Do you have any experience like that? You search for a dog blanket on Amazon and the first search results you see are sponsored ads. Depending on where and what you search for, you may also see a banner ad at the top of the page and after a scroll or two, an engaging video pops up. This is retail media in action: advertising tailored to your buying mood.
The idea of learning from consumers’ purchasing behavior, providing them with relevant offers and reaching them where they make their purchases has been around for a long time. Direct-to-consumer (DTC) brands and brands with loyalty programs have long used first-time shopper data to target consumers. And major retailers have always advertised with in-store displays and promotions. For industry observers, however, the introduction of Amazon’s Amazon Ads Platform (AAP) in 2012 marked the birth of retail media. This created an entirely new business segment in retail: Retail Media Networks, or RMN for short. Retailers sell their advertising space to brands directly at the POS, whether in brick-and-mortar stores, online stores or apps.
Media networks in retail offer brands the opportunity to reach their target audiences based on their current shopping behavior and with fine-tuned messages at a time when they are likely to be more receptive to those messages. Relevant advertising to the right people in the right context is a great combination!
To build a successful media network, retailers need to use first-hand data (for example, customer data, loyalty data, point-of-sale data and mobile data) to create analytical models that understand customer behavior. Only by integrating this data and applying meaningful analytics can a useful picture of a customer be painted that can be shared with other brands. A model that is able to identify the purchase history of customers, their favorite brands and their preferences for organic food, for example, can make it plausible that similar products at a certain price might be attractive to these customers. In addition, a recommendation can be made on how best to reach these customers – are they more likely to pay attention to digital signage in a store or click on a sponsored link on a website?
In July, IAB Europe, the European industry association for the digital advertising industry, published a report on attitudes towards retail media in 2024. The report highlights that while retail media is a much-discussed topic, its implementation is still in its infancy. Only 50% of shoppers have worked with a retailer or retail media network for over a year. In contrast, almost 90 percent are interested in accessing retail data and three quarters of shoppers are enthusiastic about the opportunity to reach consumers at the point of sale. Currently, most investment in media networks is focused on onsite opportunities, indicating a potential growth of off-site and in-store advertising. Around 60 percent of buyers cite the fragmentation of retail media networks and the lack of standardization as the main obstacles. There are also challenges in terms of operational elements and technological requirements. The market for retail media networks is growing exponentially: according to forecasts by IAB Europe, it will double in the coming years. From 10.5 billion euros in 2023 to almost 22 billion euros in 2026 – in Europe alone.
Retail Media Networks (RMN) are an important future trend as they are revolutionizing the way companies interact with their customers. By leveraging data and technology, RMNs enable more precise targeting and personalized advertising, benefiting both consumers and brands. In an increasingly digitalized world where data is the new gold, RMNs are an innovative solution to bridge the gap between online and offline advertising and drive sustainable growth. They are not only a tool to increase sales, but also a means to build long-term customer relationships and strengthen brand loyalty. But here too, at the end of the day, people make the big difference. Their attitude, charisma and customer approach can promote trust and strengthen the human relationship. They fulfill a company’s value proposition – or not.