The Evolution of Retail Media Networks and Their Growing Influence in 2024
As we approach 2024, the landscape of retail media networks is evolving at an unprecedented pace. A recent article highlights a list of key retail media networks that advertisers should be aware of in the coming year. These networks, which include popular retail stores like Walgreens and Walmart, are gearing up with strategic plans to capture a significant share of the advertising market. The importance of these networks cannot be overstated, as they offer unique opportunities for brands to reach their target audiences in a more direct and impactful manner. With over 200 retail media networks currently in operation, according to some experts, the competition is fierce, and staying informed about the most influential players is crucial for any advertiser looking to stay ahead in the game.
The significance of these networks is further underscored by the upcoming Brandweek event, scheduled to take place from September 23-26. This marketing industry event is set to feature representatives from iconic brands who will be presenting keynotes, leading workshops, and participating in networking events. Brandweek is seen as a hub for new marketing innovations, making it a highly recommended event for marketers aiming to keep up with the latest trends and strategies. The presence of these industry leaders highlights the growing importance of retail media networks and their role in shaping the future of advertising.
Amazon has been the dominant player in retail media for the past decade, but the landscape is changing. Other retailers in the grocery and specialty market are challenging Amazon’s dominance, leading to growth and speculation about the transformation of this advertising category. According to eMarketer, retail media ad spending is predicted to reach $54 billion this year, reflecting the significant investment and interest in this sector. This growth is not just limited to the giants; mid-sized and smaller companies are also making their mark, leveraging the diverse and dynamic marketing ecosystem that retail media networks provide.
The overwhelming landscape of retail media can be daunting, but resources like the list compiled by Adweek help simplify it. This list, curated through conversations with various experts, analysts, and retailers, provides a comprehensive overview of the most important networks for advertisers to know in 2024. Awareness of these networks is crucial for advertisers to navigate the complex retail media landscape effectively. By understanding the strengths and offerings of each network, advertisers can make informed decisions and develop strategies that maximize their reach and impact.
Roku’s recent performance offers a glimpse into the potential of retail media networks. The company posted strong third-quarter results, showing 20% revenue growth and increased active accounts. TV sales unit growth outpaced the industry average, with total net revenue for the quarter reaching $912 million, compared to $761 million a year ago. This growth was fueled by strong performance in content distribution, video advertising, and sales of Roku-branded smart TVs. The company’s success underscores the importance of integrating advertising with content distribution to drive revenue and engagement.
Roku’s partnerships with over 30 programmatic partners and the integration with Spotify have been instrumental in driving advertising growth. The company’s ability to rebound in video advertising, outperforming the overall ad market and linear TV ads in the US, demonstrates the potential of retail media networks to adapt and thrive in a changing landscape. However, Roku remains cautious, citing the uneven recovery of some industries, such as financial services and insurance. Despite these challenges, Roku’s strategic partnerships and innovative advertising solutions, like city integrations and shoppable ads with Walmart, highlight the evolving nature of retail media networks.
Disney’s recent initiative, the Gateway Shop, further illustrates the innovative approaches being taken within the retail media space. Launched at the Consumer Electronics Show (CES) in Las Vegas, this limited beta test introduces a new ad format that delivers advertisements to users’ phones or emails while they watch Disney content. By utilizing the ‘second screen,’ Disney aims to deliver targeted offers or promotions directly to viewers’ mobile devices. This approach is part of a broader trend, with other corporations like Walmart and NBCUniversal also pursuing shoppable television, and Amazon entering the industry with Prime X-Ray and partnerships with HSN and QVC.
The concept of t-commerce, or transactions made in response to advertising or products shown in a video stream on television, is gaining traction. Data from Parks Associates shows that 88% of internet households shop online monthly, with 62% doing so on a mobile phone. Additionally, 44 million homes, or 51% of CTV device users, engage in commerce-related activities on their televisions. Streaming services like Roku, Amazon, Peacock, and Netflix are actively using t-commerce ads, reflecting the growing importance of this revenue stream. The integration of digital transactions with saved payment credentials or links to mobile devices simplifies the purchasing process, enhancing the user experience and driving sales.
For mid-sized media companies, linear channels on third-party streaming video services like Pluto TV and Roku Channel have become a gateway to the connected TV market. While media giants like Disney and NBCUniversal have succeeded in creating standalone streaming services, smaller companies face challenges in attracting large audiences to their own apps. To offset these costs, many are turning to 24/7 streaming channels on free, ad-supported TV services. These linear channels not only generate revenue but also drive viewers to their owned-and-operated apps, offering a dual benefit of income generation and audience engagement.
Distributing content through linear channels can reduce the risk of relying on a single distributor for revenue. Deals usually involve splitting ad inventory rather than revenue, giving publishers more control over their profits. However, the landscape is shifting, with companies like Amazon planning to take control over ad sales for linear channels on their platforms. To mitigate this risk, publishers are diversifying by being on as many platforms as possible. This strategy reduces initial costs and increases margins, making it relatively easy to distribute the same linear feed across multiple platforms.
Despite the benefits, creating enough video content to fill a 24/7 feed is a significant cost for publishers, particularly for news organizations that need to constantly produce new content. Additionally, managing the linear feeds and creating a schedule for viewers requires dedicated staff. Nevertheless, many publishers view their linear channels as a long-term investment, serving both as a revenue source and a marketing tool. By using these channels to drive viewers to their premium offerings, publishers can enhance their overall engagement and profitability.
In conclusion, the evolution of retail media networks is reshaping the advertising landscape. From the dominance of Amazon to the innovative approaches of companies like Roku and Disney, the retail media space is dynamic and rapidly changing. Events like Brandweek provide valuable insights and networking opportunities for marketers, while resources like Adweek’s curated list help navigate the complex landscape. As retail media ad spending continues to grow, understanding and leveraging these networks will be crucial for advertisers aiming to stay competitive in 2024 and beyond.