It’s not just a trend anymore– retail media is an established line item within advertiser budgets. eMarketer has deemed it the “fastest growing ad channel” with $50B in revenue in the United States alone. 

However, emerging and existing retail media networks struggle to compete with Amazon and Walmart, who account for over 84% of those dollars. With such deeply entrenched front-runners, competing retail media networks (RMNs) will need to find captivating ways to appeal to advertisers in order to continue growing. 

In our “Retail Media Ultimate Guide,” we’ll briefly define retail media and its history and share our top strategies for winning against industry leaders. 

 

What Is Retail Media?

Retail media is simply when retailers offer advertising capabilities and services. Retail media advertising generally takes place:

• On-site: Ads run on a retailer’s owned digital properties, such as their website or app.
• Off-site: Ads run on external websites or apps (like connected TV (CTV), social media, or search engines) using retailer data to create audience segments for retargeting campaigns.
• In-store: Ads run on digital properties within a physical storefront, such as on screens, in-store audio, or digital checkouts.

 

Why Is Retail Media Growing?

Advertisers flock to retail media because of its access and insight into customers near the point-of-purchase. What initially started as a new use of shopper marketing dollars exploded into a major advertising channel. With retail media, advertisers can tap into:

1. Full-funnel attribution: Because retailers can track both the ad delivery and the transaction, advertisers can easily see the proven value of each of their ads.
2. Large traffic volumes: Large retail media networks have big audiences, with Amazon, Walmart, Target, and the like welcoming millions of daily users. These users are in a shopper mindset, strengthening each advertisement’s conversion potential.
3. Robust shopper data: Retailers possess extensive first-party data that appeals to digital advertisers who have historically been forced to settle for opaque third party audiences. With extensive transaction data, loyalty programs and email marketing campaigns tied to individual customers, retailers have highly actionable and qualified segments.
4. Diverse marketing strategies: While retail media has long been considered a  lower-funnel conversion marketing tactic, 68% of advertisers now allocate portions of their mid- and upper-funnel budgets to retail media (ANA). This shift is due in part to the investment retailers are making into their properties, opening up new on-site ad formats and tapping into new experiences off-site and in-store. Non-endemic advertisers are leaning in as well, eager to utilize retailer’s high value audiences and placements. 

The rapid growth of retail media has given rise to a new, broader category known as commerce media, which includes not only retail but also other industries such as travel, finance, and automotive.

 

Top Retail Media Network Examples

While the vast majority of retail media spend goes to Amazon and Walmart, emerging networks give even top RMNs a run for their money. By exploring what makes leading RMN’s successful, other top RMNs can start to stand out to advertisers as well.

Amazon

The original RMN, Amazon, dominates the market due to its extremely robust offering. Beyond monumental monthly traffic (over 2.72 billion monthly uniques), Amazon captivates advertisers by offering customizable, targetable, and scaled reach through its support of 12+ different ad units, persona and audience building tools, attribution capabilities, and a DSP from one centralized platform.  

Walmart

The second largest retail media network, Walmart, entered the market with a strong emphasis on its omnichannel advertising capabilities. With nearly 438 million monthly visitors, Walmart Connect provides advertisers access to robust first-party data from both in-store and online purchases. Their offerings include a self-service ad platform, sponsored search, display ads, and in-store TV ads. Walmart also leverages The Trade Desk’s DSP technology to unlock programmatic buying for its advertisers, allowing them to reach Walmart audiences across an even wider ecosystem. Walmart’s closed-loop measurement provides detailed insights into campaign performance, sales attribution, and ROI. While Walmart has focused primarily on serving its retail advertisers, it now extends its ads offerings to include non-endemic advertisers.

Target

Target’s Roundel retail media network provides a powerful platform for advertisers with a focus on personalized ad placements. Leveraging first-party data from over 30 million Target Circle members, Roundel offers programmatic capabilities and curated ad placements across Target’s website and app, in-store displays, and external partner websites. Their proprietary tools help brands understand the customer journey and provide actionable insights on campaign performance. Roundel’s partnerships with Google and The Trade Desk enhance its reach, enabling advertisers to run campaigns across the open web.

Kroger

Kroger Precision Marketing (KPM), using 84.51°, leverages Kroger’s extensive customer data from its 60 million households loyalty program. With precise targeting capabilities, KPM enables advertisers to create data-driven campaigns across Kroger.com, in-store signage, and external programmatic platforms. Unique offerings include personalized coupons, product recommendations, and closed-loop attribution that connects ad impressions to in-store and online sales. KPM’s 2023 partnership with Roku has further expanded the channel access offered to advertisers by extending activation access into CTV.

Instacart

Instacart Ads is a leading grocery delivery platform with access to millions of shoppers across its collective retail partners. Advertisers benefit from Instacart’s sponsored product ads, display ads, and shoppable video formats, all designed to influence customers at the point of purchase. Instacart also gives its advertisers access to high impact custom ad units such as co-branded promotions and exclusive offerings. The platform’s ability to attribute ad spend directly to sales—both in-app and in-store—allows for cross-retailer performance aggregation and reporting.

