Reposted from WARC
Key considerations for advertisers when looking to partner with retail media networks:
- Retail media networks continue to evolve their offerings, increase access to data, and expand
targeting options.
- The development of multiple self-serve ad platforms across networks has made it necessary for
brands to weigh up where best to allocate budget.
Why It Matters
Understanding how to best leverage RMNs for a brand means considering the maturity curve and paying close
attention to the RMN leaders like Amazon and Walmart. Brands that aren’t being strategic and considering all
facets of their presence on various RMNs are sure to be left behind.
Takeaways
- Brands advertising on Amazon are typically moving from standard sponsored search advertising to include
sponsored display in their overall mix, for more complex, upper-funnel campaigns.
- As brands level up their presence and overall media spend on a network, there is typically more data
available made available – especially with RMNs like Amazon and Walmart.
- It’s important to know where customers are likely to shop. Advertisers can dig into specific demographics
and targeting options to be as precise as possible, resulting in better performance but also more efficient,
targeted spend.
The landscape for Retail Media Networks (RMNs) has expanded throughout 2023 and as a result, we’re seeing
the percent of retail media ad revenue – as a portion of total digital media expenditure – increase year on year.
As we head into a busy Q4, where we expect to see this growth continue, it’s helpful for brands to look at three
different areas to find indicators to support the continued growth or signaling a potential change might be on the
horizon for RMNs (Spoiler alert: I don’t think it’s going to slow down...). Retail media networks continue to evolve
their offerings, increase access to data and expand targeting options in an effort to be everywhere for every
consumer.
- Evolution of offering
- Access to data
- Targeting options
1. Evolution of Offering
All of these networks began with a focus on lower-funnel options, offering brands and agencies the ability to
build media plans for onsite search and take advantage of opportunities to sponsor their products.
Amazon has led the way with this over the last several years setting the pace for self-serve advertising, primarily
enabling sponsored products. Other networks like Walmart, Target and Instacart quickly replicated this with their
own self-serve ad platforms. The development of multiple self-serve ad platforms across a variety of networks
immediately made it necessary for CMOs and agency media leads to thoughtfully weigh all of these platforms as
they do their budget allocation planning and strategy.
Early on, we saw many brands trying to answer the question of whether each network was critical to their
success or just a place to test. As more networks launch similar capabilities and available ad types become
more expansive, this process has not only continued, but has become crucial to overall strategy.
In an effort to more closely resemble the offerings of paid social, traditional search and programmatic, retail
media networks quickly began to level up their available ad types. You can think of this in terms of real estate
available early on with a focus predominantly on search engine results and scaling across onsite product pages,
competitor products and all the way to off-site options. In order to further dig into the evolution of these networks, follow the trend in spending across these different ad types. For many ROAS-focused brands, lower-
funnel sponsored ads typically represent the baseline coverage required to compete on RMNs.
The majority of networks took notice of this trend and began to focus on the mid and upper funnel – offering
advertisers new ways to represent their products via search. According to research, Amazon’s sponsored
product ads, targeted based on keyword searches, have declined steadily over the last three years. This has
given way to more testing and committed ad dollars to ad types like sponsored display and sponsored video –
allowing the advertiser to target new and returning customers based on user behavior. Sponsored Brands has
both search and category/contextual-targeting capabilities and is the most advanced from an onsite video
perspective and Sponsored Display Video is a much more recent development (only about the past six to eight
months).
For brands advertising on Amazon, this evolution typically looks like moving from standard sponsored search
advertising to include sponsored display in their overall mix. More complex, upper-funnel campaigns are now
available not only for onsite search but also include off-site programmatic capabilities. This signals an important
expansion for advertisers who now have the ability to target specific customer types and expand their coverage
from a media perspective.
As these advertising tools continue to grow, retail media networks are giving brands and advertisers countless
reasons to allocate more dollars to a network vs. spreading themselves thin across many. While this growth is
exciting, it has created complexity for brands and advertisers when trying to determine the right mix for their
goals.
