Retail Media Networks (RMNs) have become a focal point for marketers seeking to make use of the purchasing power of large retail platforms. Initially seen as a niche area, RMNs are now increasingly regarded as essential components of modern marketing strategies.
As these networks continue to mature, their role in driving brand visibility and engagement is becoming more pronounced, leading to a rise in ad spending and a shift in how brands perceive their value.
Retail Media Network ad spend surges, but adoption rates remain stagnant
A projected 26% increase in RMN ad spending in 2024, bringing the total to nearly $55 billion, details a surge in investment towards retail media networks, reflecting a broader trend where brands are shifting their budgets to platforms that provide direct access to consumers within a purchasing context.
Increased spending is driven by the promise of RMNs to offer targeted, data-driven advertising opportunities that can directly influence purchasing decisions at the point of sale.
Despite the growth in spending, the number of brands using RMNs remains relatively stagnant. In 2024, 60% of ANA members are reported to be using RMNs, a marginal increase from 58% the previous year. Slow growth in adoption rates suggests that while existing users are increasing their investment, there is a hesitancy among non-users to jump on board.
Factors contributing to this reluctance may include a lack of understanding of RMN benefits, concerns over ROI, or the complexities involved in integrating RMN strategies into existing marketing frameworks.
The uncertainty surrounding RMN adoption is evident, with 87% of ANA members either unsure about or not planning to use these networks in the future, down slightly from 90% in 2023.
Lingering hesitance could be attributed to several factors, including concerns over the current lack of standardized measurement metrics, which complicates the ability to gauge RMN effectiveness relative to other digital marketing channels.
The diverse range of RMNs available and their varying levels of sophistication and reach might create confusion for brands trying to select the right platforms.
Market behavior and trends
An overall rise in RMN spending is primarily fueled by a smaller cohort of marketers who are increasing their investments substantially. This indicates that while the number of brands using RMNs may not be growing rapidly, those that are engaged are doubling down on their spending.
Many brands likely see RMNs as a vital component of their marketing mix, offering unique access to audiences and the ability to deliver targeted, personalized ads that are highly effective in driving conversions. As these heavy spenders ramp up their investments, they set a precedent that could encourage more brands to explore RMN opportunities.
Conversely, the expansion into new RMN platforms is on the decline, with only 35% of marketers planning to add more RMN platforms in 2024, down from 58% in 2023. It is a trend that suggests a consolidation phase where marketers prefer to optimize and refine their strategies on existing platforms rather than spreading their budgets thin across multiple RMNs.
A cautious approach may be due to the steep learning curve and the need for specific expertise to manage different RMN ecosystems effectively. Additionally, brands may be waiting for clearer measurement standards and more comprehensive performance metrics before diversifying their RMN presence further.
Specific platform usage
Amazon Advertising, a dominant player in the RMN space, accounting for about 77% of all retail media spending, is experiencing a notable decline in use. In 2024, only 61% of marketers are using Amazon Advertising, down from 82% in 2023, which could be indicative of several dynamics at play.
As more retailers launch their RMNs, marketers may be diversifying their ad spend to explore other platforms with different audience demographics or less competition.
The decline could also reflect growing frustration with Amazon’s lack of transparency in reporting and the high cost of advertising on its platform. As brands seek better value and clearer insights, they may opt to allocate their budgets to RMNs that provide more detailed performance data and a better overall ROI.
Challenges and perceptions
A major challenge for RMNs is the lack of standardization in measurement across different platforms. Inconsistency creates difficulties for advertisers trying to assess the performance of their campaigns relative to other media channels.
Without standardized metrics, it’s challenging to compare the effectiveness of RMNs with traditional and digital advertising formats, leading to uncertainty and hesitation among potential users.
Advertisers are calling for improved measurement standards that align with their needs and provide parity with other media outlets. There is a growing push for retailers to adopt common metrics that allow for easier cross-platform comparisons, improving the ability to evaluate performance accurately and make informed investment decisions.
As RMNs evolve, the development of standardized measurement practices will be key in building trust and driving wider adoption among advertisers.
Advertiser sentiment
Advertiser sentiment towards RMNs is varied. While 41% of advertisers see RMNs as useful tools, a notable increase from 31% in 2023, 35% remain indifferent, viewing these networks as having limited value.
23% regard RMNs as a necessary cost of doing business rather than a strategic choice, suggesting that for some brands, RMNs are more about maintaining relationships with retail partners than about strategic marketing innovation.
Such range in views reflects the diverse experiences brands have had with RMNs, influenced by factors like the quality of data, ease of use, and the effectiveness of their campaigns.
Retailers play a major role in influencing brands’ decisions to adopt RMNs, with 63% of brands indicating that retailer influence is a major factor in their use of these platforms. This shows the power dynamic in play; brands often feel compelled to align with the advertising offerings of key retail partners to maintain favorable relationships and make sure their products are well-positioned within retail environments.
Future outlook and optimism
Despite the current challenges and mixed perceptions, there is optimism about the future of RMNs. Two-thirds of advertisers believe RMNs will become valuable marketing tools by 2026.
Expectation is driven by ongoing efforts to establish better measurement standards and the broadening role of RMNs beyond mere transactional tools.
As these networks develop more sophisticated capabilities and provide clearer performance metrics, they are likely to become integral to more comprehensive marketing strategies.
RMNs are becoming increasingly recognized for their potential beyond driving immediate sales. Currently, 68% of advertisers use RMNs for mid- and upper-funnel activities, such as national branding and equity campaigns.
As RMNs continue to evolve, their ability to support both performance and brand marketing goals will likely attract more interest and investment.
