Retail media networks: The secret weapon for your digital store

Daniel Landsman
Global Director of Ad Tech Solutions
July 5, 2022|8 min read

While ecommerce was growing before the pandemic, it accelerated during the lockdown as more consumers relied on digital to buy everything from groceries to sofas. What some retailers might not realize, however, is that this shift in consumer buying habits represents a golden opportunity to boost market share and increase profits by becoming retail media networks.These networks use the data collected on consumers through their online shopping to help brands better connect with consumers. This data gives brands insight into a consumer’s buying habits, which helps them better craft ads to target that consumer.In other words, a retail media network operates like an advertising business. Retailers allow brands to buy advertising space on the retailer’s online sites. Think about it like digital signage inside the store, but given that the shopper is already there, the time from ad to scale can hasten the purchase and enable faster ROI giving real clarity during checkout enabling closed loop attribution.

The value of consumer data

The Census Bureau’s Annual Retail Trade Survey, ecommerce sales in 2020 (the first year of the pandemic) skyrocketed from 2021 by $244.2 billion, or 43%. Digital 360 estimates the pandemic contributed an extra $218.53 billion to ecommerce profits during the last two years.That boost to online retail activity has led to the emerging trend of retail media networks. Any sizable retail establishment that does not currently have a retail media network is likely missing out on revenue and sales.

This comes at a time when third-party cookies are being phased out by Apple and Alphabet so advertisers will have a more challenging time tracking consumers. But, with retail media networks, first-party data on consumers from retailers still gives advertisers a way to customize ads for consumers based on their buying habits, on-site browsing activity, or search intent. This ability to augment audiences with first-party data allows advertisers to deterministically target their ideal customers. For retailers, it can be seen as a key to developing brand loyalty, upselling, and cross-selling to individuals through leveraging mass personalization across their network.

A Trade Desk retail report finds that 81% of consumers now have a registered digital account with a retailer. Some 53% of consumers say they have noticed sponsored products or ads on retail websites. More importantly, the number of marketers who say they intend to use sales data very frequently is expected to triple in the next year.I can’t stress enough that this is an important and growing trend: 74% of brands have dedicated budgets for retail media networks, according to The Trade Desk’s research. As those third-party cookies leave the Google stage, there is going to be a real push to find ways to replace mass targeting consumers while also complying with global privacy regulation.

Powerful sources of revenue

Bain & reports that retail media spending is expected to jump $25 billion from 2018 to 2023. Such an increase is being driven by retailers reimagining current digital platforms as valuable advertising space for brands and marketplace partners.Of course, this doesn’t mean that retailers will abandon their in-store placements or catalog promotions. Trade Desk research shows that 53% of consumers still mostly shop in brick-and-mortar stores. Some 70% of consumers say they still want to do their grocery shopping in a physical store.Still, in a hyper-competitive marketplace, no retailer can afford to ignore the robust revenue stream that retail media networks can provide. McKinsey & Co. partner Jess Huang says retail media is a way “to break through the noise” and attract consumers.Consider that many retailers have already created retail media networks. For instance, Walmart is the largest supplier of shopping data across a wide array of consumer products. It now has a demand-side platform (DSP), supported by the Trade Desk.This means advertisers now have access to Walmart shopper data. Other retailers like Target, Walgreens, Home Depot, CVS, and Ulta are also creating such networks, although how each one may be structured may be different.

Let me give you an example of how a retail media network can work. Let’s say a grocer knows through its data that a consumer buys a certain toothpaste once a month. Now this grocer can offer this favored toothpaste brand a chance to target this consumer with ads – or give another toothpaste brand an opportunity to “conquest” this consumer. This means that this toothpaste competitor will try to switch the consumer and change buying preferences. In addition, a dental floss brand or a toothbrush company might want to also buy ads to target this consumer as a cross-sell or upsell opportunity.Now let’s look specifically at Target’s retail media network, known as Roundel. Target says that last year it worked with MarsWrigley to highlight holiday candy. To do this, Target tapped into its “insights” and created custom holiday-themed creative for every major candy occasion (holidays, gifts).“We pinpointed the best channels – in this case, online, mobile and social – and delivered the ads to relevant Target guests. We followed with robust reporting that measured the campaign’s success – including thousands of dollars in savings for our guests and an impressive double-digit sales lift,” Target reports. Specifically, Roundel uses Index Exchange and Criteo supply-side tech as well as Criteo and CitrusAds on the buy side. It may be the case as a retailer you decide to stitch together platforms to enable you to spin up a retail network. It may also be the case that it makes more sense to build in house.

In the case of Home Depot, its Retail Media+ offers first-party data to advertisers. Home Depot touts its reach (45 million customer households online and in 2,200 stores). It offers onsite advertising to access customers through ads on its online channels, and offsite advertising that places ads on social media channels after customers have viewed certain product pages online. It also offers ad placements within Home Depot promotional emails.Ulta’s UB Media promotes its 37 million Ultamate Rewards members that can be reached by advertisers through offsite display, videos and social and influencer presence. It also says advertisers can gain access to targeted consumers through onsite sponsored and display products. For brand partners using UB Media, Ulta says they will have access to closed-loop reporting, such as audience data and creative insights.

Retail media effectiveness

Another way to boost revenue through retail media networks is offering brands a chance to buy specific positions on a website for their ads. For example, a product placement at the top of a website will cost more for that advertiser similar to product placement on the grocery store shelf. Or, the ad may be placed on a specific page, such as a search page or a product detail page, enabling advertisers to reach consumers at various stages of the buying journey maximizing effectiveness.

This ability to place ads where the right consumers will see them and possibly lead to a purchase is what has people like Huang touting the effectiveness of retail media.She explains that while CNN may run an ad for a new television, once the consumer clicks on that ad for the TV and goes to that website to buy it, there’s no way for the retailer to know what has happened. In other words, the attribution link for the retailer doesn’t exist. But with a retail media network, the electronics company pays the retailer for the ad. Then, when the consumer clicks on the TV ad, goes to the store website and makes the purchase, it’s clear that the ad worked. She says this is called “closing the loop” and why retail media networks are so effective.

How Aerospike can help

One of our customers, Wayfair, provides a great example of how Aerospike can make a big difference in ecommerce.Specifically, Aerospike has allowed Wayfair to read and write data hundreds of thousands of times a second to provide the best customer service and make relevant recommendations to users. In a millisecond, Wayfair can consider the similar products purchased by the customer, reviews and best-sellers to make that unique customer suggestion.There are several ways Aerospike can support retail media networks. Among them:

  • Recommendation engine. Aerospike allows you to increase online engagement with a fast data layer to support multiple requests per recommendation.

  • User profiles. Aerospike stores rich user profiles to leverage and build context when serving ads with speed and low latency.

  • Handle data efficiently. Customers using Aerospike typically

    reduce server footprint by 80% even as business and data grow.

  • Unlimited scale. Aerospike offers predictable performance from gigabytes to petabytes of data.

  • Secure. A rich set of enterprise security features such as data encryption, authentication, authorization and auditing means you’re safe with Aerospike.

  • Resilient. Aerospike’s high availability design principles and operating controls guarantee five nines of uptime.

  • Reliable. Aerospike can provide 99% of reads/writes in under one millisecond and predictable low latency at high throughput.

It’s clear that retail media networks are emerging as an effective and important tool in providing customized consumer experiences and boosting revenue. No one can afford to ignore this trend. Contact Aerospike today to learn more to see how we can help power your retail media network.