According to data from eMarketer, 2022 was the year of the Retail Media Networks (RMN)with an advertising expense of 40,000 million dollars in the United States and that will reach 61,000 in 2024. In Spain, this concept is not yet well known, but in reality it is something that we see every day, since they are digital advertising platforms owned by retailers that they make available to other retailers and brands so that they can advertise their products, therefore targeting to the customer database of the retailer that owns them.
The advantage of NMR for these owners is that they represent a very important and highly profitable additional source of income. While for the retailers or brands that use them, they represent the opportunity to ensure access to a larger and higher quality audience.
This is a booming advertising strategy because it’s not just e-commerce companies like Amazon that benefit from the additional revenue that NMRs can generate. As more retailers embrace unified commerce, digital channels have become an integral part of the shopping experience for many consumers. So much so that the consultant McKinsey estimates RMN ad spending at $100 billion by 2026.
3 Reasons Retail Media Networks Are Trending
- Changes in data privacy. The recent changes in the data privacy law have made Retail Media Networks become more attractive channels, compared to other channels such as social networks, where advertisements are increasingly conflicting. Retail media networks hold proprietary shopper data, historically unavailable or shared to a limited extent with brands or other retailers, which may now be available to advertisers.
- Increase in online traffic and return to stores. The exponential growth of online traffic due to the pandemic allowed retailers to reach an audience comparable to many ad-supported digital media. Today also the return to physical stores offers an excellent opportunity to offer advertising spaces to brands at points very close to the moment of the decision that advertisers view with great interest. In the case of stores, these potential revenues can offset part of the cost of maintaining a physical presence.
Search for new streams of income and profitability. With today’s retailers needing to find new sources of revenue and profitability, retail media networks offer overall operating margins in the 50 to 70 percent range, presenting a huge opportunity for retailers, especially those with low margins. single digit records. A clear example that many retailers are looking at is Amazon, which increased its advertising business to more than $31 billion in revenue in 2021. Amazon Advertising is today the third largest total ad network after Google and Facebook.
For retailers looking to launch their own ad networks, this means significant investment in areas such as talent, technology, and deals to create new businesses that function as digital advertising platforms. In the words of Xavier Places, Marketing Director of openbravo: “At a time today for retailers that need to search for new sources of income and profitability, Retail Media Networks are a great opportunity for retailers that have adequate resources, but their success will lie in demonstrating their ability to drive value and sales for advertisers. And this represents a very important change in the relationship model, since it requires a greater degree of collaboration and trust with them.”