What Is a Retail Media Network and How to Build One?

Thanks to the recent changes made in AdTech, both advertisers and publishers have a lot of new opportunities to organize their activities in the most efficient and mutually beneficial way. There are different types of digital tools and platforms that help them do this. Retail media networks (RMNs) are among them. The demand for them is continuously growing in the retail media space amid the increasing focus on first-party data, instead of the data gathered by third parties.

In this article, we are going to talk about:

• RMNs concept;
• RMNs benefits for business;
• Practical tips for building custom platforms of this kind.

What Is a Retail Media Network?

This way of placing ads presupposes reaching consumers with ad messages during their entire digital interaction with a retailer, starting from their first touch with its products and ending with the point of sales. This can also include some in-store advertising. Nevertheless, the key communication is transferred to the digital space.

At Geomotiv, we closely work with the AdTech industry and digital solutions for its participants. That’s why we try to do our best to stay tuned with all the trends and changes in this domain. In recent years, we have observed the skyrocketing popularity of platforms of this type. It is related to the fact that retailers and brands continuously look for new ways to work with advertising in the digital environment. Retailers want to increase their profits and create new revenue streams by monetizing their digital assets. At the same time, brands see the growing competition in different markets and need to implement more effective methods to attract consumers' attention.

With RMNs, brands can place their advertising messages in different formats, such as:

• display ads;
• sponsored product ads;
• online and offline in-store promotions;
• targeted email campaigns.

In 2023, the retail media network market size was $21.07 billion; in 2024, it is expected to reach $22.71 billion. The forecasts for 2028 are also quite positive as this figure is projected to increase to $31.7 billion. It means that the CAGR from 2024 to 2028 will be around 8.5%.

Analysts attribute this growth to factors such as a greater focus on customer experience and personalization, e-commerce and social commerce, dynamic promotions and pricing, and advancements in ad analytics.

The expansion of such networks is also related to another factor. Nowadays, there are many talks about the potential harm of traditional third-party cookies. Though there were some plans to prohibit their use, they are here to stay, at least for now. Nevertheless, there is an obvious shift toward first-party data, which means a company collects data directly from its customers through its own channels and platforms. This type of data is highly valuable. It is considered to be reliable and privacy-compliant, as the company has a direct relationship with the customers who provide it.

Google, Meta, and many other players in the digital space rely on third-party data. Target and context ads are also powered by the information about online user behaviors collected in browsers. However, retail media works directly with first-party data. It includes the history of purchases, page visits, adding to favorites, the average amount spent, statistics of abandoned carts, etc. Access to such information is an essential feature of RMNs.

It is important to name the key components and participants of RMNs.

• Retailers. These are the owners and operators of such networks. They can be large retailers, as well as brick-and-mortar or e-commerce businesses. Retailers can benefit from launching such networks by monetizing their customer base and digital platforms through advertising.
• Brands. These companies are ready to pay to advertise their products on the retailer’s platforms and facilities. Brands can rely on RMNs to drive product visibility and increase sales.
• Customers. They are the end users who engage with the retailer’s digital platforms, purchase, and consume the advertising content. Retailers can take insights from their behavior and shopping habits to boost the targeting capabilities of their media networks.
• Technology providers. Adtech companies enable programmatic ad buying, real-time bidding, and audience segmentation. Examples include companies like Criteo, The Trade Desk, Google, etc. Moreover, retailers can turn to software development companies with expertise in AdTech and retail, like Geomotiv, to build their own digital tools and technologies.

Quite often retailers also turn to the assistance of companies and tools that provide data analytics, customer insights, and measurement capabilities. These partners help them track campaign performance, attribute sales, and refine targeting strategies.

How Do RMNs Work?

When we already have retail media networks explained, it’s time to look closely at how they work.

With the help of such media networks, retailers make it possible for brands to purchase advertising across various digital channels, like websites and apps. It is important to note that the list of available options can include not only those channels that are owned by retailers directly. It can also include channels owned by third-party media companies that collaborate with these retailers. This allows brands to access extra ad inventory and expand their reach beyond the digital properties owned by a retailer.

A simplified workflow of am RMN looks the following way:

1. A retailer collects data on its customers’ browsing habits, past purchases, and demographics that provide valuable insights for advertising.
2. A brand uses the retailer’s self-service ad platform to create a campaign. It can be targeted at users who have recently searched for similar products.
3. Following the set requirements, the company’s ads can be demonstrated to customers on the retailer’s e-commerce site and/or mobile app. The ads may appear as sponsored product listings, banner ads, or personalized promotions. They can also be shown on in-store digital displays.
4. When customers see the ad while browsing products, they can click on it and be redirected to the product page.
5. Customers make purchases. The retailer can attribute these sales to the ad and provide detailed analytics to the brand on ad performance.
6. Brands can also access the RMN platform to view metrics like impressions and conversions. They can also adjust their future campaigns based on these insights.

