods and private brands for more than 30 years.