June 3, 2022

Pros & Cons of Retail Media Networks For New Product Launch

It’s official! retail media networks are not only here to stay, but also still growing rapidly. According to Merkle, a quarter of retailers received over $100 million in revenue on their networks in 2021. Additionally, 81% of CPGs plan to spend more on retail media networks in 2022.

As with any advertising tactic, there are pros and cons for brands looking to engage with retail media networks. Continue reading below to learn more about some of the benefits and challenges that CPGs are currently facing!

PROs

Direct access to known shoppers

In mobile advertising, one of the more challenging aspects of driving shoppers to individual retailers is aggregating the right audience. Retail media networks provide a simple solution; if a brand wants to engage known Walmart shoppers, it can reach them directly via Walmart Connect.

Several major retailers now enable direct access to their shoppers via their mobile apps and websites. Top retail media networks for CPGs include Walmart Connect (Walmart), Roundel (Target), and Kroger Precision Marketing (Kroger).

Build and sustain relationships with retail partners

A crucial element of building and sustaining brand growth is maintaining strong relationships with retailers. For decades, it has been critical that brands show that they are committed to driving shoppers to individual retailers in the form of trade promotions and in-store activations. 

Now, retail media networks provide another avenue by which a brand can prove its worth to a retailer. With enough resources, a brand can cover its distribution and earn prime placements both online and in-store.

Confirmation of return on ad spend

Because retailers can report directly on sales at the individual product level, brands can use their media networks to evaluate the effectiveness of this kind of digital ad spend. Tracking conversion is simple; a retailer can serve an ad on behalf of a brand, see a product added to a shopper's cart, and monitor whether it was actually purchased. 

Considering the frequent difficulties brands face in determining whether their ad spend impacts sales, retail media networks can be a huge asset in simplifying the process and closing that loop.

CONs

Costly Entry Fee

If a brand wants to direct spend toward a retail media network, they can expect to invest heavily. Retail media networks provide premium inventory for brands; armed with this knowledge, retailers can charge more than conventional programmatic options.

Brands looking to support products across entire distributions must be prepared to swallow these costs at several retailers. In an ideal world, marketing dollars would be unlimited. In reality, brands looking at retail media networks may be forced to make hard choices in terms of where their advertising budget goes and which retailers to prioritize.

Private label

Brands entering into retail media networks must also be wary of how retailers will use campaign data and learnings to support their own private label products. As retailers advertise on behalf of other CPG brands, they will learn more about how to successfully drive trial and purchase for individual items or categories based on your ad spend. 

Armed with this knowledge, retailers will likely position their private label products to known in-category shoppers after campaigns have wrapped. Brands have little recourse but to continue working alongside retailers and hoping that their investments prevent retail partners from pushing their products out in favor of private label.

Challenges with off-property media

While retailers have highly valuable media available on their owned and operated platforms, they still face a significant challenge of figuring out how to engage shoppers across the rest of the mobile web. 

Off-property retail media currently struggles to convert shoppers. The steps it takes from seeing an advertisement to adding promoted products to a retailer cart are lengthy and cumbersome to consumers leading to incomplete or inadequate user experiences. Contributing factors also include ineffective targeting, drop-off across landing pages, and difficulties promoting in-stock items.

Until retailers are able to solve this challenge, the most high-value media will be limited and exclusively on-property.

In Summary

Retail media networks contain significant benefits for brands, including direct access to known shoppers, opportunities to support relationships with retailers, and confirmation of return on ad spend. When evaluating retail media networks, brands must be wary of costs, potential issues with private label, and the limitations of off-property media. 

Furthermore, to address the off-property media challenges retailers should look into partners like AdAdapted to help simplify the off-property experience and driving greater conversion to purchase and sales. 

To learn more about how AdAdapted can support brands across retailers click below. For personalized subject matter expertise, email info@adadapted.com

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