Retail Media: A Complete Guide for Beginners

Introduction

In 2024, retail media networks (RMNs) are revolutionizing digital advertising, with the market projected to reach $100+ billion globally by 2026, offering retailers a powerful new revenue stream. It can fully redefine how brands connect with consumers and how retailers monetize their online presence.

Retail media networks leverage the power of first-party data and direct access to shoppers to create highly targeted advertising opportunities.

By integrating advertising within a shopping journey, RMNs can provide a win-win scenario for all the engaged parties. Brands can reach relevant audiences, consumers can leverage more relevant offers, and retailers have the possibility of unlocking new revenue streams.

This comprehensive guide will walk you through launching and managing a successful RMN.

You learn:

✔ Definition and key components of RMNs: The basics of RMNs, including their components, features, and role in the broader advertising ecosystem.

✔ Retail media trends and tendencies: Emerging technologies and shifts in consumer behavior that will shape the future of retail media networks.

✔ Benefits of custom retail media solutions: The key advantages and new opportunities that retailers can leverage thanks to the introduction of their RMNs.

✔ Development stages of a retail media platform: The process of project planning and realization; practical tips for retailers.

✔ Retail media challenges and overcoming them: The most common pitfalls and difficulties that retailers face in the RMN development and implementation process, as well as the ways to address them.

✔ Revenue growth through custom solutions: The most efficient monetization strategies and the ways to achieve the best profitability of your retail media network.

Definition and the Key Components of RMNs

In brief: From this chapter, you can learn what a retail media platform is, how it works, and its structure.

A retail media network (RMN) transforms your e-commerce platform into a high-margin advertising powerhouse. Like Amazon's $31B advertising business, an RMN enables brands to reach consumers precisely when they're ready to buy, leveraging your platform's unique first-party data.

At its core, an RMN is a digital advertising ecosystem. The power of RMNs lies in first-party data—the information gathered directly from customer interactions with your platform. While traditional advertising relies on third-party cookies and demographic assumptions, RMNs tap into actual shopping behavior, delivering:

• 2.7x higher click-through rates;
• 3.8% average conversion rate;
• 74% viewability rate;
• 40% higher profit margins.

Think of an RMN as your digital real estate monetization engine: every search, click, and purchase on your platform becomes an opportunity for targeted, contextual advertising that benefits both brands and shoppers.

What types of ads are available to brands?

• Sponsored product ads
• Display ads
• In-store digital ads
• Email promotion

Participants of RMNs

• Retailers
• Brands
• Customers
• Technology providers

How does a retail media network work?

Step 1. Data collection. The retailer gathers insights into customer behavior, including browsing patterns, purchase history, and demographic details. This data becomes the foundation for effective ad targeting.

Step 2. Campaign creation.Using the retailer’s self-serve ad platform, a brand can design a campaign aimed at the target group of customers who recently searched for similar products.

Step 3. Ad placement and delivery. Based on the campaign settings, ads are displayed on the retailer’s e-commerce site, mobile app, and potentially on in-store digital screens.

Step 4. Customer interaction.Customers can click to view more details when they see an ad while browsing. This action will direct them to the product page.

Step 5. Purchase and attribution. As customers purchase, the retailer attributes sales to specific ads and provides the brand with detailed performance analytics.

Step 6. Performance review. Brands can access the RMN platform to review key metrics like impressions and conversions. This data enables them to refine future campaigns based on actionable insights.

Retail Media Trends and Tendencies

In brief: Read about the trends shaping the present and the future of the retail media space and find out how to use them when building your RMN.

To ensure your platform can address the current market needs, you should stay tuned with all the latest trends.

What’s happening in this space now?

Advanced personalization

Retailers can gain access to vast amounts of first-party data. This allows them to deliver highly customized ad experiences that resonate with individual shoppers’ preferences, behaviors, and purchase histories.

ML algorithms and AI tools can analyze customer data in real-time. This makes it possible to predict what individual shoppers might be most interested in. As a result, RMNs can ensure more relevant ad placements and content recommendations across different channels.

Key value: With advanced personalization functionality, retailers can provide shoppers with highly relevant, timely, and engaging ad content. This leads to better engagement rates, more decisive conversion, and increased customer loyalty. At the same time, this also maximizes advertisers' return on ad spending.