 

Essential Components of Retail Media Networks

While leading retail media networks share key strengths, such as scale, access to first-party data, diverse ad formats, strategic partnerships and easy to use tools, emerging networks will not always be equipped to deliver the same level of capabilities. The good news? A successful retail media network is more than those few strengths. 

Emerging RMNs of any size can grow their ad spend by investing in the following areas to improve their offering to advertisers:

1. Unique attributes: If an advertiser can go to five major networks to achieve scale, they might not be looking to add another player to their strategy simply for reach. Think– what is unique about  your network? Do you capture a niche/hard to find audience? Are your products shoppable anywhere else? Do people tend to come to your network on specific times or days or around certain events? Have you developed unique or innovative ad units? Think about what makes your platform stand out, and emphasize those strengths.
2. Robust first-party data: First-party data is at the core of RMNs, offering insights into customer behavior, purchase history, loyalty, and preferences. If you haven’t started, begin capturing that first-party data now so you can start segmenting users into highly qualified audiences.
3. Advertiser-friendly infrastructure: A scalable and user-friendly platform is crucial for managing campaigns. Advertisers don’t want the headache of logging into another complex management system: make it easy for them to buy at scale and grow in sophistication as their needs evolve. 
4. Measurement and attribution: RMNs need closed-loop measurement systems to track the effectiveness of ad campaigns. Features like real-time reporting, incrementality testing, and audience insights go a long way in empowering advertisers to make informed and confident investment decisions.
5. Omnichannel Presence: Many successful RMNs operate across digital and physical touchpoints, from in-store screens to offsite social campaigns. However, even if you don’t have an in-store component, be prepared to allow advertisers to create full-funnel campaigns that connect with your valuable audiences wherever they go in whatever way you can. 
6. Partnership ecosystem: Collaborations with demand-side platforms (DSPs), external ad networks, and even CTV original equipment manufacturers (OEMs) help expand reach, unlock new tactics, and provide incremental value to advertisers.

 

Challenges Facing Retail Media Networks

Though RMNs are growing rapidly, many face significant challenges as they try to differentiate from competitors. Retailers struggle with new and sometimes complex advertising challenges such as:

1. Data privacy and regulation: With increasing government regulations and ongoing public scrutiny over data privacy, RMNs face challenges complying with regulations such as GDPR and CCPA or ever-changing private policies from behemoths like Apple and Google. Balancing data personalization with privacy is becoming increasingly difficult, leading more RMNs to rely exclusively on data shared with them by shoppers or loyalty members directly (first-party data).
2. Attribution complexity: While RMNs boast closed-loop measurement, accurately attributing offline sales to digital campaigns is no small feat. Industry-leading partners can help RMNs develop the infrastructure needed to confidently and reliably provide advertisers with the reporting they need to meet requirements.
3. Ad relevance and ROI: As RMNs invest in their advertising solutions, they must carefully balance delivering strong results for advertisers while preserving positive consumer sentiment by avoiding intrusive or irrelevant ads. Publishers can manage this balance by investing in ad relevancy with ML-driven quality scoring and quality ad formats. Focus on increasing ad value over volume.
4. Monetization Strategy: Retailers have multiple strategies for monetizing their inventory and data. These include selling data in DSP data marketplaces, providing targeted deals to advertisers through supply-side platform (SSP) partnerships, offering inventory programmatically, sharing audience segments directly with buyers, or running managed service campaigns. RMNs must balance the trade-offs when deciding how and where to monetize their assets. It’s important to both increase access to demand through expanding inventory availability across more channels while still providing opportunities to build and strengthen those advertiser relationships through unique and exclusive monetization opportunities. To succeed, RMNs must balance their capacity and willingness to develop advertiser-focused solutions with an understanding of advertisers’ preferences and priorities regarding where and how they buy. 

 

Key Strategies for Retail Media Success

In 2025, advertisers will be looking for quality over quantity. Focus on refining your offering with strategies like:

1. Granular audience segmentation: Develop focused audience segments or offer custom audiences to personalize campaigns for different advertisers and improve performance.
2. Expanded ad formats and channels: Introduce innovative ad formats like shoppable videos, live streams, or connected TV.
3. Invest in off-site: Collaborate with DSPs and external platforms to broaden advertiser reach. For example, Instacart’s partnership with The Trade Desk unlocks programmatic advertising and scale for new and existing advertisers. 
4. Enhance Measurement Tools: Provide detailed insights and closed-loop measurement to prove the ROI of ad campaigns in real-time.
5. Invest in technology: Automate workflows and optimize ad placement through AI-driven algorithms for better efficiency and scale.

 

Taking Your Retail Media Network to the Next Level

To compete with the likes of Amazon and Walmart, you’ll need sophisticated tech and experienced development and program management teams. Don’t go at it alone– leverage Koddi’s ad technology and teams to get there faster. Contact us today to learn more about how we can help.