The Global Rise of Retail Media Networks (RMNs) and Their Impact on Advertising

Retail media networks (RMNs) are reshaping the advertising landscape globally, and India is poised for significant growth in this space.

India’s e-commerce market is booming, creating a vast pool of online shoppers and valuable first-party data. 1 in 5 advertisements we see on digital are now served by RMNs and has been the key growth driver for digital media and for various CPG categories. Contribution of Retail media to India’s digital media has increased from 10% in FY 2022 to 18% in FY 2024.

RMNs are advertising platforms operated by retailers that leverage their first-party customer data to target ads to consumers across their properties (websites, apps, in-store). In recent years, RMNs provide off-site targeting with closed loop measurement of sales on-platform and off-site retargeting of customers with the valuable first party data. The shift towards expanding top-of-funnel reach through on and offsite retail spends, coupled with the explosion of ad inventory, is indeed the driving force behind this global rise of RMNs.

RMNs over the last decade took off rapidly owing to 

a. Closed-Loop Measurement: RMNs offer precise measurement of ad effectiveness, linking ad exposure to actual sales. 

b. Proximity to Purchase: Ads are shown to consumers at or near the point of purchase, increasing relevance and conversion rates. 

c. The Power of First-Party Data: Advertisers get access to aggregated data of buying customers and can target otherwise unreachable cohorts such as those who buy school products, or those who are interested in gardening etc.

RMNs have flourished because they provide a win-win situation for both retailers and advertisers. Retailers gain a new revenue stream and enhance the customer experience, while advertisers gain access to valuable data and achieve higher ROI

The US is a leader in RMN development, with major players like Amazon Advertising, Walmart Connect, and Target’s Roundel. RMNs in Japan are often integrated with loyalty programs to enhance customer engagement and retention.

The India opportunity for RMN’s is exciting at this time. The rapid expansion of e-commerce, especially in Tier 2 and beyond, creates a vast pool of potential customers. The rise of quick commerce further accelerates this trend, demanding real-time advertising solutions. India is also evolving differently from the rest of the world. In India the access to cheap data has powered digital consumption. People who are among the bottom strata in terms of goods consumption are in mid to high strata in terms of hours spent online Video consumption. Platforms like MX Player, Amazon Prime Video, and Jio’s various content offerings provide a wealth of opportunities for targeted advertising. The potential to integrate JioMart’s or Amazon’s retail data with its content platforms is immense, creating a truly omnichannel advertising ecosystem.

The convergence of retail and content data is a defining characteristic of India’s RMN landscape and could lead to the emergence of new advertising models that redefine the industry. This fusion allows for highly targeted and engaging advertising experiences, blurring the lines between shopping and entertainment. This could lead to new global standards for retail media networks.

Rise of Retail as a Discovery Platform & the increase in media spends across categories

Platforms use personalized recommendations and AI-driven product suggestions to enhance user experience. AI-driven engines are continuously refining the user feed and personalised recommendations. Even for the emergent Q-commerce platforms like Zepto, Blinkit and Swiggy Instamart trending brands and Card checkout placements prove to be a good ad options for driving category penetration. With the advancing technology, there has been a Consistent Improvement in Quality of Ad Inventories and the Quality of Audience to which an ad is served.

Now brands are increasing their spends on the Top funnel advertising and are willing to look for increase in brand searches as a KPI, where earlier only RoAS was an acceptable currency.

Increasing Ecommerce Spends across categories – FY 24 vs FY23

Future of RMNs

Traditionally, RMNs were heavily focused on driving immediate sales conversions at the bottom of the funnel (e.g., product search ads, “buy now” buttons). The future lies in using RMNs to build brand awareness and generate demand at the top of the funnel.

Innovating through On and Offsite Retail Spends:

• Onsite: Retailers are expanding their onsite ad formats to include rich media, video, and interactive experiences that engage consumers at earlier stages of the purchase journey. 1 & 2 in Chart 1 below captures the possibilities of onsite ads for products sold on retail networks and non endemic ads.
• Offsite: Partnering with third party (3P) ad networks and publishers allows retailers to extend their reach beyond their own properties, targeting potential customers across the open web and social media. This is achieved by leveraging the retailers first party data to target consumers on those offsite locations

The onsite and offsite advertising capabilities would expand the scope of RMNs towards:

1. Expansion beyond CPG: RMNs are attracting advertisers from various sectors, including travel, automotive, and financial services.
2. Full-Funnel Advertising: RMNs in the US offer a wide range of advertising solutions, from awareness to conversion.

Explosion of Ad Inventory: RMNs are moving beyond traditional search and display ads to offer a wider range of formats, including Video ads (in-stream, out-stream, connected TV), Social media ads, Audio ads and more.

The shift towards expanding top-of-funnel reach through on and offsite retail spends, coupled with the explosion of ad inventory, is indeed the driving force behind this revolution.

How RMNs will drive delight for customers through seamless advertising introduced into any purchase journey:

• Hyper-Personalization: RMNs will move beyond basic targeting to deliver hyper-personalized ads that are tailored to individual preferences and behaviors.
• Interactive and Immersive Experiences: Ads will become more interactive and immersive, incorporating AR/VR and other technologies.
• Seamless Shopping Journeys: RMNs will facilitate seamless shopping journeys that blur the lines between online and offline.
• Data-Driven Attribution: Advanced analytics will provide precise measurement of ad effectiveness, enabling advertisers to optimize their campaigns in real time.
• The rise of contextual commerce: Where ads will be so relevant to the content being consumed, the act of purchasing will become seamless.

As marketers we have learned to segment customers on the basis of their content consumption, We have to relearn targeting on the basis of the shopping card and delivery preferences.

Case Study

Leveraging Events On Q-Comm To Capture Incremental Category Buyers

The Challenge:

Hansaplast, already a category leader in the Band-aid category, was facing challenges in growing its sales on Q-Comm.

The Insight: Experiments with new ad inventories such as Display did not yield results, indicating that the issue was not around users not seeing ads sufficient number of times but fundamentally around intent. Therefore, to gain incremental sales customer intent had to grow.

Our Approach:

• Identify High Intent Events – Makar Sankranti, a festival of kites and outdoor celebrations, emerged as the perfect moment for a band-aid brand to launch a targeted campaign—ensuring first-aid was as readily available as the fun in the skies.
• Utilise Ad Inventories & Target Users Across Different Touchpoints – Homepage Touchpoints with Prime Banners, Direct-To-Cart assists and Search touchpoints (using Activated Listing Spotlight Ads & Product Booster Ads).

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Impact

• 5X Growth in impressions
• 77% Growth in add-to-cart rate
• 43% Growth in total units