Digital advertising revenues have shifted fundamentally, with Amazon, Meta and Google now commanding a significant share of retail media spending.
This consolidation of power represents a critical challenge for retailers, who are watching billions in potential advertising revenue flow directly to tech platforms
Retailers are being urged to reclaim their digital advertising space by investing more in their own retail media networks (RMNs).
The potential to earn money from advertising is huge, with Statista predicting that worldwide retail media ad spend will rise from around $114bn in 2022 to more than $178bn in 2028.
An RMN is a network of retailer-owned onsite, offsite and in-store media assets that leverage shopper data and carry targeted brand advertising.
Most leading retailers have a media network in place, but James Avery, founder and CEO of API-first ad-serving company Kevel, believes too many retailers have settled for off-the-shelf RMNs, sacrificing control and brand differentiation by outsourcing rather than owning their media networks.
Retailers are already innovating with advanced segmentation, new ad placements and data-rich loyalty programs. The next wave of growth will be driven by digital transformation such as AI and omnichannel strategies that deepen customer engagement and streamline shopping journeys across all platforms.
Avery says retailers are missing out on revenue because they do not realise they can make more money from selling media than selling their data.
“Don’t hand over the keys. Every time a brand wants to target a segment of your customers they should come and buy media from you,” says Avery.
He urges retailers to maximise the use of onsite and offsite first-party data because brands are so hungry for information.
“Retailers know what we are shopping for, what we are buying and at what stage of life we’re at,” says Avery.
“They can go to the big brands and say: if people are looking to switch brands in a category, let a brand buy a sponsorship around onsite search.”
He cites the example of the world’s biggest home improvement chain The Home Depot which decided to invest heavily in its own RMN, including introducing a self-serve solution for advertisers.
The retailer has worked with Kevel since October and introduced innovative creative formats for brands onsite and offsite using storytelling and personalisation.
“If someone has bought countertops and a dishwasher, it indicates they are probably renovating their kitchen. Have they considered replacing their cabinets? Here’s where The Home Depot can tell a great story around lifestyle,” says Avery.
Experts claim recruiting specialist talent is also crucial to maximise the revenue potential of an RMN. The Home Depot, for instance, has invested in a large in-house retail media team for their Orange Apron Media Network.
Indeed, retailers need senior-level sponsorship to build a robust retail media strategy and to hire top talent in this area.
A skilled sales team is crucial, as major manufacturers across grocery, electronics and apparel sectors seek to leverage RMNs for global and European campaigns.
Craig Macdonald, partner in media and advertising at consulting firm McKinsey & Company, says major retailers must extend what they have done so far around RMNs to help with cash flow and innovation.
“When it comes to talent, retail leaders need to hire the right people to form better relationships with the media experts at the brands,” he says.
Macdonald agrees brands are actively pursuing customer data, but advertisers also want a consistent way to put relevant messaging in front of shoppers. He calls on retailers to cooperate more and to standardise areas such as measurement.
“TThe industry thinking is that retailers are better working together to try to gain a competitive advantage with big tech players,” says Macdonald.
When it comes to talent, retail leaders need to hire the right people to form better relationships with the media experts at the brands
“Of course retailers are competing for brands’ advertising budgets, but they are not competing on areas where brands don’t consider a difference, such as on how you measure post impressions.”
David Fieldhouse, head of commerce at media strategists GroupM, agrees that making life easier for brands is key. He points to how unified platforms can help advertisers and retailers overcome fragmentation to scale campaigns internationally. This also makes it easier to analyse trends.
“Unified platforms enable effective collaboration across the value chain,” he says. “By aligning advertiser’s goals with agency efficiencies and retailers commercial imperatives, these platforms foster long-term partnerships that benefit everyone.”
Fieldhouse urges retailers to move beyond one-size-fits-all approaches by creatively combining data and insights to craft unique, multi-channel campaigns.
This could mean integrating social media, connected TV and digital out-of-home advertising into a single cohesive strategy.
There is no shortage of retailers looking closely at how to invest in their RMN to realise untapped revenue.
US online new and used car resource Edmunds knew it could persuade dealerships and manufacturers to sponsor car listings, but it was struggling to achieve results using just Google Ad Manager.