Benefits of Retail Media Networks

Understanding pros and cons of RMNs will also help you make a well-grounded decision about the feasibility of creating such a platform for your business.

Benefits for retailers:

• Traffic monetization. Your website and app traffic can become your new revenue stream without requiring extra physical inventory or services investment. RMNs allow retailers to monetize their online and in-store platforms by selling ad space to brands. 
• Use of first-party data. Retailers can access valuable first-party data on their customer behaviors, preferences, and purchasing patterns. RMNs can offer advertisers precise targeting capabilities. This type of data is becoming increasingly valuable amid the growing privacy regulations and talks about the potential decline of third-party cookies.
• Increased customer engagement. With the help of RMNs, retailers can deliver more relevant and personalized advertisements to their customers. This can result in better engagement and higher conversion rates, ensure a smoother shopping experience, and boost loyalty.
• Enhanced customer insights. RMNs provide retailers with deeper insights into customer preferences and behaviors through the data collected from ad interactions and a platform. This data can help them better understand which products enjoy the highest popularity and which marketing strategies work more efficiently than others.
• Control over their entire advertising ecosystem. With such platforms, retailers can maintain control over all the types of ads shown and the overall customer experience. Unlike external ad platforms like Google or Facebook, RMNs allow retailers to safeguard their brand image and consistently grow their advertising revenue.

Benefits for advertisers:

• Precise targeting. RMNs provide brands with access to a retailer’s audience of active shoppers who are already engaged and ready to buy. Brands can target specific customer segments based on real purchasing behaviors. As a result, they can successfully improve ad relevance and impact. Precise targeting improves return on ad spend (ROAS) by reducing wasted impressions and focusing on high-potential customers.
• Sales attribution. Retail media networks offer clear sales attribution by linking ad exposure to actual purchases. This gives brands visibility into the ads that are driving conversions and sales. This makes it easier to calculate return on investment (ROI).
• Increased brand visibility and recognition. RMNs provide premium placements like sponsored product ads and banner ads that appear alongside organic search results. This boosts brand visibility and product discovery. For smaller brands and new products, retail media networks provide a way to compete for visibility alongside their more established competitors.
• Better control over ad spend. Many solutions of this kind offer self-service platforms. They enable brands to set budgets, control bids, and optimize campaigns in real time. This allows them to have more control over their advertising strategies and make data-driven adjustments.

Benefits for consumers:

• Higher personalization. Retail media networks use customer data to deliver more relevant ads given individual preferences and shopping habits. For consumers, this means that they can see product recommendations and promotions that can be potentially interesting to them. Personalized advertising often feels more helpful to shoppers, which improves their overall satisfaction.
• Access to exclusive offers. Some RMNs may feature exclusive deals, discounts, or personalized customer promotions. Such elements can function as additional incentives to complete purchases. For customers, this provides a more rewarding shopping journey.

How to Build a Retail Media Network: Actionable Guide

Before starting the realization of any project, you should clearly understand how the entire process will be organized. This will help you to plan your time and allocation of resources better. That’s why we have prepared a guide for you containing all the significant steps in this process.

Step 1: Define your business goals and choose a monetization strategy

Behind every project, there should be precise business objectives. Launching a retail media network is not feasible just because you’ve heard that many retailers do this. You need to determine what you are expecting to get from it. Revenue stream diversification, profit generation, getting a new competitive advantage, customer experience enhancement, etc.

5 most common RMNs’ monetization strategies:

• Sponsored product listings. Brands pay to display their products prominently on search results pages or category listings within the retailer’s website or app. Advertisers may pay based on the number of clicks shoppers make on a sponsored product (cost-per-click) or the number of times their product is displayed (cost-per-impression).
• Display or banner ads. Retailers offer ad space for brands to promote their products. These ads can be shown on homepage banners, category pages, product detail pages, or customer email newsletters. Advertisers may pay based on the number of views, based on the number of clicks, or based on a specific action (like a purchase or form submission).
• Video ads. Retailers can also offer video ad placements on their websites, apps, or CTV platforms. Advertisers may pay based on how often their video ad is viewed or when a user watches a specified portion of a video ad (for example, at least the first 5 seconds). There is also a model when brands are charged based on user interaction with their ads (like clicks, scrolls, or purchases).
• Instore digital ads. Retailers can monetize physical spaces (kiosks, digital displays, interactive screens) by offering digital advertising in stores. In this case, advertisers pay to have their ads or promotions displayed on in-store screens. Revenue models can be based on ad impressions or flat sponsorship fees.
• Customer data monetization. Retailers can monetize their first-party customer data. They can do it by offering this data to brands for precise audience targeting in their campaigns.

