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How retailers and brands can maximize the value of non-endemic advertising on RMNs

February 24, 2023

Matterkind’s Nancy Hall (US CEO) looks at how retailers and brands alike can maximize the value of non-endemic advertising on RMNs and asks whether the position of these campaigns in the marketing funnel needs a rethink.

Though still in their relative infancy, retail media networks (RMNs) have been described as the third big wave of digital advertising (after search and social). And with every month that passes, brands and retailers are finding new and lucrative data-point-breaks from which to surf this wave.

One such approach is non-endemic advertising. While the first flourishes of advertising focused on brands that sell in-store, the RMN proposition is every bit as compelling for non-endemic brands. That is, brands that don’t sell directly through the retailer, but provide products or services that are in some way complementary.

In this article we’ll take a closer look at this exciting, expanding new space, including some ke

An uneasy relationship

Some retailers have been reluctant to introduce non-endemic advertisers. This is principally a control issue. Retailers are fiercely protective of their dotcoms’ user experience and wider digital locations. It’s much harder to predict (or control) how people will react to receiving messaging connected to non-endemic brands. The wrong brand match could compromise this experience.

However, an even greater challenge to retailer control comes when their RMN has an audience extension offering. That is to say when they've taken their consumer data, and they've packaged it up in private marketplaces and PMPs in order to extend the opportunity out beyond their dotcom for reach, scale, and for omnichannel enablement. Here, controlling the brand messaging people receive is at least partially ceded to the technology and sales teams of the wider network. It’s a challenge that requires careful management but well worth taking on.

A huge mutual opportunity

You can see the appeal: for brands, there's the chance to leverage rich first-party data – particularly buyer behaviors – across retailers’ dotcoms, open exchange, and private marketplaces (PMPs). It’s an equally enticing arrangement for retailers: opening up a broader range of advertisers from which to generate major new revenue streams.

RMN advertising is big business. Just look at some of the numbers:

In the US, RMN revenue is predicted to exceed $50bn this year, which would equate to nearly 20% of total digital ad spend.

A recent study of CX predictions by Acxiom found that 55% of businesses believe RMNs will deliver higher conversion rates because ads appear when people are actively shopping and willing to spend.

As RMN insights grow more sophisticated the attractiveness to brands is only going to rise. Added to which, retailers are enhancing and diversifying RMN options – just this month for example Kristi Argyilan, senior vice president, retail media at Albertsons, talked about attracting non-endemic advertisers via “self-service access to decoupled insights, audiences, and other assets.”

Many retailers have identified data decoupled from advertising inventory as a revenue stream with huge potential. Just look, for example, at how Walgreens positioned the launch of its new self-serve data segment service for brands to use via OpenX and The Trade Desk: “With more than 95 million my Walgreens members and Walgreens roughly 1 billion touchpoints daily with customers, the service can target purchasers of more than 70 key categories.” This type of arrangement has the scope to be an advertiser’s dream: bespoke consumer data decoupled from the confines of retailer dotcoms, scaled-up on to the open web via supply-side platform inventory.

Similarly, in January commerce media enterprise Criteo announced a new partnership with omnichannel sell-side advertising platform Magnite to extend retail audiences into CTV. The point being, this flexible approach to RMN data management and access could herald exponential growth in non-endemic advertising.

Finding the right fit, picking the right partner

Irrespective of the advertising dollars, the two core rules of RMNs are simple: firstly, do not allow anything people would deem ‘off-brand’ onto the network; secondly, no new brands can be introduced that could cannibalize core sales. For non-endemic advertising to deliver mutual benefits, there needs to be a coherent, complementary, and appropriate fit between retailer and brand. This fit, or alignment, can be broken down into two broad considerations – brand relevance and network capability.

Brand relevance

  • Positive association: An easy one.The association of retailer and advertiser should reinforce their individual brand positioning and perception.Parity: there needs to be a clear match or overlap in customer type, demographics, aspiration, or product price points between advertiser and RMN. Lack of parity – say, a luxury car brand on a discount retailer’s network – risks compromising customer experience and advertising effectiveness.Pertinence: Do the matchups make sense? Would people understand intuitively why a non-endemic brand’s messaging might be pertinent to them? If not, customer experience is compromised.
  • Parity: there needs to be a clear match or overlap in customer type, demographics, aspiration, or product price points between advertiser and RMN. Lack of parity – say, a luxury car brand on a discount retailer’s network – risks compromising customer experience and advertising effectiveness.
  • Pertinence: Do the matchups make sense? Would people understand intuitively why a non-endemic brand’s messaging might be pertinent to them? If not, customer experience is compromised.

Network capability

  • Range: An RMN’s suite of advertising solutions needs to be aligned to brands’ advertising ambitions. Not all RMNs are created alike; not all can offer the same scale, audience extensions or omni-channel enablement. Not all retailers currently offer the option of decoupling data and inventory.
  • Reporting and insights: To facilitate reach for non-endemic brands, RMNs need to offer a sufficient level of audience insight and buyer behavior reporting. Like the Walgreens example above, the level of data management and segmentation available on the RMN will go a long way to determining whether the brand and network are a good fit.

Beyond performance: RMNs as a branding play

Understandably, RMN advertising has been viewed largely as a bottom-of-funnel performance marketing play. This viewpoint is, however, evolving. A 2022 study from McKinsey, for example, indicated that some advertisers place equal emphasis on RMNs for brand-building as for sales.

And with non-endemic brands, the imperative to drive sales directly from RMNs isn’t easy to track. With these brands, there’s a strong case to consider RMN advertising as a primary driver of top-of-funnel branding value. This has implications for both retailers and brands.

Firstly, it changes retailers’ media network positioning to a performance and branding proposition. Simultaneously this demonstrates greater value to prospective advertisers, while widening the scope of advertisers they could approach. However, it will also place greater demands on retailers to deliver high-definition audience insights, reporting, brand favorability studies, and inventory in order for advertisers to realize this ‘full funnel’ value.

For both retailers and advertisers the top-of-funnel perspective doubles-down on the importance of finding the right partnership, to find that relevant fit of brand and retailer.

A simple, sophisticated future

For both endemic and non-endemic advertisers, a full-funnel RMN future presents both challenge and opportunity. Devising coherent campaigns that serve top-of-funnel branding plays and bottom-of-funnel performance objectives simultaneously could be a tough needle to thread. Carefully orchestrated campaign creative will be imperative for brand success. It will be a challenge. But so worthwhile.

With the size of the non-endemic advertising prize more than clear, network sophistication and service levels will only increase. Increase to deliver valuable, defined audience segments receiving coherent, demographically appropriate messaging without compromising customer experience or dotcom sales. Or more simply, they’ll increase to deliver retailer and brand matches that make sense and deliver value.


retail media networks
non endemic
Retail media
Performance Marketing
Commerce strategy