How to address this trend:

• Carefully collect, store, and process first-party user data, build and customise profiles based on this data;
• Identify segments of consumers by their needs and preferences;
• Monitor and analyze user reaction to personalized messages;
• Equip your RMN with real-time personalization and recommendations;
• Introduce AI predictive analytics and ML models;
• Launch dynamic ad creation to adjust visuals, messaging, and call-to-actions based on the user’s browsing history or loyalty status.

Growth of omnichannel advertising

Retailers can now unite online and offline shopping experiences for customers. Omnichannel advertising enables brands to connect with their target audience across digital and physical touchpoints.

Key value: Integrating digital ads with in-store experiences helps improve customer engagement and reinforce messaging, creating a smooth customer journey across channels.

How to address this trend:

• Offer full-funnel advertising solutions that engage customers at every stage, from discovery to post-purchase;
• Connect data from various shopper interactions to create a cohesive customer journey map;
• Provide a complete view of individual customer preferences, extending beyond online-only interactions;
• Use real-time insights and AI to deliver personalized and consistent ad experiences across all channels;
• Avoid internal data silos to allow smooth, continuous data flow between systems and applications;
• Provide comprehensive tools for assessing the impact and effectiveness of campaigns across multiple channels.

Focus on retail media measurement and reporting

According to the latest statistics, 75% of advertisers consider measurement options among decisive factors when evaluating which RMNs to use.

Brands seek to understand the exact impact of their ads on in-store and online sales. That’s why advanced measurement tools and attribution models are now critical to retail media.

Key value: Retailers can give brands more precise insights into customer journeys and ad effectiveness. This can result in better-optimized ad spend and a more substantial return on investment (ROI) for advertisers. At the same time, this helps to increase advertiser satisfaction and loyalty, which can boost ad sales and retail media revenue growth.

How to address this trend:

• Provide a unified view of performance metrics, displaying key KPIs ( impressions, clicks, and conversions) in real-time;
• Offer complete visibility into every ad, campaign, and channel. Integrate data across touchpoints to support continuous tracking and clear attribution;
• Share insights that clarify how specific interactions drive sales and repeat purchases;
• Standardize data reporting formats.

Interest in offsite retail media placements

Today, we can observe a significant trend toward offsite media placements. This concept presupposes advertising that extends beyond a retailer’s owned platforms to external digital environments like social media, publisher websites, and search engines.

Key value: By placing ads on third-party platforms, retailers can reach shoppers earlier in the purchasing journey. The first interaction becomes possible before people visit the retailer’s website or app. Moreover, offsite ads allow retailers to re-engage customers who may have browsed products but didn’t complete a purchase. It is possible to do it through well-timed retargeting on other platforms.

How to address this trend:

• Integrate your RMN with demand-side platforms (DSPs) to automate ad serving on external websites and apps;
• Let brands place their ads on streaming and CTV platforms;
• Establish cooperation with audio streaming and podcasting platforms to include audio ad format into the list of your offers;
• Introduce shoppable ads on social media platforms;
• Implement targeted promotions on digital displays within physical stores.

Expansion of programmatic ads and real-time bidding (RTB)

Programmatic advertising and real-time bidding are becoming more popular in retail media. They greatly facilitate the process of publishing ads for brands as they allow for automated, data-driven ad placements based on customer behaviors and ad budgets.

Key value: This approach enables efficient ad placement and real-time optimization. As a result, increasing reach and engagement without manual intervention is possible, which ensures more effective campaigns.

How to address this trend:

• Offer automated ad buying to reduce manual effort and accelerate the ad placement process;
• Allow advertisers to bid on ad inventory in real-time during the ad auction process;
• Enable advertisers to adjust their bids based on performance metrics or market conditions;
• Introduce data-driven ad targeting;
• Provide robust analytics and reporting features that will help advertisers track the performance of their campaigns in real-time.

For more useful information on the latest retail media trends, check out one of our previous blog posts.

Benefits of Custom Retail Media Solutions

In brief: Is it worth investing in custom development? Or can off-the-shelf solutions fully address your needs? Find answers in this chapter.

Businesses must choose between ready-made platforms and custom solutions when entering retail media. While off-the-shelf platforms offer quick deployment and lower upfront costs, they come with significant limitations that can impact long-term success.

