Retail media networks – the future of digital advertising

Building strong relationships with key partners to create a robust retail media network ensures you continue to deliver enhanced value to your customers and brand partners.

According to McKinsey, retail media networks are currently worth $45 billion and are projected to reach $100 billion in three years – making them the next big thing in advertising.

This rapid shift is transforming how brands interact with consumers and how retailers generate new revenue streams by monetizing their shopper data. But what are these networks and what’s fueling their growth?

What is a retail media network?

A retail media network is an advertising platform managed by a retailer to manage its ad inventory and control the placement of ads from various brands across its owned channels (digital, in-store, etc.) and other paid media channels. This includes ads and videos on its website, app, and in-store digital displays and banners.

These networks are made up of three main components: the advertiser (the brand or media buyer), the publisher (the retailer owning the digital and physical points of purchase), and a technology platform that connects them.

Fueling retail media networks

There are several factors currently driving the growth of retail media networks. These are:

• The rise of ecommerce – the shift to online shopping has given retailers access to a wealth of first-party data, including consumer purchase behaviors, preferences, and demographics. This enables them to target consumers and create new revenue streams by monetizing their advertising – all while reducing spend
• Cookie deprecation and the need for first-party data – with Google’s deprecation of third-party cookies, brands are seeking data collection and targeting alternatives. Retailers, armed with extensive first-party customer data, are well-positioned to fill this gap, which encourages them to collaborate closely with retail media networks to create more personalized advertising
• The disruption of traditional channels – traditional advertising channels, such as TV, have been shrinking for several years, and recent declines in ad revenues for established platforms like Meta and Google signal significant disruption in the rapidly changing advertising ecosystem. However, retail media networks provide brands with the ability to display ads to high-intent consumers closer to the point of purchase, which helps increase conversion rates
• The presence of lucrative margins – the prospect of setting up a retail media business is highly lucrative for retailers as it can significantly impact their profitability. For example, Amazon’s advertising revenues grew to $46.9 billion in 2023, an increase of over 24% compared to the previous year
• The rise of non-endemic advertisers – beyond traditional retail brands like CPGs, non-endemic brands are also benefiting from retail media networks. Walmart Connect, Walmart’s ad platform, has started offering offsite media to brands that do not sell at Walmart but offer complementary products and services. This approach positively impacts businesses outside of the retail sector such as automotive, entertainment, financial services, fast-food, and travel providers.

Collaboration builds successful retail media networks

In conclusion, while the potential of retail media networks is immense, it’s still very early days. Retailers need to build an entire ecosystem of capabilities from media operating models and streamlined workflows to the right partnerships with agencies, all while providing a personalized experience for shoppers and enhanced campaign performance for advertisers’ retail media spend.

Even with a robust process and advanced technology, scaling media planning, activating many channels simultaneously, and measuring across multiple advertisers seamlessly remains challenging for many retailers. The increasing deployment of Gen AI and intelligent automation solutions can help accelerate speed to market for campaign activations and provide tangible results for brands and retailers.

Building a robust and successful retail media network is a journey. Nurturing strong relationships with key partners is an effective way of ensuring you continue to deliver enhanced value to your customers and brand partners.

To learn how Capgemini’s Connected Marketing Operations is helping Albertson’s Media Collective leverage intelligent process automation and Gen AI to create ad formats, bolster media planning capabilities, and build precise audience segmentation, contact: abha.singh@capgemini.com or isha.b.gupta@capgemini.com