Why Retailers Can’t Afford to Ignore Media Networks

Over the last couple of years, retail media networks have acquired wide popularity in the modern business environment. The key players, such as Walmart Media Group and Amazon, have adopted progressive techniques to win the hearts of their customers. What about the rest? The marketplace is overcrowded, with companies of all sizes striving to master the new approach.

There are several reasons why today’s businesses are concerned with following the latest marketing trend so rigorously. First, old advertising methods that used to generate clients no longer work due to the changes in the privacy policy. Second, retailers that fall behind the schedule risk losing their positions in the competitive environment. Thus, companies cannot afford to remain passive in the face of changes.

What are retail media networks?

A retail media network (RMN) is an advertising platform that retailers place on the app, website, or another platform in their network. In other words, it’s a digitized version of in-store advertising, allowing consumers to see the ads on popular websites, such as Target and Macy’s.

RMN advertisements can be displayed on a plethora of pages:

  • Home page

  • Items’ specific features

  • Search

  • Category page

  • Product Detail Page

Such an approach allows business owners to maintain good contact with their potential buyers throughout all stages of the journey.

Any retailer who is serious about their business is the target audience for such networks.

Have a look at the companies using them on a regular basis:

  • Walmart

  • Instacart

  • Home Depot

  • Wayfair

  • Best Buy

  • CVS

  • Target

  • Kroger

  • eBay

As you can see, all market leaders currently count on RMNs due to significant changes in the main traffic sources. There has been a shift from in-store to online advertising, so IKEA’s paper catalog is no longer a part of the brilliant promotional strategy.

Today’s advertising activities should be based on retail digital marketing, and here is why:

  • RMN is a $560 billion industry.

  • 85% of consumer packaged goods will increase their expenditures with retail networks.

  • Non-seller brands advertise on the RMNs of 63% of retailers.

  • A conventional shopper program is used by 99% of retailers.

Business owners who master RMN will enjoy excellent conversion rates and a new retail revenue stream generated from enhanced customer experience. Those will be the new media moguls surfing on the waves created by the rise of e-commerce.

At the same time, businesses that fail to catch up with the latest online shopping trends will experience a considerable downside and might even cease to exist. Let’s dig deeper into the causes that have brought about such dramatic changes.

Retail media networks are growing fast

COVID-19 has facilitated online commerce development, boosting digital communications and Internet retail sales. Here are some statistics:

  1. Internet shopping grew by more than 21.9% in 2020, according to the National Retail Federation.

  2. In 2021, Internet shopping is predicted to expand by 18 to 23%.

  3. The industry's predicted improvements within the upcoming two years have been realized within the previous six months.

Nevertheless, the global pandemic is not the main reason why RMNs have made a sensation in the international business arena — it was just a catalyst for the inevitable change.

Of course, the necessity for contactless payments and delivery has created an increased demand for outstanding digital solutions, as well as the steady progress made by big-box shops, such as Target and Walmart that followed Amazon’s successful digital strategy.

However, there’s also a new reliance on first-party data for advertising caused by the “death” of the cookie. In the past, tracking user activity helped business owners to turn cookies into real customers. Today, however, the situation changed due to an increase in online privacy.

These updates will have a significant impact on the business cycle, creating shifts in loan calculation, content customization, etc. In other words, they will force numerous firms to tailor their business models to the new requirements.

How to cope with the change?

Companies providing online services are searching for methods to improve their customer experience. Many business owners firmly believe that contextual advertising is one of the best ways to deal with major transformations and retain leadership.

What’s good about it?

1. It resolves issues associated with brand safety and relevance for a particular audience.

2. It does not use cookies from a third party.

3. It ensures excellent customer service.

4. It relies on artificial intelligence.

Although contextual advertising is a truly effective way to acquire new customers, other formats can also assist you with fulfilling this goal. For instance, various native advertising solutions allow for improving the degree of personalization and engagement.

Those can be in-feed content blocks, sponsored and branded material, content suggestion widgets, etc., that are directly linked to search results. Try them out if you want to enhance the user experience and receive an impressive return on investment (ROI).

We’ve collected a few examples of native ads.

  1. Sponsored content

IBM on Atlantic is a classic example of a native ad with a “sponsor content” label, mostly matching Atlantic’s editorial and design style.

2. In-feed ads

Those are catchy messages that aim to make you click the link and go to the advertiser’s website. Here are some examples:

  • A 10-minute exercise that fully replaces an hourly workout.

  • The murder records of your city.

  • One short phrase that broke thousands of relationships.

3. Online video advertorials

Native video ads’ format is tailored to the platform where they are placed. Such an approach makes them look organic. Have a look at this commercial from HelloFresh made specifically for Facebook.

Native and contextual advertising are promising techniques to help your business move with the times.

Retailers need to adapt or fall behind

Retailers who adopt new RMN strategies quickly will benefit from the enhanced user experience, improved relationships with their stocked brands, and additional revenue streams.

For instance, Amazon has already established a dominant position (approximately $26 billion of revenue in 2021), while Kroger, Walmart, Target and other giants are doing their best to catch up.

It will be difficult for late-adopters to match the success of early-adopters who have already increased their revenue and are using retail media like a well-oiled machine.

When you combine the rise of e-commerce with the inevitably approaching cookie ban, retail media becomes the only reasonable solution. Of course, the RMN industry will mature and consolidate by the mid-late 2020s, and now, we are all witnessing the beginning of its rise.

Expected return for retailers on a retail media platform

Here are the stats to illustrate how retailers can benefit from using RMNs.

At CitrusAd, we never stop until we reach excellent results, such as:

  • 2.5% - average banner X CTR

  • 64% - average sponsored product conversion rate

  • 450% - average ROAS

  • 39% - average inventory fill*

*Based on the analysis performed involving 10 major RMN customers and including all search terms, such as “fresh,” “produce,” and “brand names” (which are typically low-saturation).

Prior to using the CitrusAd platform, a major retailer required 35 staff members to sell, traffic, and manually report on sponsored products and banner media offered on their website. Installing Citrus resulted in a 150% increase in suppliers and a reduction of 32 staff members to manage the media spend due to the self-serving nature of the Citrus system. This provided a 25% increase in revenue and an 85% increase in media revenue EBITDA.

Let’s compare advertising sales revenue before and after CitrusAd. Our client, a company producing biodegradable wipes, increased their market share at a retailer from 13% to 18% in just 13 days. There was an 18% increase in their in-store sales and a 40% increase in their total online sales.

Thus, don’t hesitate to empower your business with proven RMN solutions and progressive self-service technologies to maintain a high-margin ad revenue.