Limitations of ready-made retail media platforms

1. Lack of flexibility and proper customization. When you build your retail media networks, you can consider all your specific processes and unique advertising capacities. In the case of off-the-shelf platforms, you must deal with pre-configured features, as the room for customization can be restricted.
2. Limited omnichannel integration. Most ready-made retail media solutions are intended to work only with traditional digital channels, such as websites and mobile applications. It means they may not allow brands to work with physical store advertising or email campaigns.
3. Limited advertising format options. Off-the-shelf solutions do not always offer a wide selection of ad formats. This can restrict the opportunities for brands and significantly reduce ad performance.
4. Low chances to stand out in the market. The retail industry is rather crowded today. That’s why you need to differentiate yourself from competitors if you want to succeed. However, it is impossible to do it with a standard set of features and ad formats on your platform.
5. Vendor lock-in. As a rule, ready-made retail media platforms are proprietary. This can make you highly dependent on the vendor’s decisions. It means you won’t have complete control over your RMNs, which may negatively affect user satisfaction.

Why is it worth investing in custom development?

Integration capabilities. When you have a custom platform, you can connect your RMN with any tools, solutions, and services that may be valuable to you and advertisers. For example, CRM, ERP, social media, data management platforms, and financial and marketing automation software are among retail media networks' most highly demanded integrations.

Performance and scalability. Your custom platform can be tailored to fit your unique needs and goals as your business grows and evolves. Many ready-made solutions can cope only with limited levels of maximum loads. When the number of ad inquiries, users, or transactions goes beyond the set level, businesses may face serious tech issues, including software freezing and downtimes. With a custom RMN, it will be possible to address the platform scalability needs at the development stage.

Advanced data management and analytics. You can enrich your platform with cutting-edge tools for working with first-party data. Your RMN can be fully tailored to deal with massive amounts of data received from multiple sources. This will allow advertisers to leverage actionable insights based on their needs. Moreover, custom development will let you maintain data privacy and security in full compliance with regulations that are in force in your region.

Omnichannel engagement and personalization. In these aspects, your possibilities with custom development will be significantly broader than in the case of ready-made software. For example, traditional segmentation tools may need more accuracy. To overcome this challenge, you can introduce AI-powered segmentation that automatically identifies patterns and creates audience segments. You can also introduce cross-channel personalization and omnichannel experiences, boosting conversions and driving sales.

Yes, custom software development involves a larger initial investment than off-the-shelf solutions. However, weighing the upfront costs against the potential ROI is essential. Tailored specifically to meet retailers’ unique requirements, custom platforms can deliver superior efficiency. As a result, this can lead to substantially higher profits in the long run.

Development Stages of a Retail Media Platform

In brief: This chapter provides practical recommendations and an approach to the development process for those wishing to start their retail media journey and build a bespoke retail media platform.

To achieve the efficiency of your RMN and create a really powerful tool, you need to approach the development process correctly. And here’s how you can do it.

Step 1. Strategic planning and goal-setting

Start by defining clear objectives. It would be a great idea to follow the principles of SMART goal setting. Your goals should be Specific, Measurable, Achievable, Relevant, and Time-bound.

For example, you want to increase your revenue. In this case, you can formulate your objectives in the following way:

• Our monthly revenue increase will be supported by sales of ad space on our website and mobile app. (Specific)
• We aim to grow revenue by 20%, meaning we need an additional $20,000 monthly. (Measurable)
• We will introduce our retail media platform with all the necessary tools for advertisers to meet our goal. We will offer discounts and bonuses for brands to retain them on our platform. (Achievable)
• This goal corresponds to our plans to build a retail media business and increase profitability. (Relevant)
• This revenue goal should be achieved within the next five months. (Time-bound)

Next, identify your target audience, considering which brands and advertisers your platform will serve. To do this, you must analyze the primary customer segments that shop on your retail platform. Based on this, you will be able to understand what brands will consider your digital ecosystem suitable for promoting their products.

This knowledge will guide decisions on platform features, ad types, and available ad placements. For example, sponsored searches can be a good option for smaller brands, and top-tier advertisers can be more interested in premium display ads.

At this step, choosing the features that will be available on your future retail platform is essential.

What functionality is typically created for RMNs?

• Ad inventory management;
• Real-time bidding (RTB);
• Audience segmentation;
• Behavioral and contextual targeting;
• Ad serving and personalized ad delivery;
• Automated campaign management;
• Analytics and Reporting.