Step 2: Choose the right technology stack

The set of technologies will significantly depend on the exact functionality you will opt for, the desired architecture, and the necessary integrations. As a rule, a tech stack is chosen in cooperation with your development team.

Here are some tools and solutions you may need to integrate your RMN.

• Ad server. It functions as a backbone of a retail media network. It delivers ads to customers and tracks impressions, clicks, and performance. Kevel Ad Server, Butler, and Epom Ad Server are examples of such solutions available today.
• Demand-side platforms. Brands use DSPs to place bids on ad inventory available on the RMN. The DSP connects to multiple retailers and publishers. It means that advertisers can purchase inventory based on their specific targeting criteria. Such platforms include Amazon DSP, Yahoo DSP, The Trade Desk, Adform, and Display & Video 360 by Google.
• Supply-side platforms. The retailer's ad inventory is managed through an SSP. It optimizes the availability of ad space and connects it to multiple DSPs. OpenX, Magnite, and Google Ad Manager are well-known platforms of this kind.
• Data management platforms. Retailers use DMPs to gather and organize customers’ data and create audience segments. Advertisers use these segments through DSPs to target ads effectively. The examples are Liveramp, Adobe Audience Manager, and Oracle BlueKai Data Management Platform.

And of course, there should be a retail media platform itself that will allow you to manage and sell your advertising inventory.

Step 3: Leverage first-party data

As we’ve mentioned, one of the main advantages of RMNs is that they work directly with first-party data. However, together with the power that it brings, here comes the responsibility.

You should deeply study the regulatory framework that manages the use of personal data in your region and implement the best practices of ethical and secure work with it.

By creating audience segments based on actual shopping behaviors, preferences, and past purchases, you can allow advertisers to target these segments with their personalized ads.

Step 4: Build partnerships with advertisers and brands

To attract advertisers to your RMN, you should provide them with high-quality and beneficial offerings.

Precise audience segmentation, high-intent audience targeting, better attribution data, access to consumer insights, different ad formats, and a continuously growing customer base are among the factors that will look appealing to brands.

Moreover, you should think about the brand identity of your RMN itself. You should promote it correctly and position it as a platform that connects advertisers directly with a ready-to-buy audience. Do not forget to highlight your network’s ability to deliver relevant and timely ads to consumers who are already shopping.

Also, consider hosting events or webinars to establish your network as a must-use platform for advertisers.

Step 5: Optimize and scale the RMN

Constant improvement is a must. We recommend you rely on data analytics to enhance ad performance.

It will also be a good idea to expand your network across various digital touchpoints to widen the reach of the published ads.

What You Should Think about When You Build a Retail Media Network

As well as the development of any other digital solution, the creation of RMNs has important points to pay attention to.

Data architecture and integration

Developers should find the right approach to integrate the new system seamlessly with the retailer’s e-commerce platform. This will allow the RMN access to product data, inventory, and customer purchase history.

Moreover, you should consider the integration of your RMN with Customer Relationship Management (CRM), Point-of-Sale (POS) systems, and other systems. Thanks to this, you will have a 360-degree view of the customer journey.

Establishing collaboration with third-party data providers, DSPs, and analytics platforms can also be sensible. By integrating their data, it is possible to expand targeting capabilities and enhance campaign performance.

Ad serving technology

Ad placement, targeting, and reporting are among the core features that you should focus on. The overall success of your retail media network will depend, namely, on the efficiency and accuracy of this functionality.

For a more detailed description of the process, please refer to the scheme here.

Given the industry standards and today’s market expectations, you need to deploy or integrate an ad server capable of handling multiple ad formats and rely on real-time bidding (RTB) for programmatic advertising.

For real-time bidding and programmatic ad buying, you can integrate your network with Demand-Side Platforms (DSPs) and Supply-Side Platforms (SSPs). You will need to organize seamless interaction between these platforms to ensure that everything will work as it is supposed to.

Data privacy and security

Each business that works with customers’ data in this or that format should consider its proper protection and security. It is crucial not only to ensure regulatory compliance but also to build and successfully maintain customer trust.

Nevertheless, this remains to be a serious challenge for retailers. According to the 2023 Deloitte survey, 74% of respondents named data security and privacy the major concerns preventing their companies from deploying their own RMNs. 

Sometimes implementing advanced security mechanisms only leads to extra expenses. Nevertheless, that’s the investment in the future of your company. Data breaches and loss can lead to huge financial and reputational damages.

That’s why do not ignore the necessity to implement strong encryption mechanisms (both in transit and at rest) and secure APIs to prevent data breaches.

