Words: Jim Nichols, Founder of Exclamation Marketing
The rise of retail media networks (RMNs) is incredibly rapid and massive. These retailer-driven media programs go from basically having nothing a few years ago. US digital spending will reach $60 billion in 2024 alone. Although the United States has the highest level of RMN maturity, Group M expects RMN maturity to continue to increase. Earned 2.4 billion pounds ($3.1 billion) in the UK this year. A lot of money is being sucked out of the digital media channels, which is definitely impacting affiliate investments.
What is Retail Media Network?
RMN leverages retailers' vast customer data and proximity to purchase opportunities. Think of these as online versions of shopper marketing categories. These networks allow advertisers to reach shoppers within the retail ecosystem at various stages of the purchase journey, from product discovery to post-purchase engagement. RMN is rapidly gaining traction among advertisers seeking effective digital marketing channels by providing precise targeting capabilities and access to highly engaged audiences.
In addition to purchasing RMN advertising from the retailers where their products are sold, some brands are now purchasing advertising from retailers whose customer base they believe is a good fit for their business. Ta. For example, a fast food restaurant buys ads from a home improvement store's RMN to reach construction and maintenance workers during the week.
Why retailers love RMN
Simply put, it's all about margin. Retailing tends to be a very low margin business. 3% to 4% is common. In contrast, McKinsey reports: RMN profit margin is 50-70%. BCG describes them as follows: 70-90%. A dirty little secret in the retail world is that much of its profits come from store credit cards and other “secondary” business, which are the primary profit drivers. RMN is a fast-growing part of that highly profitable secondary revenue stream.
RMN operations
The targeting, reporting, and data available from RMN tends to be more limited than that available from other types of digital media sellers. However, this is changing as the space begins to mature.There is Currently over 200 (!) RMN And most of them are powered by CitrusAd, The Trade Desk, and Criteo platforms. Here's why they grew so quickly:
- Many brands essentially impose a product tax on vendors, requiring or strongly encouraging purchases in exchange for shelf space or product.
- It improves your search rank on your site, driving product discovery and instant sales.
- Allow advertisers to access targeting information unaffected by cookie retirement.
- Drive product sales by marketing directly to shopping-minded people on your retail site.
RMN ads come in a variety of formats, including sponsored search results and listings, display ads, and video ads. Here are some concrete examples:
A fragrance brand invests RMN spending from department stores to purchase:
- Provide brand videos on top-level page tenants
- Search results for fragrance and other related keywords
- Place display ads in search results and pages for beauty and apparel products
- Steal sales by serving display ads on competitors' product pages
- Post a brand video on the shopping cart page
In theory, most of the inventory is sold on retailer sites, and some of the largest retailers have enough inventory to consume most or all of the funds invested in RMN. But most retailers don't have enough regular traffic to consume all the money brands pour into this space. Additionally, many buy advertising off-site for resale and use their own customer data to target prospective shoppers.
Affiliate Marketing Challenges and Opportunities
RMN brings both challenges and opportunities to the affiliate marketing industry.
assignment: On the other hand, RMN offers brand advertisers an alternative to directly promote their products within the retail environment, potentially reducing their reliance on traditional affiliate partnerships. The money you would have spent on affiliate marketing to drive traffic to your DTC site could be transferred to promoting your products at other retailers.
Additionally, many RMN ads are purchased on a CPC basis, which means there is intense competition for performance budgets. Most of the money currently flowing to RMN comes from the brand trade spending budget, but some is also siphoned off from other media channels. As a result, affiliates may face increased competition for advertising budgets and fewer opportunities to monetize content through affiliate links.
opportunity: Retailers are under pressure to increase site traffic to increase the value of their RMN programs. With a glut of programs with relatively low viewership, retailers are taking steps to increase traffic and visit frequency. A few merchants, such as Amazon, Target, Walmart, and Kroger, attract tens of millions of shoppers each week, while others may only attract shoppers a few times a year. Affiliate marketing can help change this dynamic by presenting great products and offers across the web.
For affiliates, that means ensuring that the content, page structure, offer presentation, etc. all work properly with the retailer's program. Providing merchants with the right services could be the key to tremendous future growth for your affiliates.
Affiliates may also find it beneficial to leverage RMN to drive traffic. Advertiser Create pages in exchange for a sales commission. Inbound traffic often increases your search rank, and driving traffic to your sales partner's site can be profitable. This is one of the concepts driving the strong growth of brand affiliate programs aimed at driving traffic to Amazon.
That said, RMN also helps brands understand that there are alternatives to traditional CPM-based media buying. Advertisers can also work with affiliates to drive traffic to pages on retail sites. For example, many brands are now doing this to improve their Amazon sales and search rankings.
Retailers are under pressure to increase site traffic to increase the value of their RMN programs. A few merchants, such as Amazon, Target, Walmart, and Kroger, attract tens of millions of shoppers each week, while others may only attract shoppers a few times a year. Affiliate marketing can help change this dynamic by presenting great products and offers across the web. Affiliates may also benefit by leveraging RMN to increase traffic to advertisers' pages in exchange for sales commissions. Incoming traffic often boosts your search rank.
What is clear is that RMN is disrupting the industry. Affiliate marketers tend to thrive in changing environments. This is due to their willingness to adapt and experiment to find new sources of income and profit. Looking ahead to the second quarter of 2024, he will take the time to learn more about RMN and find unique ways to capitalize on this rapidly growing phenomenon.
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