And finally, think about the development team that you can rely on. While only some retailers have the required expertise in-house, outsourcing has become a viable option.

What can you get working with an outsourcing development team like Geomotiv?

• Exclusive AdTech expertise;
• Flexibility and easy scalability in team composition;
• Deep understanding of the tech trends and retail media market needs;
• Comfortable engagement models;
• Reasonable price-quality ratio.

Step 2. API development and system integration

A well-designed retail media system usually requires APIs to support smooth communication between different platform components. These APIs can enable ad placement, targeting, reporting, and payment processing, among other functions.

Common APIs for retail media platforms include:

• Ad serving API. It manages ad delivery across the platform and tracks user interactions.
• Programmatic advertising API. This API integrates a demand-side platform (DSP) for RTB, automating ad buying.
• Campaign management API. It enables brands to manage and optimize their ad campaigns.
• Billing and payment API. This API handles billing between advertisers and retailers and manages payments.
• Ad reporting and analytics API. It provides insights into ad performance for both retailers and advertisers.

Step 3. Data management and security compliance

Data is one of the RMN’s most valuable assets. Retail media platforms rely heavily on first-party data, representing highly sensitive information. That’s why data collection and storage require careful management and proper protection.

Today, retailers often use data management platforms (DMPs) to organize and process customer data.

Regulations like CCPA and GDPR guide security. How can you protect first-party data to avoid breaches and losses that can lead to serious financial and reputational damages?

• Introduce robust security features like multifactor authentication (MFA), end-to-end encryption (E2EE), and role-based access control (RBAC);
• Perform regular security audits and vulnerability scanning;
• Keep sensitive data anonymized;
• Continuously monitoring access logs and system activities.

In case of suspicious behaviors or patterns, it is crucial to take measures immediately.

Step 4. Personalization and AI integration

AI has become a buzzword today. However, in the case of custom RMNs, its introduction looks more like a necessity than a modern trend.

Why AI?

• AI-powered personalization enhances ad relevance, which successfully drives engagement and conversion rates. 
• By analyzing user behavior, preferences, and demographics, AI algorithms can identify patterns and tailor ad creatives in real-time. 
• Moreover, AI-driven engines can recommend products, promotions, or ads, providing personalized experiences across web, mobile, email, and in-store channels.

Step 5. Testing, continuous monitoring, and optimization

Thorough testing is essential before a full-scale launch. We recommend you start with a pilot phase. It can allow a select group of advertisers to provide feedback, ensuring all features work as intended.

Once live, continuous monitoring enables the detection of issues and optimizes platform performance. AI-driven analytics tools can track ad performance, identifying areas for improvement to refine user experience.

You can establish partnerships with brands, agencies, and data providers to maximize the platform's value. Such collaborations can enrich the platform’s offerings, helping retailers expand their reach and enhance ad targeting capabilities.

Retail Media Challenges and Overcoming them

In brief: RMN development can be associated with some challenges. This chapter tells you how to address them to mitigate their consequences.

The RMN development and running is an entirely seamless process. In the case of any other digital solution, implementing a retail media platform is associated with a row of challenges. However, with reliable solutions at hand, you can fully overcome or at least mitigate them.

Challenge 1. Technology deployment and integration complexity

Complex integration of platforms, channels, and data sources with existing infrastructure requires specialized expertise.

How to overcome it?

Implement open, scalable architecture through modular design, enabling seamless integration and future adaptability. Partner with experienced developers who understand retail media technical requirements.

For example, at Geomotiv, we usually opt for modular software architecture. It includes the division of a solution into independent modules. This approach makes solutions more secure and manageable.

Challenge 2. Data fragmentation and lack of transparency

Retail media networks often contend with fragmented data silos. As a result, it becomes hard for advertisers to get a unified view of campaign performance across platforms. Managing and standardizing data from various sources can be challenging due to differing reporting standards.

How to overcome it?

We recommend you invest in data aggregation tools like CDPs or DMPs to consolidate data into a single dashboard for more straightforward analysis. Collaboration with other retailers, despite competition, can also be beneficial. Adopting standardized metrics makes data sharing between networks smoother and more effective.

Challenge 3. Pricing concerns and feasibility of investments

Implementing retail media technologies can be costly, especially for small and mid-market retailers, creating a significant barrier. Additionally, measuring the ROI of campaigns and solutions can be challenging, complicating the pricing process for retail media services.

