The New Darling of Digital Marketing: How Retail Media Networks Address Current Challenges in the Retail Industry

"Advertising costs are rising again, so why hasn't the conversion rate improved?" "Without third-party cookies, how can we execute precise ad targeting?"... If you are a marketing manager, these questions are likely all too familiar.

With Google's official phase-out of third-party cookies and the continuous rise in traditional advertising costs, for a business to stand out in the market, marketers must not only give their all but also actively learn about various new digital marketing channels, striving to achieve maximum results with minimal investment.

Today, Retail Media Networks (RMNs), which boast high traffic volumes and possess vast amounts of precise first-party data indicating clear purchase intent, are rapidly becoming the new darling of digital marketing strategies.

What is a Retail Media Network? How is it Different from Traditional Media Networks?

A Retail Media Network (RMN) comprises various advertising placements provided by retail e-commerce platforms. It enables brands to place ads on the retailer's website, app, and even in physical stores, while leveraging the platform's first-party data for precise ad targeting to reach consumers with the highest purchase intent.

Literally, one might think Retail Media Networks are just an updated version of traditional media networks (like the Google Display Network or Facebook Audience Network). However, there are several distinct differences between the two:

	Retail Media Network	Traditional Media Network
Data Source	Retailer first-party data, based on actual purchase behavior, more accurate and reliable.	Primarily relies on increasingly obsolete third-party cookies.
Advertising Environment	Appears directly within the shopping journey, high intent, shortest conversion path.	Appears alongside news, videos, etc., further from the purchase context.
Partnership Model	Deep collaboration; data co-creation and strategic co-planning between brand and retailer.	Primarily an advertiser-publisher transaction.

Why Can Retail Media Networks Effectively Solve Current Challenges in Retail?

According to eMarketer estimates, the global retail media network market is expected to double from $111.4 billion in 2023 to $233.9 billion by 2027. The US market alone is projected to exceed $100 billion by 2027.

As consumer behavior undergoes seismic shifts, breaking down the barriers between online and offline has become a crucial challenge for numerous brands. The emergence of Retail Media Networks effectively addresses this by managing omnichannel traffic for retail brands. By delivering personalized ad content to specific audiences, they enhance advertising effectiveness.

Furthermore, the value of Retail Media Networks is also demonstrated in:

1. Precise Targeting of Audiences

Consumers visiting retail platforms typically have strong shopping intent. RMNs help brands track the entire consumer journey from ad exposure to purchase completion. This clarifies the correlation between ad spend and product sales, analyzes ROI performance, and enables more strategic decision-making.

2. Ensuring Consumers Find Desired Products

RMNs seamlessly integrate ads into the consumer purchase journey, significantly reducing ad resistance and greatly increasing the likelihood of discovering new brands and trying new products. This is because the ad's timing and context perfectly align with their immediate needs, making it feel less like an interruption and more like a service.

3. Implementing Full-Funnel Marketing Strategies

Traditional marketing funnels often break across different platforms. In contrast, RMNs provide brands with a unique, closed ecosystem that makes executing Full-Funnel Marketing strategies easier. Since the entire consumer journey occurs within the same retail platform, analysis is more holistic. Brands can segment audiences based on data and deliver targeted ad content and promotions, thereby enhancing awareness, conversion performance, and results.

4. Uncovering Unexpected Potential Customers

What else do your core customers buy besides Product A? Beyond targeting the core audience, first-party data analysis within RMNs can identify other relevant products that interest these consumers. This expands brand revenue while deepening understanding of consumer preferences and profiles, thereby uncovering unexpected potential customers.

Given the Many Benefits, Is My Brand Suitable for Investing in RMNs?

Generally, brands already present on retail e-commerce platforms are well-suited for RMN deployment. Brands can use RMNs to precisely push products to consumers as they browse related items or search for keywords, directly influencing purchase decisions.

Of course, if you haven't yet established a presence on a retail platform, you can also partner with RMN platforms highly relevant to your target audience. For example, a high-end kitchenware brand could place ads on an RMN platform owned by a premium supermarket with a large membership base of high-spending households.

In terms of product categories, the following can particularly benefit from RMN deployment to increase conversion opportunities:

Fast-Moving Consumer Goods (FMCG): With relatively high repurchase rates, brands can use RMNs for sustained exposure, reinforcing brand recall, and increasing repurchase rates.

Consumer Electronics: These often involve long decision-making cycles and careful consideration. RMN ads can repeatedly influence consumers during processes like price comparison and review checking, building trust and conversion opportunities.

Fashion and Beauty Categories: In highly competitive environments, RMNs help new brands or products stand out, precisely reaching consumers interested in specific styles or functions.

Facing the RMN Wave, What Preparations Should Retailers and Brands Make?

For Retailers:

Aspiring to capture market share requires recognizing one thing first: building an advertising system is no easy feat, often demanding significant investment and determination. Before deciding, ensure you confirm the following three aspects:

A. Define Marketing Objectives

In developing an RMN, retailers can not only earn ad revenue but also potentially achieve:

— Optimized consumer experience

— Activation and retention of existing members

— Driving website traffic

— Increasing overall product sales

— Deepening collaboration and mutual trust with brands

— Strengthening relationships with strategic suppliers

Among these objectives, retailers must prioritize and confirm the strategic focus for their advertising business development.

B. Start with Small-Scale Pilots

After setting advertising business goals, retailers can develop their "Minimum Viable Product (MVP)." For instance, a retailer could start by offering banner ads on the homepage to test market acceptance, while also auditing internal capabilities—such as sales and business development, operations and analytics, technology, and entrepreneurship—required for the advertising business.

C. Assess Data and Technology Capabilities

Finally, retailers need to objectively evaluate current assets. Does the company possess sufficient member profiles and transaction data for potential partners to run multiple campaigns? Does it have the technical capability to implement functions like data management, ad serving, campaign management, and reporting? If lacking in these areas, partnering with a mature online marketing technology company to jointly build a robust platform is necessary.

For Brands Planning to Utilize RMNs, We Recommend:

Carefully Select Retail Partners: The effectiveness of RMNs is rooted in data quality. Therefore, brands should prioritize retail platforms with strong data analytics capabilities and a member profile that aligns with the brand's target audience to ensure precise ad delivery.

Engage in Close Collaboration with Retailers: Avoid treating RMNs as just another ad channel. Instead, actively discuss with retailers before, during, and after campaigns. Jointly interpret data insights to continuously optimize strategies and ensure every dollar spent delivers maximum impact.

In Conclusion

Amid the waves of digital marketing, Retail Media Networks are emerging as a favored new strategy for many brands, thanks to their unique advantages. However, no matter how powerful RMNs are, they remain merely a marketing channel. What ultimately resonates with people is always communication content and strategy that strikes an emotional chord.

Therefore, ensuring consumers are willing to purchase and proactively spend requires delivering the right message, through the right channel, at the right moment, to the right person. This remains the unchanging core of digital marketing. If you are still troubled by "how to attract target customers" or "how to improve conversion rates," please contact us directly. Arachne Group Limited will provide an initial strategic diagnosis and work with you to uncover the limitless business opportunities Retail Media Networks can bring to your brand