Access to Data
Offering various ad types and options to spend media dollars has been the way RMNs have catered to
advertiser needs. However, a consistent question asked of RMNs over the last several years has been, “what
about access to data?” While the advertising build-out for RMNs has been on a highspeed trajectory, the ability
to access customer specific data around buying trends has been slower. This can make things particularly
challenging for brands, given privacy laws and safeguarding PPI. We’re now in a position where the networks
earning the majority of spend all have a fairly straightforward way to provide some of the data advertisers are
craving.
Today, each network is making data available in different ways and at different times. For brands starting their
journey launching on a network, the expectation is very straightforward – they want access to basic sales and
traffic data, not including any true customer specific analytics or any first-party insights. As these brands level up
their presence and overall media spend on a network, there is more data available made available.
In most cases, we’re seeing this with higher spending brands across Amazon and Walmart, primarily around
more sophisticated new to brand metrics, path to purchase and conversion analysis. Amazon has again led the
way on this topic, not only with available data, but also via Amazon Marketing Cloud (AMC), which creates the
environment to aggregate this data and make sense of it. AMC is a customizable measurement tool to help
advertisers answer complex questions and generate cross-media insights. Examples include:
- What combination of ads are leading to the highest ROAS?
- Which audiences are resulting in more NTB (new-to-brand) purchases?
- How can I better understand the unique characteristics that differentiate a marketplace customer compared
to a DTC or brick and mortar customer?
Just like with the ad types, other RMNs are likely to soon follow Amazon’s lead by developing more
sophisticated measurement tools like AMC to help advertisers prioritize their network over others.
Targeting Options
In addition to the themes of ad type expansion and data availability, most RMNs are also touting their ability to
offer more precise targeting capabilities across their media offering. This has added even another element that
advertisers must consider as they navigate all RMNs have to offer. It’s important to know where your customers
are likely to shop via these networks, but now advertisers can dig into specific demographics and targeting
options to be as precise as possible. This results in better performance but also more efficient, targeted spend.
Most targeting options begin with audience types like the following:
- Custom (rule-based) – Most customizable audiences and many different options, based on a specific
network’s shopping data.
- Model-based – Premade audiences that are based on marketplace-specific shopping data. Most often this
includes In-Market, Lifestyle, Demographic and Contextual options.
- Third-party data – Premade audiences provided by third-party audience providers such as Oracle or
LiveRamp. These enable advertiser first-party data use within an RMN, as well as more broad credit
card/transaction data that is RMN agnostic.
For example, Amazon’s first-party data allows advertisers to target shoppers specifically based on their shopping
habits on Amazon, offering brands the most tailored approach possible. These custom audience options include
Product Purchases, Product Views, Similar Product Views and Searches. Once you determine the framework for
an audience, you can then determine the potential audience available and make a decision on what the ad
spend level should be.
The following example highlights a scenario on Amazon:
- Millennial men are 1.5x more likely to spend over $5,000 on a luxury purchase compared to total luxury
shoppers. The majority (84%) of these shoppers surveyed watch content through streaming services and
are more likely to engage with digital touch points throughout their journeys.
- Millennial men are also 1.3x more likely for their purchases to be informed by advertising seen on streaming
TV services, compared to luxury shoppers overall.
- Also, millennial men are 1.7x more likely to engage at least once a week on Twitch.
All of these targeting options will vary across networks, but each network is working towards coverage for
targeting across the funnel from Brand Awareness all the way down to repeat purchase and loyalty.
There are many other factors that go into the world of RMNs. One final consideration worth noting is how RMNs
fit into overall budget allocation. If we break budget planning into its simplest form, you’ve got the following:
- Conversion Drivers – tried and true lower funnel, you know your customers are here and a large part of
your budget is dedicated to consistently targeting them via this always-on spend.
- Brand Defense – Comprehensive strategy to own branded search terms/PDPs and defend market share.
- Promotional Support – Tactics that leverage/align with promos to drive maximum sales velocity.
- Testing – Testing new tactics to see which can scale and be a part of strategy moving forward.
In every section of the above budget allocation, an RMN can play a pivotal role in reaching existing and new
audiences for any brand.
The dominance of online shopping and the benefits of retail media networks isn’t slowing down anytime soon.
Understanding how to best leverage RMNs for a brand means considering the maturity curve and paying close
attention to the RMN leaders like Amazon and Walmart. Brands that aren’t being strategic and considering all
facets of their presence on various RMNs are sure to be left behind.
