- Circana
- 1 day ago
- 6 min read
Michael Ellgass, EVP, Client Sales and Insights, Marketing and Media
Mark Hurst, Head of Retail Media EMEA
Alistair Leathwood, Head of Analytics, Insights and Media, APAC
Table of Contents:
Retail Media Networks (RMNs) have been game changers in digital advertising, enabling retailers and brands to better connect with the “right” consumers and drive measurable results as part of their omnichannel strategy. Because targeting is based on purchase data, these platforms cut through an often-fragmented marketplace to reach relevant shoppers and help deliver tangible sales outcomes.
What Are Retail Media Networks?
RMNs are advertising platforms that retailers offer to brands, allowing them to advertise directly on the retailer’s digital properties — such as websites and apps — and as well as offsite platforms and even in-store. These networks utilize a retailer's first-party customer data, including purchase history and browsing behavior, to deliver personally meaningful ads to specific consumer segments. This creates a powerful pathway for brands to influence purchasing decisions and, ultimately, drive incremental sales that are especially important in industries with narrow margins.
Such networks are deployed around the world, albeit with varying degrees of maturity. The U.S. market is in the more established stages, with buy-in from a wide range of retailers, including both national and regional operators. In EMEA, the RMN landscape is in an earlier phase of development, as stakeholders work to build a cohesive ecosystem that benefits both retailers and brands. That said, in-store retail media is more mature in Europe than the U.S.
Why Is Retail Media Advertising Important?
Retailers and brands are increasingly focusing on retail media as another tool to connect with desired customers. The unique value proposition of retail media is its ability to link advertising spend directly to sales outcomes. For CPGs, these platforms optimize investments and reduce waste by targeting consumers who are actively in the market for their products. In addition, RMNs can be pivotal in new product launches; targeting buyers who have shown interest in similar products has been shown to improve trial accuracy.
The importance of RMNs is underscored by their capacity to provide closed-loop reporting. Brands can analyze who saw an ad and who subsequently made a purchase, offering a clear view of incremental return on ad spend (iROAS). This level of attribution is a key reason why RMNs are becoming a cornerstone of performance marketing strategies.
Who Is Driving Retail Media Trends?
The growth of RMNs is driven by retailers, CPG brands, and consumers, who are looking for the most efficient and valuable ways to satisfy their respective interests and goals.
Retailers, for their part, are capitalizing on the valuable asset of first-party data. By building RMNs, they can optimize revenue streams and enhance the shopping experience with more relevant content. For example, in the U.S., retailers like Kroger have been seen positive results by establishing consulting teams that help brands identify opportunities and connect with key customer segments. In the UK, Boots has a mature ecosystem that has proven effective in this space.
In the CPG sector, leaders increasingly leverage sophisticated customer data analysis to optimize campaigns and ad frequency through RMNs. The focus is shifting beyond category management to a deeper, actionable understanding of shopper behavior. Some forward-thinking CPGs have created centers of excellence to unify shopper marketing and brand budgets with allocations to RMNs and other tools.
Consumers’ shifting preferences and behaviors contribute to the acceleration of RMNs as well. Shoppers – who are increasingly digitally engaged -- appreciate relevant offers on items that they have previously purchased, and many also welcome opportunities to discover and try new products.
Implementing Retail Media in Your Strategy
The effective implementation of RMNs requires a strategic approach that goes beyond basic ad placement. Brands must shift their focus from legacy metrics to a more nuanced understanding of consumer behavior, with a retail media strategy that includes smart segmentation and thoughtful execution. There are several ways to optimize that strategy.
H3: Use sales data to pinpoint growth opportunities
The implementation process for these networks begins with a thorough analysis of sales data to uncover key growth drivers. Advertisers can identify areas of opportunity among both loyal and lapsed customers, and use insights to identify new shoppers for conversion.
Identify and engage your brand’s "movable middle"
A critical step is to identify and engage the "movable middle", which is defined by the Mobile Marketing Institute as customers who purchase a brand between 20% and 80% of the time and whose purchasing decisions can be influenced. Instead of overspending on loyal buyers or customers who are unlikely to purchase items from a brand, advertisers can focus on this movable middle audience that is open to trading up, switching brands, or purchasing items with different attributes. Through retail media, this group can be incentivized with personalized offers or promotions that demonstrate relevance and foster loyalty.
Adopt an omnichannel strategy with ads tailored to different media channels
Shoppers don’t shop the same physical and digital retail channels in the same ways as they did even a decade ago. For better engagement and sales lifts, brands should tailor campaigns to fit the shopper’s mindset during their interaction with each touchpoint. For example, ads on a retailer’s website or app should emphasize immediate action, using direct calls to action like “add to cart.” Meanwhile, off-site ads on platforms like social media can focus on awareness and consideration, planting the seed for future purchases and broadening reach.
Align strategy with retailer strengths
Just as consumer touchpoints vary, so do retail operations. Because not all retailers serve the same purpose in the consumer journey, brands must consider the specific role of each retail partner.
In convenience stores, for example, media messaging that is geared to unplanned or in-the moment purchases will be more effective. Larger grocery formats are better suited for pre-purchase messaging that reaches shoppers as they plan their major trips. Club stores, meantime, tend to attract loyal members who are receptive to communications about deals and long-term value. Ultimately, tailoring retail media strategies and the accompanying messages to a unique customer base and shopping patterns maximizes the impact of advertising.
Optimizing Performance in Retail Media
How can retailers and brands execute the best programmatic retail media strategies? Ongoing data analysis and a commitment to continuous improvement are crucial in understanding not only what works, but why it works. Advertisers can take several actions to get the most out of retail media, which has been shown to have up to five times the ROI as traditional advertising.
Analyze purchase data
Purchase data is central to RMNs. Brands should focus on analyzing who saw an ad and subsequently bought the product. Equally important is taking a look at those who saw the ad but did not convert. This helps determine if the message resonated and if further communication is needed.
Go beyond incremental ROAS
Although iROAS is a primary performance indicator for these programs, RMNs also serve as powerful brand-building channels. They offer a platform to tell a brand story to a relevant and engaged audience.
Leverage audience segmentation
The true power of retail media is unlocked through deep customer segmentation. Understanding the distinct needs and behaviors of different customer groups makes targeting more effective and reduces wasted ad spend.
Refine campaigns thoughtfully
To refine campaigns and maximize performance, reviews such as A/B testing are essential. Through A/B testing, brands can assess variations of ad creative, copy, or target parameters against each other to determine which performs best. This method provides data-driven insights to guide future campaign decisions.
Dynamic Creative Optimization (DCO) is another tool that can accelerate the effectiveness of RMNs. DCOs automate the personalization of ads in real-time using data signals such as browsing history, location, or past purchases.
Optimize Retail Media Performance with Circana’s Solutions
Navigating the complexities of the RMN landscape requires a partner with deep expertise in consumer behavior and advanced analytics. Circana provides the insights, technology and institutional knowledge to empower brands to master retail media. We also help brands and retailers maximize their ROAS through strong partnerships with Epsilon, Experian, Live Ramp, and others.
Our predictive analytics and proprietary technology enable clients to measure market share, understand the underlying consumer behaviors driving it, and activate strategies for accelerated growth. We turn complexity into clarity, revealing the nuances required for true consumer understanding. By connecting you to the entire landscape, we unlock new thinking and empower you to take immediate, informed action to evolve your growth strategies in this dynamic market.
