Retail Media Networks (RMNs): The Third Wave of Digital Advertising

1. Introduction: The New Media Battlefield

For two decades, digital advertising has lived under a virtual duopoly. If a brand wanted to capture the intention from the user, she paid Google (Search). If she wanted to capture the The most common and direct translation of "interesse" to English is: * **interest** and the demographic profile, you paid Meta/Facebook (Social). This era seemed immutable. .

However, in recent years, a “Third Wave” has emerged that is reshaping the internet economy: the Retail Media Networks (RMNs).

Technical Definition: One Retail Media Network is an advertising structure built and operated by a retailer (such as Amazon, Mercado Livre, Magazine Luiza, Walmart, or Carrefour), which allows brands to purchase advertising space using first-party data.First-Party Data) of that retailer. .

Unlike Google or Facebook, where the user is searching for information or socializing, in NSMs the user is in manner of purchase. Retail Media Networks (RMNs) transform online stores into media vehicles, monetizing digital (and physical) traffic and their customers' transactional data. .

It is not an exaggeration to say that retailers are becoming the new TV networks. Amazon Advertising, alone, already generates more annual revenue than the sum of many global traditional media conglomerates. What began as a way to sell “digital endcaps” has become a revenue stream with profit margins higher than those of retail itself. .

2. The Economics Behind NMRs: Why Now?

To understand the explosion of retail media networks (RMNs), we need to look at retail accounting and the data privacy landscape. .

2.1. The Margin Imperative

Retail is, historically, a low-margin business. A supermarket or a marketplace operates with net margins that often range between 2% to 5%. Logistics are expensive, inventory is capital intensive, and price competition is brutal. .

In contrast, the digital media business has very high margins, often between 60% to 80%. By creating a RMN, the retailer creates a source of “free money.” There is no cost of goods sold (COGS) for displaying a banner. The infrastructure (the website) already exists. .

• The Subsidy Effect: The profit generated from ad sales subsidizes the retail operation, allowing companies like Amazon to maintain low prices and fast deliveries, crushing competitors who rely solely on product margin. .

2.2. The Cookie Apocalypse

With the end of third-party cookies (Third-Party Cookies) and with Apple's privacy changes (iOS ATT), brands have lost the ability to track users across the open internet. Facebook targeting and traditional programmatic media have lost precision. .

In this scenario, the retailer's data becomes pure gold. The retailer doesn't need to infer who you are. He The translation of "sabe" depends heavily on the context. Here are a few possibilities: * **He/She knows:** This is the most common translation when "sabe" is a conjugation of the verb "saber" (to know). Example: "Ele sabe a resposta" -> "He knows the answer." * **You know (formal):** When addressing someone formally ("você"). Example: "Você sabe?" -> "Do you know?" * **It tastes:** When referring to flavor, as a conjugation of the verb "saber" (to taste). Example: "Sabe bem." -> "It tastes good." who you are. He has your name, your credit card, your address, and, most importantly, your Actual purchase history. It has First-Party Data (1P Data) deterministic, not probabilistic. In a cookie-less world, the “Walled Garden”Walled Garden) of retail is the safest and most efficient place to advertise. .

3. The “Holy Grail”: Closed Loop Attribution

The biggest competitive advantage of Retail Media Networks (RMNs) over any other media vehicle (TV, Radio, Outdoor, or Social) is the Closed-Loop Assignment.

• TV/Social Landscape The brand shows a shampoo ad on TV or Instagram. The user sees it. Days later, the user goes to the supermarket and buys the shampoo. The brand You'll never know. It was definitely that ad that generated the sale. There's a break in the journey. .
• MRI Scenario: The brand displays a shampoo ad in the supermarket's website search. The user clicks. The user adds it to the cart. The user pays. .

The entire process occurs within the same ecosystem. The retailer can tell the brand, with cent-level precision: “You spent R$ 1.00 on this ad and it generated R$ 5.00 in direct sales within 24 hours.” ”. This eliminates guesswork from marketing. Return on Ad Spend (ROAS) is transparent, auditable, and generally much higher than top-of-funnel channels. .

4. The RMN Ecosystem: Where Do Ads Appear?

A mature Retail Media Network doesn't just sell homepage banners. It offers a complex inventory divided into three fronts:

4.1. On-Site (Within the Digital Store)

This is classic inventory, operating within the retailer's website or app. .

• Sponsored Products: The most popular and profitable format. These are the products that appear at the top of search results when a user types “running shoes.” They generally operate via auction (CPC – Cost per Click) and focus on immediate conversion (bottom of the funnel). .
• Sponsored Brands/Display: Banners on the home page, category pages, or checkout, focused on awareness brand awareness .

