Having worked with over 20 retailers, airlines and rights holders on developing their in-house media network platforms, we have come across a number of hurdles that show up again and again - many of these networks are grappling with significant challenges that hinder their potential growth and success.
Regardless of maturity or size, the media networks that can get over these hurdles will be the ones to win - and the prize is big. Retail media is forecast to grow by over 20% yearly over the next 5 years, and accounts for the majority of incremental growth in the digital space.
Here we explore the ten key obstacles facing RMNs.
- Legacy and Siloed Systems: One of the most pervasive issues plaguing more established RMNs is the labyrinth of legacy systems they rely on. With over 15 different systems handling various aspects of their operations (from booking, media inventory management, DSPs, SSPs, CDPs, ad servers to invoicing), these networks struggle to streamline their processes effectively. The ability to connect and integrate these systems is vital for scalability.
- Ineffective Data Utilisation: Timely data, including in-store loyalty data, remains underutilised in many RMNs. Advertisers are seeking advanced measurement strategies that are ROI-driven, both onsite and offsite. Leveraging this data for campaign optimisation and informed decision-making is crucial. Retail media networks must offer real-time or near-real-time modelled sales data based on loyalty samples to stay competitive.
- Complex and Manual Operations: The days of manual management and spreadsheets are surprisingly still not a thing of the past- look behind the curtains at most RMNs and you will find a mess of not-fit-for-purpose project management tools and spreadsheets. To scale efficiently, RMNs must automate their operations, reducing human error and increasing efficiency in everything from ad bookings to invoicing.
- Demand for Self-Serve Capabilities: Advertisers are increasingly demanding self-serve options within RMNs, especially as OOH and TV become digital. The ability for brands to independently create and manage campaigns empowers them and allows for more agile and responsive advertising strategies. It also unlocks agency budgets who are loath to hand budgets over to be executed by a 3rd party on their behalf. Brands and media buying agencies want control to be able to react to performance and optimise their omni-channel retail media campaigns in real time.
- Privacy Risks and Data Sharing: In an era of heightened privacy concerns, sharing shopper data externally without robust permissions can deter brands from spending their media dollars with RMNs. Ensuring compliance with privacy regulations and providing clear permissions are a must for brand confidence in the RMN.
- Embracing Industry Standards: Industry frameworks, such as those introduced by the IAB and ISBA, aim to unify and streamline the retail media ecosystem. RMNs that adopt these standards will find themselves in a more advantageous position. This is especially important as more and more retailers and other data owners bring their own media network offerings to an increasingly crowded market.
- Enhancing the Media Offering: RMNs must innovate by offering immersive experiences, personalised advertising, or data driven DOOH to meet these demands and go beyond basic banner ads and sponsored listings.
- Scale of Data and Loyalty Usage: Increasing loyalty program participation can be a game-changer for RMNs. The success stories of retailers like Kroger and Tesco, with over 90% and 80% loyalty usage respectively, underscore the importance of leveraging loyalty data to attract and retain advertisers. It just makes sense to spend your marketing dollars with the retailers that have the biggest addressable audiences and most robust audience pools.
- Effective Packaging: RMNs understand their media ecosystem better than anyone else. By packaging their offerings effectively and aligning them with brand goals, they can reduce the workload for brand media planners and ensure RMNs are not viewed solely as lower-funnel channels but also as powerful brand-building tools.
- Media Revenue Maximisation: RMNs should explore revenue maximisation by incorporating bidding systems, especially for high-demand media placements like sponsored listings and digital-out-of-home (DOOH) campaigns. A 2nd price auction bidding system is not only seen as fair by brand media buyers but also maximizes the value of these premium placements.
The challenges facing retail media networks are pervasive, but they are not insurmountable. By addressing these issues, embracing innovation, and staying aligned with industry standards, RMNs can unlock their full potential and offer advertisers the advanced digital and in-store advertising solutions they demand. The future of retail media networks lies in their ability to adapt, evolve, and rise above these challenges.
