Retail media networks, or advertising platforms aligned with one specific retailer, are quickly gaining traction in the industry. Top retailers like Amazon and Walmart are investing heavily in these solutions. In fact, according to Merkle, a quarter of retailers received over $100 million in revenue on their networks in 2021.
On the other hand, advertisers can also consider a retail agnostic advertising strategy — when brands target shoppers on the sites and apps they organically engage with. This allows brands to advertise their products on several platforms and apps to meet consumers where they are most frequently on their mobile devices.
So, should brands partner directly with retailers or drive sales at multiple retailers? There are pros and cons to each option that advertisers should consider as they look to implement a strategy best suited for their unique business needs.
The Ins and Outs of Retail Media Networks
The Pros: Retail media networks are a smart choice for brands that want direct access to consumers and the data they provide. By collecting first-party data from the retailer’s opted-in consumers, brands don’t have to worry about relying on third-party cookies. In turn, brands can use this data to create in-app experiences that are more personalized to the consumers’ preferences at that specific retailer.
Additionally, brands can strengthen relationships with retailers by supporting their revenue streams and driving sales at the store level.
The Cons: At the same time, retail media networks require a large investment. This can prove to be a big pain point for small and emerging brands who may not have the budget to test out new products in different markets or with varied audience sets. They aren’t able to compete with big players and private brands who place higher bids for ads.
Investments are also often less efficient due to only driving sales at a single retailer. Advertising that increases sales across multiple retailers tends to result in higher ROAS, leading us to the second method — a retail agnostic strategy.
The Ins and Outs of a Retail Agnostic Strategy
The Pros: A retail agnostic strategy enables brands to reach targeted audiences where shoppers are likely to spend their time. This includes connecting customers in apps that go beyond a specific retailer, including list building, recipe, lifestyle, and social apps.
This approach is generally more efficient for brands selling through multiple retailers because it encourages consumers to shop for the products at their favorite grocery store rather than at a specific retailer where they may rarely shop.
As well, a retail agnostic strategy helps brands outperform competitors by shortening the path to purchase for consumers. Brands get onto shopping lists or in digital carts, making it more likely that the consumer will choose promoted products before they get to the store or site.
The Cons:Brands must be careful with a retail agnostic strategy because it can cause an interrupted customer experience if not executed correctly. Without proper solutions in place, the user can experience numerous inconvenient and interrupting authentication screens:
- The user sees an advertisement on an app they normally engage with
- The user is routed to a different app
- The new app opens and the user jumps screens
- The user is sent to the product page
- User has to log in to complete the add-to-cart
At each step, user drop-off exponentially increases. Brands and retailers are taking people out of their off-property experience and are forced to bypass inconvenient and interrupting screens. They’re also expecting shoppers to remember the product when they eventually start their cart. This does not drive incremental sales and rarely drives a return.
The good news is that add-to-cart shoppable media solves several friction points that brands may encounter in a retail agnostic setting, including creating an easy way to build a basket over the course of the week, from any app or website. It offers consumers a simple way to add promoted products to their digital shopping list, creating a seamless user experience within a retail agnostic strategy.
Bottom Line: Diversify Your Strategy
After weighing the pros and cons, it’s apparent there are reasons to go with both strategies. One category of products may perform well in the right retail media network, while other products might be better served with a retail agnostic approach.
Advertisers can use a healthy mix of both retail media networks and retailer agnostic solutions to create a data-driven connection that generates impactful results. Both approaches can help brands reach the right shoppers at the right time — it’s a matter of understanding how they are working together to meet their target audience.
— Molly McFarland, co-founder and chief revenue officer, AdAdapted