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What’s ‘Fair and Proportional’ for a Retail Media Network?

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retail media money

HOW ARE BRANDS MANAGING their retail media network spending?

Part one of this analysis addressed the conundrum CPG brands face in dealing with retail media networks. It summarized brand marketer spending trends documented by Cadent Consulting and described why brand teams are challenged when it comes to making sound empirical decisions about their retail media investments across their entire distribution networks.

Steps toward further clarity have been initiated by FMI – The Food Industry Association, which released new research, The Evolution of Retail Media: Decoding What Works — And What Doesn’t, in collaboration with NIQ and Think Blue on Jan. 31 at its FMI Midwinter Executive Conference.

The report forecasts CPG retail media network spending will reach $27 billion by 2026, with the grocery channel commanding $6.6 billion of that total.

Write the study authors, “As RMNs increasingly tap into brand media budgets, brands and retailers must adapt to this new paradigm. Aligning investment strategies, leveraging advanced data-driven personalization, and integrating RMNs into broader business planning will be vital to fully unlock the transformative potential of these networks.”

The report calls out several key challenges that trading partners face in this regard:

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Retail Media and CPGs: How do Brands Optimize Investments?

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Question marks at the table


AMID THE HYPE AND HYPERBOLE around Retail Media Networks, some fundamental issues about CPG marketing spending have barely been addressed. Brand marketers have an opportunity – perhaps an imperative – to elevate the dialog about how funds should be allocated, to maximize returns and sustain mutually profitable relationships with retail partners.

​Ad standards are yet to be established across the RMN universe. The allure of first-party data is compelling, but each network presents its own interfaces and definitions. Established norms around trade marketing spending – the lion’s share of marketing investment by brands – are under pressure. Beneath the surface lurk issues around fairness and proportionality, too.

THIS ARTICLE IS PART ONE of a series, originally published on CPGmatters.com

Experts contacted for this article spoke mostly on background. The consensus is that RMNs are not easy to master and that best practices are yet to emerge. They introduce a heightened degree of intricacy for brand marketers and retailers alike. Some standards may be on the horizon, but trading partner joint planning is not getting any easier.

Concentration at the Top

A relatively small handful of retailers with very broad geographies and high customer counts are sweeping up the lion’s share of retail media spending and decision-making capacity. This presents steep challenges for CPG brands. Their “brand-width” is not unlimited, after all.

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Retail Media Network Gaps Hold Peril for Brands

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Retail Media Networks Mind the Gaps

JUST WHEN YOU THOUGHT the retail media conversation couldn’t get any hotter, we hear high-profile executives from the largest Retail Media Networks (RMNs) and their technology suppliers on podiums and podcasts talking up a glorious future for brand advertisers.

RMNs were a recurring theme at last September’s Groceryshop event in Las Vegas and this month’s NRF ’24 Big Show in New York promises no fewer than 24 sessions on “Retail Media” topics. No wonder – the take from retail media sales this year is projected to reach $52 billion in the U.S. market alone, according to Coresight Research.

RMNs are retailer-owned digital and in-store channels which convey messages and offers to shoppers from CPGs and other third-party businesses. They have exploded in popularity over the past few years, due to the added revenue they can attract for retailers and the personalized audiences they can deliver to advertisers.

Right now, big RMNs wield heavy clout when it comes to scooping up those alternative revenues. The most prominent – Kroger Precision Media, Walmart Connect, Albertsons Media Collective, Target Roundel, Dollar General, Instacart – can deliver audiences in the tens of millions or more. These certainly boast wide geographic coverage that is important for brands.

It’s easy to be dazzled by the scale of those audiences and the purported advertising efficiencies and targeting capabilities of their networks. Savvy advertisers must also recognize that sheer, provable reach is only the first piece of the puzzle.

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Invoking Relevance

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RelevanceBEST PRACTICE IN MOBILE ADVERTISING remains an oxymoron, as marketers grapple with the natural tension between intrusiveness and usefulness. There is a strong drive to justify ad spending and validate the business premise behind personalized promotions. Relevance seems to be the key, we are told, and the unique data-capturing and consumer-tracking capabilities of mobile devices should materialize a marketer’s nirvana in which every message is on-target and welcomed.

Recent consumer research from PriceWaterhouseCoopers suggests that this formula may need to be applied with greater subtlty, however.  In Mobile advertising: What do US consumers want?, PwC researchers find, “There is an overall aversion to the prevalence of mobile advertising. Even ads that are relevant to personal interests do not directly translate to ad interest or engagement.”

This poses a challenge indeed, since according to PwC, “The biggest challenge is to leverage the knowledge of how consumers are using mobile to improve monetization from ad delivery.”

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