How to overcome it?

To manage costs and assess feasibility, retailers can partner with a professional agency with AdTech like Geomotiv. Such agencies can offer consultancy services and provide cost estimates and ROI evaluations. This will help you to find budget-friendly solutions that meet their needs.

Challenge 4. Balance between ad revenue and customer experience

Retail media ads offer strong revenue potential, but excessive or poorly placed ads can harm customer experience. Issues like irrelevant ads, poor placement, and slow loading times may lead to higher bounce rates and cart abandonment.

How to overcome it?

While revenue is significant, prioritizing customer experience is essential. Ads should be strategically placed to avoid disrupting shopping, especially near checkout. Ensure ads are relevant, visually appealing, and load quickly. Use A/B testing to find the best ad placement and frequency, making adjustments based on performance data to maintain an optimal balance.

Challenge 5. Competition from established retail media networks and retail businesses

Such giants as Amazon, Walmart, and Target lead the retail media space, making competition challenging for other businesses.

How to overcome it?

Smaller retailers can focus on niche audiences, offering targeted ad placements relevant to specific brands. They might offer premium ad spots like sponsored newsletters, personalized app notifications, or in-store ads, which can attract brands seeking exclusivity.

For larger retailers, upgrading legacy systems and investing in data analytics and Big Data tools is key to staying competitive. These solutions streamline processes, reduce costs, and improve logistics management, ultimately strengthening their market position.

Moreover, loyalty programs and incentives effectively draw customers and foster brand loyalty.

Revenue Growth through Custom Solutions

In brief: Finally, you have decided to launch a custom RMN platform. This chapter contains some ideas on how to monetize it.

Any retailer allocated a budget to developing a custom RMN expects to maximize revenue and fully return the investment as soon as possible.

Here are some tips that can help you in achieving these goals.

Select the right monetization model for your RMN

Your choice should depend on the types of ads that you offer to place across your channels and advertisers you primarily work with.

• CPC (cost per click). In this case, advertisers must pay for every sponsored product click. This simple model is suitable even for smaller brands with limited budgets. 
• CPI (cost per impression). The fee is calculated based on the number of impressions. Though this is a popular model, advertisers have better options focused on conversions. Impressions do not always correlate with actual sales.
• CPM (cost per mille). This model presupposes paying for every 1,000 impressions. It can be appropriate for advertisers that prioritize brand visibility over direct sales.
• CPA (cost per acquisition). Advertisers pay only for conversions. This option is low-risk for brands. And the outcomes are easily measurable.
• Flat fees.  As a rule, fixed rates are taken for premium ad placements. This model is easy to understand, but its implementation often leads to the necessity of introducing different tiers for smaller and larger advertisers.
• Sponsored offers. Brands pay to feature their products in loyalty programs, emails, or app notifications. That’s a good way to monetize your platform. However, smaller brands may find it rather expensive.
• RTB (real-time bidding). The amount to be paid is defined based on the auction price for ad placements. This model helps to get higher revenue per impression during competitive times.

Build Partnerships with advertisers and brands

Establishing strong relationships with advertisers is crucial for a thriving retail media network.

What can you do to attract advertisers?

• Offer precise targeting and exclusive insights into customer preferences and purchase patterns;
• Introduce comprehensive tools for monitoring ad performance;
• Provide customizable ad options;
• Ensure transparency in data sharing and reporting;
• Build solid security measures;
• Regularly update and enhance your platform.

Scale and innovate

You should be open to innovation to stay competitive in the evolving ad landscape. By continuously adapting and scaling your offerings, you can attract new advertisers and increase retention by consistently delivering value.

How can you enhance your RMN?

• Leverage advanced AI and ML tools for personalization;
• Expand omnichannel capabilities;
• Go beyond standard ad formats and offer interactive and shoppable ad experiences;
• Offer flexible monetization models;
• Invest in robust data analytics and reporting tools;
• Continuously experiment with emerging technologies.

Wrapping up

Building a custom retail media network is a transformative strategy for retailers seeking to unlock new revenue streams.

By leveraging first-party data, adopting diverse ad formats, and continuously innovating, you can create a strong competitive edge and open new opportunities to modify your interaction with brands and consumers.

Despite some potential challenges related to developing and implementing an RMN, a well-executed retail media strategy can transform your business and drive long-term growth.