Retail Media Networks: The New Frontier
“The intelligent investor shouldn’t ignore Mr. Market… do business with him, but only to the extent that it serves your interest.”
– Benjamin Graham
Retail Media Networks, The Genesis
In the beginning, there was the shelf. And stores put brands on the shelves. And shoppers shopped the shelves. And it was good.
Now the shelf is omnichannel – in stores, online, and in-app. Retail media promises brands newfound control of shelf visibility directly at the point of sale, plus closed-loop measurement. For retailers, media provides 70-90% profit margins – by comparison, the grocery business itself averages 2-3% margins.
Most retail media networks came of age during and since 2020. But unlike most paid ads services, we’ve created retail media strategies for clients since 2011 when we were among the first paid ads services working with Net-A-Porter for luxury clients Orient-Express/Belmond and Aether Apparel. Since then we’ve navigated the rapid growth and unicorn exit of Europe’s Fastest Growing grocery delivery app, retail media for America’s most loved greetings card retailer, and global retail media for complex, perishable goods like California Table Grapes.
Here’s what global brands need to know about retail media networks – including how, why, and where to begin evolving their strategy.
Retail Media Buying: What to Know
The IAB calls retail media networks the “third wave” of digital advertising. But unlike social, digital’s “second wave” which demanded oceans of new content from brand marketers, retail media is dominated by the paid media buying opportunity. It is, by comparison, content-light in terms of creative burden for brands, but can be investment-heavy if not calibrated correctly.
Are retail media networks still an affordable place to invest my ad budget?
It depends. Retail media offers ad space as close as possible to the (digital) point of sale. Its value lies in the data and targeting opportunity of reaching shoppers where they shop. The trick to unlocking affordability and value is understanding the true cost of advertising (sometimes called TaCOs) to level out measurement.
Although “affordable” is a relative term, one thing is certain: Spends are increasing. Rapidly. Global spending will double by 2024 according to eMarketer. So the most affordable time to understand this new territory is yesterday.
What is the most expensive market for retail media networks in the world?
For retail media buying, the US is the most expensive market in the world, which accounts for 40% of all global retail media spending. Yet – from our vantage point – retail media networks are a global opportunity, even if these “networks” are only now emerging (more on this below)
What about lackluster ad types? How do I break through in retail media?
Retail media ads are a mixed bag. Overwhelmingly retail media networks are highly regimented marketplaces of templatized units leading to heavily optimized PDP copy (where AI can over-massage features to the point of unintelligibility). Our hot take is that the greatest opportunity for creative impact that’s somewhat universally accepted across major retail media networks is video. But to date, retail media networks offer fairly few different ad types. First-to-market opportunities, which feel new to users, are valuable opportunities that tend to see a “pop” in performance when they are new. What does this mean? Hold aside the budget for experimental opportunities!
For more on these key points and the role of agencies in providing paid ads services in this new retail media frontier, read on:
Retail Media Network "Roulette"
Retail media is dominated by very few giants. But even on these platforms, the experience for the user and the advertiser is often poor.
Try searching Amazon for toilet paper. You might see a sponsored search ad for a $1,500 Toto Toilet instead of a $.15 roll. That’s because the potential value of the sale of the toilet is worth more. But is it relevant to your search? Absolutely not. Helpful? Not even a little bit.
Or consider Walmart Connect, the Retail Network of Walmart (and Walmex in México). Even the largest global CPG brands on the second largest retail network in the world have tiny, blurry sponsored display ads.
And multi-platform buys can cannibalize data on which network was responsible for a sale, since many offer “closed loop” reporting that claims total and singular credit for driving sales. Retail media managers are forced to navigate retail media network “roulette” which is the phenomenon of cloudy data and buying more media solely for fear that sales would tank without it.
The "Frenemy" Paradox in Retail Media Networks
This is why retail media networks are often “frenemies”: you can’t live with their inconsistent data, limited ad options, and high costs. But you seemingly can’t live without them.
As retail media specialists, we help clients work through sometimes toxic relationships through a testing process that helps sort the true cost – and true return – of retail media networks. Often the value comes down to unique buyer data owned by retailers, and the relative value of “shelf-space” ad product. At times, shopper apps independent of retail media, can deliver lower risk ways to access avid shoppers for brands early to market and taking a more cautious approach (for more on this, see our case study on growing ZEISS sales +14% in Walmart, one of the largest retailers in the US.).
According to BCG, the margin for onsite (or in-app) retail media is 70-90% for retailers. But offsite – where retailer data is used to target past or prospective shoppers – is 20-40% (1). If the quality of the data is weak, or if the data is comparable to a brand’s own data – that’s an unnecessary 20-40% markup without any added benefit to your brand.
Global Retail Media Specialist: The Opportunity
As shown below and discussed briefly above, 40% of all retail media network investment globally is spent in the US. This means the international media buying opportunity outside the US is immense.
US (Billions) | Worldwide (Billions) | US v. Worldwide | |
2021 | 31,06 USD | 77 USD | 40% |
2022 | 40,81 USD | 95 USD | 43% |
2023 | 51,36 USD | 116 USD | 44% |
2024 | 61,15 USD | 143 USD | 43% |
In Asia, which leads the world in mobile adoption, the lines between content and commerce disappeared as long ago as 2016-2017 with the regional growth of mega-apps. But in Europe, LATAM, the Middle East, and Africa, retail media is closer to its infancy. We work with both market-dominant and emerging players in the grocery and retail space to localize international expansion campaigns.
What’s the bottom line? For international advertisers outside the US and Asia, retail media networks are still fairly new and are underfunded due to the size of the opportunity they represent. With rates growing 15-30% year on year, first-movers have a huge advantage in adopting global retail media early.
Retail Media Agency + Specialist
To thrive in retail media buying, advertisers must innovate – even when platforms will not. This is where retail media specialist services and agencies play a vital role in managing retail media networks. We bring clients expertise and support in planning and executing strategies, as well as the benefit of insights from multi-advertiser experience. This platform knowledge goes well beyond what any single advertiser can know based on what’s shared with a platform sales rep. From network selection in-market to targeting the right audience, agencies ensure maximum returns on investments.
Since 2011, Criterion Global has pioneered working with retail media networks. Trusted by clients, we offer innovative strategies and exceptional results.
Contact us to learn about our retail paid ads services to seize the potential of retail media.