2022 Is the Year of Retail Media Networks

There is an emerging – and important – trend on the horizon. Retail media networks are showing up as the future of retail.  What is a retail media network? It’s a component of a retailer’s website or app that gives outside advertisers access to its first-party customer data and channels. This allows brands to reach in-market consumers when they are in a purchasing mood. Retailers across all sectors – from Kroger to Dollar Tree, Best Buy and Lowes are launching their own advertising (and revenue-generating) platforms. In fact, business forecasters predict that US retail media networks will exceed $52 billion in ad sales by 2023.

Those kinds of numbers are generating a great deal of excitement within the retail community – it turns out that selling ads is more profitable than selling goods. In fact, retailers have been sharing the cost of advertising with their brand partners for some time now. In essence, cooperative advertising (Co-Op) is a marketing process whereby the retailer advertises a particular product (for example in a newspaper) but shares the cost of advertising with the supplier of the product.

As consumers shift to a digital spending model, however, retail media networks are becoming a hot new property in revenue-generating ad placement. And just as shelf space placement shapes consumer interest and purchasing decisions, 2022 has seen this insight extend to the online model, causing brand ad placement to be carefully deliberated in terms of value. This new model is important to retailers, considering that with the massive shift to online spending, they are struggling with lower margins that can be associated with digital sales. Retail media networks create opportunities to create incremental revenues to offset eroding margins.

This emerging marketing model comes at a time when other types of digital advertising have been negatively impacted by privacy changes and restrictions in organizations such as Google and Apple. Meta has estimated that these protocols cost FaceBook $10 billion worth of advertising revenue in 2021 – all because it has become much more difficult for these platforms to “track” the actions that their users are taking after seeing an ad. Here’s where retail media networks have an edge. Since customers purchase products directly from the retailers after seeing the retail media network ad, the retailers are able to practice “closed-loop marketing” in a way that’s unavailable to other advertising networks.

It’s clear that the retail media network model is driving the future of retail – and in order to do so successfully, they will need to evolve in certain ways:

  • As with all other consumer relationships, the shopper experience is key. A well-placed, compelling ad can be a powerful sales tool, while flooding shoppers with irrelevant results can have the opposite effect. Networks need to find the balance.
  • Today’s brands need to see a favorable return on ad spend (ROAS). Online retailers must continue to capture the metrics that demonstrate the value of this model.
  • Along with digital audiences, the interest of in-store buyers must be seized in order to realize growth. Considering that only 13.2% of all retail US sales are generated through e-commerce, it’s clear that retail media networks need to tap into the huge audience that still shops in brick-and-mortar stores.
  • Self-service can and should become a powerful component of this new marketing model – which will involve the provision of more comprehensive self-service interfaces and APIs for third-party tools.

Moving forward, it’s clear that integrating the services of BPO outsourcing companies can be a perfect starting point when looking to boost your e-commerce position and capture a lion’s share of the retail media network market. With a successful track record spanning twenty years, Anexa has emerged as one of the preferred BPO outsourcing companies for American firms – particularly in the exploding e-commerce arena. Specializing in bilingual services (English and Spanish), our skilled teams of agents take outsourcing to the next level with a commitment to support your business processes as we would our own. Anexa can provide your company with the opportunity to create and sustain meaningful customer relationships that drive your brand, while allowing you to focus on the core activities that strengthen your operations.

Have questions? Reach out today for information on how Anexa can support your business processes.