In retail media networks, retailers post advertising by other market actors, sharing their marketing communications with customers who are visiting the retailer’s store or website. For example, grocery stores might feature brand advertisements for toothpaste products they carry; online retailers like eBay host promoted products on main pages. In both cases, the sellers—whether the toothpaste brand or an individual seller hawking items on eBay—pay the retailer to be featured in these promotions. Thus, retail media networks represent both a relatively new advertising channel that sellers can use to reach customers and a growing source of revenue for retailers.

To be effective and efficient, retail media networks need to be able to grant advertisers sufficient numbers of views. Therefore, the retailers that seem to be benefitting most from these relatively novel advertising channels are the largest retailers in the world, including Amazon, Walmart, Target, Dollar General, Instacart, Lyft, and Wayfair (in an extremely incomplete list). For these retailers of products and services, their substantial customer bases are deeply appealing to advertisers. As a Walmart executive noted, in its stores, the retailer “can provide Super Bowl–sized audiences every week.”

Beyond sufficiently large audiences, retail media networks seem to work best when the advertising aligns with customers’ buying process and status at the moment they see the advertising. In particular, because it delivers advertising precisely while a customer is actively looking to make purchases, the marketing effort does not need to include attempts to move customers down the purchase funnel. An advertisement for floss delivered to someone scanning the toothpaste shelves can skip the part about convincing people that oral health is important. When eBay features a link directly to a memorabilia seller at the top of the page, it is appealing to shoppers who already have come to eBay, which means they likely are looking for unique, collectible items to purchase.

Such examples represent strong targeting opportunities, which may account for the popularity of retail media networks. They will attract an estimated $52 billion in spending in 2023, and predictions suggest that level will reach $100 billion by 2026.

But such effective and intense targeting might represent a concern for retail media networks, as well as being one of their most appealing features. That is, for consumers, targeted advertising can quickly lead to annoyance, especially when it involves their habitual purchases, like buying groceries or consumer packaged goods (CPG) in large retail stores. If a shopper likes, is loyal to, and always buys Crest, encountering a Colgate advertisement in the toothpaste aisle represents a distraction and divergence from their easy, habitual shopping habits, which is more likely to annoy than entice that customer. Notably, research shows that CPG manufacturers are among the largest spenders in the retail media network market.

Even if a retailer wanted to avoid such potential irritants, it might find few other options for viable advertising clients. No retailer is likely to host advertising for items that are not available in its stores or websites; doing so would risk encouraging customers to visit another retailer to obtain the advertised merchandise. Thus, brick-and-mortar grocery retailers, in a practical sense, can only share advertising for brands they carry, and online sites can only push products with links to their pages.

Despite such apparent limitations, predictions of the relevance and importance of retail media networks continue to indicate their growth and expansion. Thus, the concept represents a notion that marketers and retailers need to know.

Discussion Questions

1. Do you predict continued growth in retail media networks, or do their inherent limitations imply they cannot grow much further?
2. Can you think of any creative approaches to advertising through retail media networks that might expand their usage?
3. As a consumer, how do you feel when you encounter advertising for related products while you are in the midst of a purchase process?

Sources: Katishi Maake, “Walmart and eBay Reign Supreme in the Growing Retail Media Network Space,” Retail Brew, August 7, 2023; Nikki Baird, “Retail Media Networks Are Having a Moment, But It Won’t Last,” Forbes, February 23, 2023