Another thing to remember is the requirement to adhere to privacy regulations like GDPR, CCPA, and other local laws. This requirement applies to both collecting and processing data from customers. Remember that regulatory frameworks can differ in different jurisdictions. This means that before launching your RMN, you must check the rules and laws in force in your region.

Scalability

Already at the stage of building your retail media network, you should remember that with the growth of your business, your digital solutions should also be able to scale. If you don’t foresee such a possibility for your RMN, it will prevent you from welcoming new customers and increasing the volumes of inventory that you can sell. 

That’s why you should ensure that your solution's architecture is scalable enough to support your future growth. The first choice you must make will be between cloud-based infrastructure or on-premises solutions. Cloud solutions typically offer greater flexibility and scalability. Thanks to the cloud environment, your platform can handle large-scale traffic. For that, you can use auto-scaling features. 

Moreover, instead of the monolithic architecture, you can opt for microservices. Each microservice can be scaled independently based on its specific demands, and there is no need to scale the entire application if just one component requires it. Moreover, since microservices are isolated, the failure of one service typically doesn’t bring down the whole system. This can increase overall system resilience and reliability.

ML and AI capabilities

Today artificial intelligence and all the related technologies are widely used in different types of solutions and can greatly enhance them. Retail media networks are familiar. Nevertheless, to implement this or that technology or tool, you should fully understand the goals of doing that.

• For example, you can utilize the capability of AI to predict customer behavior and optimize ad targeting based on historical data, seasonal trends, and real-time behaviors. Moreover, you can rely on machine learning algorithms to segment customers into target audiences. This can be done following their preferences, demographics, and previous purchases.
• Another use case for AI and ML in this context is bid optimization. These technologies can analyze the real-time conditions to optimize advertisers’ bidding strategies and maximize return on ad spend.
• Ad personalization and targeting are another application of AI that deserves your attention. You can implement ML models to personalize ads dynamically. Such an approach can ensure the highest efficiency of the demonstrated ads.

Of course, the development of AI-powered functionality increases project costs. That’s why businesses often launch their solutions with a standard set of features first. And then step by step they introduce more advanced functionality.

Real-Life Examples of Successful RMN Implementations

No single formula can highlight the only possible way to build and develop a successful retail media network. Let’s consider some examples that brightly illustrate that different approaches are possible. The main secret is finding the one that will work in your case.

The most well-known retail media network examples are Amazon Advertising, Walmart Connect, Wayfair RMN, Target Roundel, eBay Ads, Carrefour Links, Tesco’s RMN, Kroger Precision Marketing, Klarna, and others.

ASOS, a British online fast-fashion and cosmetic retailer, established cooperation with the commerce media platform Criteo to develop its retail media network. The key goals of this collaboration were to scale its marketing campaigns, increase revenues, and provide broader ad opportunities for the brands in the marketplace.

Instacart, an online grocery shopping platform, has chosen another strategy. Intending to provide brands with new digital ad tools, the company launched its own RMN. 

Though this second approach requires greater investments and efforts, it also ensures greater flexibility, which is often the highest priority for retailers.

Final Word

Retail media networks represent a transformative shift in digital advertising, offering a win-win solution for retailers, brands, and consumers. By leveraging first-party data and providing precise targeting capabilities, RMNs are poised to become a critical component of modern marketing strategies.

Key takeaways for businesses considering retail media networks:

1. Strategic Value: RMNs are not just a trend but a $31.7 billion market projected to grow at 8.5% CAGR by 2028.
2. Data-Driven Advantage: With the decline of third-party cookies, first-party data becomes increasingly valuable, making RMNs a powerful marketing tool.
3. Technological Investment: Successful RMNs require robust technology infrastructure, focusing on data integration, ad serving, privacy, and scalability.
4. Continuous Innovation: Embrace AI and machine learning to enhance personalization, targeting, and ad performance.

As digital advertising evolves, retail media networks offer a promising pathway for businesses to create more meaningful, targeted, and effective advertising experiences.

FAQ

We Help Unlock Answers to Your Questions

How do media networks work?

Retail media networks are tech platforms owned and managed by retailers for advertising purposes. They can also be defined as unified ecosystems that allow advertisers to promote their brands on websites, apps, and other digital properties operated by retailers.

What is the difference between DSP and retail media networks?

A DSP (demand-side platform) allows advertisers to buy digital ad inventory programmatically across a wide range of websites, apps, and other digital channels. A retail media network is an advertising ecosystem created by retailers. As a result, advertisers can purchase ad space on the retailer’s owned platforms, like a website and app.

What is a retail media network example?

Amazon Advertising is the biggest platform of this type. Among other well-known retail media network examples we should mention Walmart Connect, Target Roundel, and Retail Media+ by Home Depot.