Edmunds partnered with Kevel to handle reporting, targeting and decision processes, freeing its team to focus on ad strategy, user feedback and front-end development.
The result has been a 30% increase in advertising revenue from sponsored listings which are blended into the user experience and include price optimisations.
The retail media playbook: 5 steps to launch your independent network
Retailers sitting on valuable first-party data can transform it into profitable advertising networks - but success demands a strategic approach to technology, talent and advertiser relationships.
Retail media thrives on the use of first-party data which enables personalised adverts delivered at the point of purchase. This enhances conversion rates and provides retailers with greater control over their advertising ecosystem.
Susie Moan, chief data officer at leading UK electronics retailer Curry’s, says this is about understanding shopper behaviour, preferences and purchase intent across all touch points.
Curry partners with outcome-based marketing company Epsilon, and Moan says brands want retailers to help them identify the optimal moments to engage consumers.
Turn customer insights into targeted audience segments across your full media portfolio - from on-site product placements to off-site video and connected TV campaigns,” says Moan.
“Use first-party data to identify the optimal moments to engage customers, whether they are researching, ready to buy, or exploring complementary products.”
Advertisers want something different from an RMN, and retailers want to be on a brand’s media list.
Rather than outsourcing, retailers should invest in their own network to offer relevant and innovative advertising solutions.
A technology partner can provide the infrastructure APIs needed to quickly build custom ad platforms for sponsored listings, internal promotions, native ads and more.
Retail leaders must also invest in talent and hire people who understand the world of advertising.
This includes having good contacts at media agencies and ideally some experience in programmatic advertising. They also need expertise in helping brands to analyse how their ads have performed.
On-site ads are placed within a retailer’s digital ecosystem, including websites, apps, and emails. The advertising revenue margins can be high as the retailer is not sharing the costs – the brands are then fans because their adverts appear at the point of purchase.
Consumers who are already browsing and ready to buy see sponsored listings appearing among product listings, native banners and other display advertising.
For example, the mobile app and community-led online bargain shopping platform Slickdeals has around 12m monthly users and worked with Kevel’s server-side ad APIs to create a featured deals section on its home page. First-party data is used to ensure users view personalised deals.
Retailers should also use their first-party data to help brands engage with consumers via media, not in the retail environment.
This includes social media, CTV and websites where brands can reach potential customers at different touchpoints outside the retailer’s own channels.
Retailers can provide advertisers with a personalised view of the customer, so brands can target their ads by browsing history or demographic. The ads are usually linked to a retailer’s e-commerce platform.
Retailers can save time and money by providing a self-serve platform where brands control their ad spend, creativity and who they target.
Latin America’s largest restaurant delivery service iFood has 40m monthly users and works with around 330,000 restaurants. It needed to scale its in-house self-serve ad infrastructure without a complicated integration process.
It launched iFood Ads as a plug-and-play solution to provide transparency to advertisers, dynamic ads that improve the user experience and streamlined ad decision requests.
The result was a 1900% increase in food delivery ad revenue in a year.
The platform’s contextual and search targeting capabilities strengthen relationships with dealers and vendors by delivering more relevant advertising. For Edmunds, the RMN investment delivers a clear competitive advantage.
Of course, revenues will only grow if a retail media strategy integrates across channels to utilise full-funnel opportunities, driving sales while improving measurement and optimisation for brands.
Advertisers now demand transparent, standardised metrics such as attribution, incrementality and return on ad spend.
“With retail media you can always show a direct correlation between the advertising spend and how it drove sales,” says Avery. “Am I surprised by how fast retail media is growing? I’m probably more shocked it is not growing faster.”
For more information, please visit: kevel.com
Digital advertising revenues have shifted fundamentally, with Amazon, Meta and Google now commanding a significant share of retail media spending.
This consolidation of power represents a critical challenge for retailers, who are watching billions in potential advertising revenue flow directly to tech platforms
Retailers are being urged to reclaim their digital advertising space by investing more in their own retail media networks (RMNs).
The potential to earn money from advertising is huge, with Statista predicting that worldwide retail media ad spend will rise from around $114bn in 2022 to more than $178bn in 2028.
