Retail media networks (RMNs) are evolving well beyond being used for just sponsored search results on e-commerce websites. Their access to rich, first-party shopper data, direct shopper relationships and sophisticated, closed-loop measurement makes them an invaluable tool for full-funnel brand marketing.
A recent report from EY, Reaching shoppers beyond the cart: Using retail media networks to drive brand awareness and sales, highlights how RMNs can help brands:
- Build awareness: Brands can use their reach, targeting and full-funnel capabilities to drive awareness amongst qualified shoppers that can be tracked to sales and an on-target CPM.
- Grow sales: RMNs connect media exposure directly to purchase behaviour, making it easier to build personalized experiences that connect tactics to sales.
- Improve effectiveness: With layered audience targeting and full-funnel execution, RMNs can help brands reach the right shoppers with the right message at the right time, reducing wasted spend.
- Inform brand product strategy: First-party data gives brands deep insight into shopper behaviour, fueling marketing strategies and better product development.
- Measure what matters: RMNs unlock metrics like incremental ROAS and CLV, and adjusted cost per mile (aCPM), providing a more sophisticated view into brand and campaign performance.
Karamjot Bains, EY Partner, EY Studio+ Consumer Sector and National Ecommerce Leader, said retail media networks remain significantly undervalued by brands and advertisers, despite the growing potential for retailers to generate high-margin revenue from their customer data.
Bains said the undervaluation stems largely from “the origin story of retail media networks—not the value they deliver.” He explained that retailers have always had direct customer relationships, but the rise of digital tools, loyalty programs and online channels in the 2000s and 2010s fundamentally changed what retailers could understand about their shoppers.
“What retailers realized in the last five to 10 years is: not only can they make money selling to customers like you, they can make money advertising to you—because they know you, people like you, your tendencies, what you buy, what you haven’t bought, what you might buy,” he said.
According to Bains, retailers began monetizing this first-party data by selling products more effectively and by providing advertisers and brands with precise targeting capabilities. He compared the shift to how traditional broadcasters built ad networks, saying retailers are now combining customer data, digital technology and advertising infrastructure to create “a media network.”
Bains said the financial incentive for retailers is clear. “Margins in retail—especially grocery—are thin,” he said, noting that grocery chains typically run at a three to five per cent EBIT margin. “A media business, on the other hand, has significantly higher margins—upwards of 60%.” He pointed to Instacart as an example of a company generating most of its profits from advertising and monetization of their “custom eyeballs” rather than selling goods.
When asked what needs to improve, Bains said both brands and retailers have work to do, but “most of our focus was on the first—brands.” He said major advertisers, including CPG companies, are not currently structured to take full advantage of retail media networks.
One challenge is internal fragmentation. “Historically, on the brand side there are two distinct teams,” he said: the sales team, which manages retail relationships and promotions, and the brand team, which focuses on broader awareness and marketing. Those groups “traditionally haven’t interacted much,” limiting awareness of retail media capabilities and making it difficult to plan them into campaigns.
While retailers have merged their physical and digital operations, Bains said CPG companies still operate with “a physical store world” and a separate brand and marketing world. “The wall between those two internal teams needs to come down,” he said.
Bains also said Canada trails other markets in adoption of retail media networks. “Like in most areas, adoption in Canada is behind,” he said, noting Amazon and Walmart as leaders in the United States. He expects half of all advertising spending will become digital, with more than half of that shifting into retail media. But with e-commerce adoption driving much of the growth, he said Canada is “typically three to five years behind the U.S. adoption curve.”
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