Despite the billions of dollars poured into digital advertising over the past several years, retail media is still in its first inning.
That’s what Forrester claims in its report, The Trifecta That Makes a Best-In-Class Retail Media Network. According to the research firm, numerous retail media networks (RMNs) have come online in the past few years, including those launched by Kroger, Macy’s, Delta and Marriott. But they still have a long way to go to catch up to the volume, reach and power of their predecessor, Amazon.
These necessary improvements make up what Forrester calls a “trifecta” that will define the best of the best in retail media going forward.
3 Qualities of Winning Retail Media Networks
Most retail media dollars in the US today go to Amazon. In fact, Forrester estimates that retailers who operate their own RMNs generate little more than 2% of their revenues from the outlet. But that’s not to say non-Amazon RMNs aren’t without tremendous potential. Forecasts predict the market will more than double in the next four years, reaching over $85 billion by 2026.
What will separate the standouts from the burnouts? A few key characteristics are more likely to lead to success:
Real-Time Measurements That Demonstrate Value
Brands have come to expect the same data-rich performance insights they receive on Amazon from other RMNs — but not all are willing to give it. The problem is, without something to show for their spend, brands will be unwilling to reinvest. To compete, RMNs must provide:
- Closed-loop, cross-channel measurement
- Real-time insights that allow for immediate adjustments
- Detailed insights that are easy to digest and compare
Automated, Self-Service Platforms That Allow Brands to Move Quickly
Forrester claims most RMNs today are actually service offerings within which clients must place manual insertion orders. Some agencies even report it can take up to seven days from ad placement to results. That’s not fast enough in a minute-by-minute digital world.
Forrester recommends outsourcing retail media technology wherever possible. Whereas successful retailers that manage their RMNs in-house are often equipped with hundreds of employees, smaller shops should lean on the vast ecosystem of sell-side platforms — perhaps even selecting different partners for various ad types (e.g., on-site display or on-site, search or off-site media).
A Wider, More Creative Menu of Ad Placement Options
Right now, there isn’t enough ad space to go around. Forrester says retailers are only monetizing small parts of their websites, and some ad inventory is sold out for half the year.
Newer RMNs are getting creative, monetizing everything from refrigerator doors to internal product packaging to connected TV. Could in-store music and announcements be next? Forrester believes the potential for increased ad outputs is so great, it could double onsite inventory levels.
Currently, only a few existing RMNs possess the Forrester “trifecta.” While the pool is shallow today, it won’t be for long — and those that don’t deliver on advertisers’ needs will likely face a years-long journey toward achieving a viable network.
Download the full Forrester report, The Trifecta That Makes a Best-In-Class Retail Media Network, for insightful stats, charts and actionable tips.