This is the first post in our Ensuring the long-term success of your RMN series, which is focused on helping retailers stay ahead of the retail media curve.
Retailers with a retail media offering know two things: One, getting into the retail media game was a smart move, as predictions say spending in this category will surpass linear TV by 2025. And two, everyone else has wised up and is also joining the fray, requiring retailers to protect their investment and stand out in an increasingly crowded space.
The category is maturing rapidly and what’s considered table stakes for retail media networks (RMNs) keeps growing. In the Mars Agency’s Q3 2023 Retail Media Report Card, 44 (!) of their 65 evaluation criteria are now considered standard requirements for any RMN. Getting a retail media network off the ground is no small feat, but the dizzying pace of growth means that any retailers who want to take a rest risk falling behind.
This urgent need to keep up with the Joneses is being driven mostly by brands. And this is perhaps the biggest paradigm shift that retailers have had to come to terms with: The brand as the customer.
Flipping the relationship script
In the days before retail media, retailers and brands had a mostly one-way relationship. Brands courted retailers, and, as their customers, retailers set the rules of engagement. But now, a retailer is also a media company, which makes brands the customers of its advertising products. This has created a much more complex two-way relationship, where the retailer is both a customer of the brand and a supplier of the brand in terms of advertising and data.
Retailers who don’t recognize this shift in the power balance risk turning away brand dollars. As eMarketer’s Andrew Lipsman articulately says, “…earning national media dollars will only come if retail media networks (RMNs) stop acting like retailers and start acting like media companies.”1 But what exactly does that mean? For retailers used to focusing on their own traffic and sales numbers, it requires switching gears and looking at things through the eyes of the brands. Because at the end of the day, the RMN that meets the most brand needs will garner the most brand spend.
Embracing a brand-centric mindset
A “do whatever my brands need to reach their advertising goals” approach may push some out of their comfort zone, especially in terms of access to data and audiences. But in a recent commissioned study conducted by Forrester Consulting, 82% of commerce media strategy decision makers at retail or travel organizations say that an effective network can have significant or transformational benefits to revenue/high margin operating income.2 In other words, a brand-centric mindset is worth it.
What makes an “effective” network? If you ask brands, as Merkle did recently, two of the highest rated key features they’re looking for in a retail media network are “easy to work with”, and “ability to partner in the planning process with someone who understands my business”.3 Retailers who come to the table with expanded offerings and a desire to be a strategic partner will win the hearts of brands used to a certain way of buying media.
Once retailers philosophically adjust to this new way of operating, they’ve cleared the highest hurdle. Meeting brand asks after that comes down to making adjustments in-house or working with the right tech partners to enable things like self-service and enhanced reporting. In business, as in life, meeting a partner’s needs while also meeting your own is a delicate dance. But retailers who show a willingness to be open, to hear brands out, and to innovate on their behalf will be the RMNs of choice.
Stay tuned for future posts in this series, where we’ll dive into specifics about how RMNs can attract more brand dollars now and as the category continues to evolve.
1 Source: https://www.insiderintelligence.com/content/retail-media-networks-need-start-acting-media-companies-retailers
2 Source: A commissioned study conducted by Forrester Consulting on behalf of PubMatic, August 2023.
3 Source: 2022 Retail Media Research Report, Innovating in a Competitive Landscape, Merkle