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Marketers Spending Significantly More on Retail Media Networks Despite Underlying Concerns: ANA Report

In the Next Phase of Growth – From Adolescence to Adulthood – RMNs Must Prove Their Value to Drive Both Sales and Growth for Brands

NEW YORK (January 30, 2023) — When it comes to retail media networks, many marketers seem to be taking a “can’t live with them, can’t live without them” attitude, according to a new ANA study.

The report, “Retail Media Networks: A Forced Marriage or Perfect Partnership?” cited a report by eMarketer that projected RMN ad revenue will reach $52 billion in 2023, and $61 billion in 2024, capturing one in five digital ad dollars spent by marketers.

But large spending increases notwithstanding, the new ANA report characterizes marketers as “reluctant buyers” who embrace RMNs with mixed feelings.  The study revealed that brands view RMNs as “have to buy” versus a “want to buy,” and an overwhelming 88 percent believe they are somewhat or heavily influenced by retailers to buy advertising on their RMNs. 

The report also showed sharp differences in advertisers’ reasons for using RMNs.  For example, two-thirds of respondents cited “to drive conversion (sales)” as the most important objective while only 12 percent indicated “to invest for future brand growth” was the most important objective.

In the report, a retail media network is defined as a network of digital channels owned by a retailer that allows marketers to purchase advertising space directed by the retailer’s first-party data to targeted shoppers and prospects. Retail media advertising can include online display advertising and paid search across retailer assets, as well as off-site display, video, and social placements (i.e., to other web and social sites) targeted by the retailer’s first-party data.

“The rapid proliferation of RMNs have made them a must-buy media platform for brands, yet they have also created more marketing decision-making complexity for advertisers,” said ANA CEO Bob Liodice. “The learnings from our research provide valuable feedback, insights and benchmarking of how brands are using and managing these channels.”

The report attributed the increased spending and overall growth of RMNs to a relatively recent confluence of significant technological, privacy, and behavioral shifts in society.  Factors include:

  • Retailers recognized an opportunity to create new and high-margin revenue streams by selling advertiser access to their audiences and site traffic. With RMN overall operating margins in the range of 50 to 70 percent, retailers with historical single-digit margins have unlocked enormous economic potential via the monetization of their shopper touchpoints, interactions, and intelligence.
  • The impending demise of third-party cookies has shifted marketers’ focus to building first-party databases to enable the continued deployment of targeted digital ads and customer engagement, and RMNs own a treasure trove of first-party shopper data.
  • A seismic shift in consumer shopping habits and buying options, driven by two years of COVID lockdown, has resulted in the proliferation of new and direct shopping channels. Retailers experienced exponential growth in online traffic, interactions, and transactions with their shoppers, amassing audience traffic comparable to many ad-supported digital media platforms.

Survey respondents also said spending on RMNs was not incremental and was being shifted to RMNs from existing budgets for shopper marketing, brand marketing, and trade spending.  They said they feared this would result in an emphasis on driving short-term sales at the expense of building brand equity.

Despite their concerns, advertisers are optimistic about the future of RMNs. Most brands said they expect that both their investment in RMNs, and the effectiveness of their programs will increase in the coming years.  Fifty-two percent believe RMNs will be viewed more positively as a “valuable marketing tool” in the next two years, compared to 31 percent currently viewing RMNs that way.

ADDITIONAL FINDINGS:

  • Brands are actively engaged with RMNs; 56 percent said they are currently working with five or more different RMNs, and 58 percent of respondents said they expect to be using more RMNs than they do now over the next two years.
  • RMNs are considered foundational platforms for brands. They are seen as recession-proof, less prone to budget cuts in more challenging economic times, and a way to counter potential shopper shifts to store brands.
  • Lack of standardization across RMN platforms poses a challenge. Brands believe a lack of measurement standardization and transparency are preventing advertisers from deriving full value from their RMN investments. Improvement is needed and expected in these areas.
  • Advertisers believe that although their RMN activations are not fully optimized to deliver expected KPIs, they can eventually get there, as 73 percent said they expect to be spending somewhat or significantly more on RMNs in the future than they spend today.

METHODOLOGY
Over the summer of 2022, the ANA conducted an online survey of its members into their usage and management of RMNs. A total of 138 members participated in the survey, 80 of whom utilize RMNs. After the quantitative survey was fielded and completed, the ANA conducted an additional nine qualitative follow-up interviews with senior marketer members who participated in the survey to gain additional learning, insights, and context into the findings and drivers of the survey responses.

The full report can be accessed here.

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ABOUT THE ANA
The ANA’s (Association of National Advertisers) mission is to drive growth for marketing professionals, brands and businesses, the industry, and humanity. The ANA serves the marketing needs of 20,000 brands by leveraging the 12-point ANA Growth Agenda, which has been endorsed by the Global CMO Growth Council. The ANA’s membership consists of U.S. and international companies, including client-side marketers, nonprofits, fundraisers, and marketing solutions providers (data science and technology companies, ad agencies, publishers, media companies, suppliers, and vendors). The ANA creates Marketing Growth Champions by serving, educating, and advocating for more than 50,000 industry members that collectively invest more than $400 billion in marketing and advertising annually.

MEDIA CONTACT:
John Wolfe
ANA
Director of Communications
Office: 212.455.8011
Cell: 914.659.8663
Email: jwolfe@ana.net