Will retail media networks live up to the hype?

Through a special arrangement, presented here for discussion is an excerpt of a current article from the blog of Nikki Baird, VP of strategy at Aptos. The article first appeared on Forbes.com.

With access to their customers’ purchase data and the ability to put brands in front of consumers right when they’re most willing to be influenced, retail media networks (RMNs) are not unsurprisingly growing like gangbusters.

The fast-track growth does face a few hurdles, however:

• Trade funds exchange: A Wakefield Research survey of consumer packaged goods (CPG) brands found 64 percent planning to increase their RMN spending in 2023, yet most are not spending incremental money on RMNs. Where does the money come from? Trade funds.
• The elephant in the room – Amazon: eMarketer estimates that in 2022 Amazon achieved a 76.9 percent share of retail digital media with faster growth than other major RMNs. Traditional (brick and mortar) retailers can fight back with their in-store and digital access offers, although it’s going to be an uphill climb. Piecing together shopper activity across online and stores is challenging enough to leverage internally.
• The upper limit of advertising inventory: According to Forrester’s “CMO Pulse Survey,” 45 percent of advertisers say their biggest RMN challenge is the number of RMNs they have to manage. Forty percent say it’s comparing the performance across RMNs. There is a finite market of retail media sites until someone figures out aggregation.
• The upper limit of advertisers: In the Wakefield survey, 53 percent of CPG brands were using RMNs before 2019, but only 11 percent planned to start in the future. RMNs will also only be good for brands carried by retailers.
• The upper limit of consumer receptivity: Offers served through RMNs are not personalized — they’re targeted. Serving an ad to someone who will never buy the product is annoying.
• An upper limit to the funnel: Wakefield’s study found two-thirds of CPG brands citing driving conversion as the most important objective of RMNs. Are messages around brand awareness relevant at RMNs’ stage of the purchase journey?
• Abuse: The Association of National Advertisers’ recently-published survey found 88 percent of CPG respondents feel somewhat or heavily influenced by retailers to advertise on their networks, with 42 percent questioning their value.

RMNs have value. But they need to be considered in the context of what they can do, not what everyone wishes they would do.

• Retail Media Networks Are Having A Moment But It Won’t Last — Forbes

• Wakefield - Specificity & Scale: The Future of RMNs Means Providing Both – Wakefield Research

• What you need to know about retail media in 5 charts – eMarketer/Inside Intelligence

• Retail Media Networks Are The Next Big Advertising Channel — Forbes