Merkle is a leading data-driven customer experience management (CXM) company that specializes in the delivery of unique, personalized customer experiences across platforms and devices for the Fortune 1000.
This promoted content is produced by a publishing partner of Open Mic. A paid-for membership product for partners of The Drum to self-publish their news, opinions and insights on thedrum.com - Find out more
Media Networks: Not Just for Retail Anymore
April 27, 2023
Author: Megan Cameron, VP, New Stream Media
After an explosion in recent years, media networks have been tightly linked to retail. However, other industries are recognizing the opportunity that a media network presents – after all, there’s no reason data monetization should sit with just retailers. Brands across travel, automotive, financial services, and more are joining the media network conversation.
Note: throughout this article, “brands” will refer to the companies either considering or currently running a media network, while “advertisers” are the companies looking to buy media from them.
What’s Happening with Media Networks to Encourage This Expansion
Retail media networks experienced a meteoric rise over the last several years – but despite the relative newness of the space, the financials are quite attractive for retailers.
Operating margins are high, with some media networks reporting figures of up to 70%. There’s also scale. Though Amazon’s size puts it in its own league, other players see significant revenue from their media networks. In 2022, Walmart Connect was a $2.7B business and Instacart was forecasted to bring in $1B in ad revenue. Both retail media networks posted double-digit YoY growth and, along with dozens of other retailers, are helping to drive what’s being called the third wave of digital advertising. Importantly, much of this revenue is incremental. McKinsey found that more than 80% of spend on retail media networks is from net-new budget sources rather than a reallocation of dollars already going to the retailer. Retail media networks are capturing budget investment from upper funnel sources like national agencies and brand direct. All of this data signals that the retail media network model has the financial stability to expand into new industries.
The scope of media networks has changed as well. They used to include just .com, on-app, or in-store media placements. Now they span the entire shopper experience including ad solutions like programmatic display and video, connected TV, digital out-of-home, paid search, social, and more. This expansion into mid- and upper-funnel formats translates well to other industries where consumers aren’t necessarily in a “buy now” commerce moment.
Why Other Industries Should Jump In
There are a few reasons why now is an ideal time for brands to launch a media network program.
· Secure first-mover advantage without as much risk. Retail has established the groundwork for media networks and there are a variety of partners across tech, strategy, and media activation with experience and expertise. At the same time, the number of non-retail brands with a media network is small. By acting now, brands get the benefit of less competition without all of the unknowns that early adopters usually face.
· Capitalize on demand, which is at an all-time high. Third-party cookie deprecation is on the horizon and advertisers are hungry for relevant and insightful first- and zero-party data. Many advertisers don’t have their own first-party data and need it from partners in order to target their marketing efforts effectively.
· Diversify your revenue streams. Economic uncertainty makes relying on one source of revenue risky. Media networks add an alternative stream of revenue that can be additive to your bottom line or used as investment to fund necessary advancement projects.
With the value that media networks add for brands, competition is unlikely to stay low for long. Those who jump in now can capitalize on the current whitespace and advertiser interest.
How to Determine If a Media Network Makes Sense for Your Business
Though the benefits are motivating, not every brand should launch their own media network. There are two key offerings that can make a brand an enticing media network platform for advertisers.
1. Unique data. One of the core reasons advertisers choose to work with media networks is access to their first-party data – 59% of US advertisers said so in our 2022 Retail Media Research Report. However, it’s important not to think of your first-party data offering in terms of volume alone. If you have thin data points on 100 million people that other sources also have access to, then your data isn’t differentiated. To be valuable, your data segments should be deep or unique (or, ideally, both). The number of customers in your database matters less.
For example, take an insurance provider who uniquely serves the subprime space. Their database many only have a few million individuals, but access and insight to this audience can be incredibly valuable to advertisers who are seeking to reach these individuals, especially with current economic uncertainty. The insights they can glean about those 4 million people might be more valuable than what they could learn about 100 million people from a mass retailer.
Depth of data is also important and is an area in which many non-retail brands thrive. Consider brands with rich loyalty programs. I’ve been part of the same hotel loyalty program for 20+ years, and they have data that follows my travel preferences– when I prefer to travel, which brands I stay with most frequently, where I go, what amenities matter most to me, and how that’s all changed over time. That depth of profile can help other advertisers get a detailed picture of my needs and preferences as a consumer.
2. Owned media opportunities. As I mentioned earlier, part of what’s changed is the expanded definition of what a media network is. It’s no longer limited to .com or even online placements. Offline touchpoints have become a key part of media networks, and any brand with physical, consumer-facing engagement has high-value opportunity for media sales.
The most prevalent example of this is at gas stations. The screens that are showing up at more pumps are prime real estate for media. But the opportunities extend far beyond that. From digital signage in hotel elevators to car configuration screens at a car dealership, there are endless possibilities for brands to connect advertisers with their target audience.
Remember, the goal is to build a business that reaches the customer that you and your advertiser(s) share in a one-to-one, personalized, addressable conversation. Potential advertisers don’t need to sell something related or complementary to what you sell; they just need to be equally relevant to your shared customers. If Subaru owners are highly likely to be dog owners, there’s no reason they can’t partner with Chewy as an advertiser. The media network-advertiser connection comes from the people, not the product.
Getting Started on a Media Network
If you decide to explore the possibility of a media network, there are a few initial steps you can take to get started on the right foot:
1) Develop a business case or opportunity size: The rest of your planning process will require knowing what the realistic revenue potential is for your media network.
2) Define your goals for monetization: Understand what you want to achieve through your media network. This could include financial goals, reach targets, partnerships, and more.
3) Secure executive level buy-in: Define the vision and align stakeholder expectations across the enterprise to ensure financial and business success.
4) Talk to potential advertisers: Gauge interest and understand what capabilities and monetization formats advertisers will want from your media network.
The key throughout the initial planning process is to be realistic – about revenue potential, your organization’s openness to change management, and the expenses and time required to get the media network up and running.
The opportunity for media networks is immense, and it’s not limited to retail. With the right planning and differentiation, brands across financial services, travel, automotive, and more can capitalize on this industry growth and build their own successful media network.