Retail media networks: A primer

Retail media networks (RMNs) connect retailers and CPG brands with the help of technology suppliers, but how does it work, and how do these companies partner to make it happen? 

Leaders came together at CSP’s inaugural Retail Media Network Forum in Chicago in October to learn more, share experiences and discuss each stage of the process. Some attendees were completely new to the idea, while others wanted to continue refining their approach, and few convenience-store retailers already operate a retail media network.

What is a retail media network?

From a retailer’s perspective, RMNs are about taking consumer data and allowing that data to be used to serve relevant ads to consumers in partnership with CPG companies. These ads can exist both on- and off-site, whether it’s inside stores, on websites or via apps, said Michelle Dooley, retail media partner at NexChapter, a strategic growth advisory firm for the convenience and grocery channels based in Des Moines, Iowa. 

Retail media spend in the U.S. is growing, and in 2024, it reached $59.6 billion, according to NexChapter.

Retailers benefit from RMNs not only because more consumers are influenced to enter the store from the fuel pump and grow their basket size, but also because CPG companies pay a convenience-store chain to be a part of its RMN.

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The three ingredients for retail media are first-party data, ad inventory and strategy and planning. 

Retailers have the foundational ingredients for RMNs, including loyalty programs, digital marketing and physical assets like stores, fuel pumps, car washes and digital screens, Art Sebastian, CEO of NexChapter, said. It comes down putting it all together in a more formal package.

Temple, Texas-based CEFCO, which c-store chain Casey’s recently agreed to acquire, is developing its own RMN, said Rachel Puepke, vice president of marketing, foodservice and merchandising at CEFCO. “We have all the individual components. We have an advanced loyalty program; we are testing pumps with digital tech, and we are integrating that all together as a whole.”

For its loyalty program in partnership with Par Retail, Philadelphia, CEFCO leaned into its vendor partners to share data and drive membership, Puepke said.

“I didn't realize I was tapping into the notion of retail media networks until we were having this conversation,” she said.

It starts with data

When a retailer has customer purchase data—including sizes, time of day and week, if they are open to new products or loyal to certain products—it can go after those customers when advertising.

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“The more identified data you have, the larger the opportunity for your retail media network,” Dooley said. “The more you know your customers, the more relevant you can be, the more you can reach your customers, the more you can serve your customers.”

Convenience has opportunities for core differentiation with RMNs because of frequency, the customers and the way that they interact with our stores, she said.

Becoming an advertiser

The next step is advertising. There are three channels to advertise in, Mike Templeton, vice president of digital strategy at NexChapter, said. The first location is in-store, which is everything at the store location, such as digital menu boards, fuel displays, physical signage and more. Second, off-site advertising includes spaces other than the store where a customer is choosing to interact with the brand, like its website, app, email subscriptions or texts. Third, off-site ads include tv, social media and other spaces that a consumer might occupy but are not managed by the brand.

“[Consumers] are more likely to make a transaction when the message is just seamlessly displayed across all of your channels,” said Sebastian.

Yesway is figuring out how to launch its retail media network, said Darrin Samaha, vice president of marketing at Yesway, Fort Worth, Texas. He is focusing on ensuring it’s not just promotional content, and he emphasized wanting a more integrated approach with marketing and advertising. 

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Every ad should lead to an action, said Templeton, such as joining the rewards program, using an offer, starting an order, adding an item to the cart or finding a store. 

“Advertising is about reaching the live, massive audience to keep you top of mind,” he said. “[Retail media networks] are going to help you understand more about what’s important to that customer. You can't do that in a broad-based advertising way because everybody's looking for something different.”

Strategizing the desired outcome 

When beginning the planning process for RMNs, retailers should focus on gaining internal buy-in and support, assessing key performance indicators and finding a strategy for positioning the RMN to external partners, Sebastian said.

It’s also important for retailers to think about who they want to target, its reach (how many people subscribe to emails, how far does paid social media go), the right advertising frequency and time, the channels it should occupy and how they’re going to create ads, especially in different channels.

While retailer attendees agreed that driving sales is the biggest opportunity with RMNs, other valuable outcomes include leveraging first-party data, integrating merchandising and marketing, improving retailer relations and strengthening communications plans, Sebastian said.

RMNs can also result in helping customers see value with more relevant offers, promotions and content; creating a seamless experience across channels; and driving new high-margin alternative revenue to reinvest back into the business.

Investing in a retail media network is important for Yesway because the company is looking for incrementality, Samaha said. Suppliers are looking to invest, and retailers have assets like loyalty programs for them to invest in.

CPG brands, tech companies are valuable resources 

RMNs allow CPGs to get access to customer data, such as purchase history, shopping behaviors and demographics to target ad campaigns. 

There’s also potential for improved return on investment by advertising closer to where customers make purchasing decisions. Tech partners are a valuable resource in making this happen, said Joe Workman, vice president of trade marketing and sales operations at smokeless tobacco alternative company Black Buffalo Inc., Chicago.

“Technology providers can help you as a retailer and help [CPGs] understand the consumer audience,” said Workman. “You have the consumer data; they're in your stores. The faster you can get that to us or get that in front of your category people to help us understand you—that’s the opportunity.”

Offering these measurable results to CPG companies will make them invest in more offers within the RMN. As a result, customers will see more value and bring retailers more sales, he said. 

“It is a trend that is here to stay across channels, across retailers, all serving that personalization need,” said Bret Thurston, director of integrated media and eCommerce at J.M. Smucker Co., Orrville, Ohio.