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Retail media networks are reshaping advertising. What does our research on the US market reveal?

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The rise of retail media networks

In the news

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Relationship status: it’s complicated. The relationships between brands, media agencies, and retailers is becoming more complex. Adding retail media networks (RMNs) to the mix means that as RMNs gain a larger share of brands’ advertising budgets, brands could bypass agencies altogether. A 2022 survey found that 84% of US consumers purchased products in brick-and-mortar stores within the past year, which gives retailers more power to curate the brands populating their shelves. Agencies are having to rethink their strategies in this new ecosystem. [Digiday]

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Areas of influence. Gen Z and millennials trust online influencers more than ads and celebrities, according to a 2023 consumer study. With influencer marketing now a $16.4 billion enterprise, brands are focusing on making more authentic connections with customers by building relationships with influencers who have similar values. In April, a quick-service restaurant partnered with a chef with a large social media following to create a spicy lamb bowl dish, offered for a limited time. Working with influencers could enable RMNs to present shoppers with more personalized content. [PYMNTS]

Advertisers are splitting their business among an average of about four RMNs, and 27% have shifted spend from one RMN to another in the past year.

On McKinsey.com

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RMNs take the reins. The US retail media market has grown into a $45 billion industry in recent years. Even amid economic uncertainty, RMNs now represent an increasingly large share of companies’ marketing budgets. Our research finds 73% of advertisers anticipate spending more on RMNs in the next 12 months, with RMNs capturing an estimated 10 to 15% of total media spend. Many retailers use multiple RMNs and are willing to invest more in RMNs that offer extra features, like more timely data reporting, according to McKinsey senior partner Marc Brodherson and colleagues.

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Meeting advertisers’ needs. Advertisers want to invest in channels with the highest rate of return on their investment, like on- and off-site display and video advertising. To continue growing and capturing a larger share of marketing spend, RMNs can focus on scaling these channels while also addressing advertisers’ pain points, such as a lack of data sharing, poor reporting, and limited customer insights. Explore six secrets that underpin successful RMNs.

— Edited by Gwyn Herbein, editor, Atlanta

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by "McKinsey On Point" <publishing@email.mckinsey.com> - 12:42 - 14 Jun 2023

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Retail media networks are reshaping advertising. What does our research on the US market reveal?

The rise of retail media networks

In the news

Advertisers are splitting their business among an average of about four RMNs, and 27% have shifted spend from one RMN to another in the past year.

On McKinsey.com