4.2. Off-Site (Audience Extension)

Here, the retailer acts as a programmatic media agency. It uses its data to find its customers. The most accurate and natural translation of "fora" depends heavily on the context. Here are a few possibilities with examples: * **Out:** (General meaning) * *Example:* "Ele está fora." -> "He is out." * **Outside:** * *Example:* "Está frio lá fora." -> "It's cold outside." * **Away:** (Often implies absence) * *Example:* "Ele está fora em viagem." -> "He's away on a trip." * **Outdoors:** * *Example:* "Vamos brincar lá fora." -> "Let's play outdoors." * **Out of:** (Used with containers/quantities) * *Example:* "Estamos fora de gasolina." -> "We're out of gas." * **No longer in/at:** (To indicate leaving a place or profession) * *Example:* "Ele está fora da empresa." -> "He's no longer at the company." / "He's left the company." To provide the *best* translation, please provide more context or the sentence/phrase where "fora" is used. of your website. .

• Example: Mercado Livre knows you're buying diapers. It can purchase advertising space on the G1 news website or on YouTube and show you an ad for baby wipes there. .
• This allows RMN to scale its reach beyond traffic from its own site, competing directly with the Google Display Network (GDN) and DSPs. .

4.3. In-Store (The Digitalization of the Physical Store)

The new frontier. Retailers with brick-and-mortar stores (such as Walmart, Carrefour, RaiaDrogasil) are digitizing the physical environment to connect it to their Retail Media Networks (RMN). .

• Digital Screens (Digital Signage): TVs in the hallways that change the advertisement depending on the time of day. .
• Smart Carts: Tablets attached to the shopping cart that display offers based on the aisle where the customer is. .
• Programmatic In-Store Radio Targeted audio in the store. .
• The attribution here is done by cross-referencing the ad data with the CPF (Brazilian national ID) entered at the checkout (loyalty program). .

5. Advertiser Types: Endemic vs. Non-Endemic

A crucial evolution of RMNs is the expansion of the customer base. .

5. 1. Endemic Brands

It's the brands that sell products. inside from that retailer. .

• Example: Samsung advertising a TV on Amazon. Or Nestlé advertising condensed milk on the Carrefour website. .
• Objective: Sell the product right there. The click leads to the product page (PDP). .

5.2. Non-Endemic Brands

That are brands that no They sell products at that retailer, but want to access its qualified audience. .

• Example: - An auto insurer advertising in the “Auto Parts” section of Mercado Libre. - A construction company advertising apartments in the “Decoration” section. - A bank advertising credit cards at checkout. .
• This transforms the retailer into a pure-play media vehicle, monetizing audiences for sectors such as Finance, Automotive, Tourism, and Education. .

6. The Technology Stack and Democratization

In the beginning, only giants like Amazon were able to build their own ad tech. Today, the market has evolved. .

• Build (Construir): Amazon and Mercado Livre (Mercado Ads) built their platforms from scratch. They have complete control, but with a high engineering cost. .
• Partner (White-Label Partners): Most mid-sized retailers use third-party platforms that provide RMN infrastructure “as a service.” Companies like Criteo, CitrusAd, and Google (Retail Search) provide the auction engine and ad delivery, while the retailer provides the audience. This has allowed pharmacies, pet shops, and niche stores to launch their own media networks quickly. .

7. Metrics and KPIs: The Language of NMRs

Unlike TV (GRP, TRP) or Social (Likes, Shares), RMNs speak the language of the CFO (Chief Financial Officer). .

1. ROAS (Return on Ad Spend): The queen metric. For every R$1.00 invested, how much came back in sales? RMNs (Relationship Marketing Networks) often deliver aggressive ROAS (e.g., 5x, 10x). .
2. ACOS (Advertising Cost of Sales): The inverse of ROAS. What percentage of the sale did it cost to generate it? (Ex: I spent 10% of the sale value on media). .
3. iROAS (Incremental ROAS): An advanced metric. The ad generated a sale that It wouldn't happen. otherwise, or did they just cannibalize an organic sale that the user would have made anyway? Measure the "incrementality" That's the current challenge to prove real value. .
4. New-to-Brand (NTB): What percentage of sales came from customers who had never purchased from the brand before? Essential for measuring market share gains. .

8. Challenges and Growing Pains

Not everything is perfect in the world of Retail Media Networks (RMNs). Explosive growth has brought growing pains for advertising brands. .

8.1. Fragmentation and Complexity

In the past, a brand would buy media in 2 places (Google and Meta). Now, they need to buy on Amazon, Mercado Livre, Magalu, Carrefour, RaiaDrogasil, Uber… Each of these networks has:

• A different login system. .
• Different banner formats. .
• Different attribution models (some count a sale within 7 days, others within 14 days). .
• Reports that don't talk to each other. .

This creates an operational overload for agencies and brands. The market is crying out for standardization. .

8.2. The Retail Tax

Some brands feel that RMNs are becoming a “toll.” Where they previously appeared organically in search, they now need to pay to maintain their position (“Pay-to-Play”). This can erode the manufacturer's margin if it doesn't generate real incremental sales. .

8.3. Trade Conflict vs. Media

Historically, the retail buyer negotiated with the industry salesperson. Now, the media team enters the picture. Often, the retailer pressures: “If you don't invest 1 million in my Retail Media Network, I won't buy your product to put on the physical shelf.” ”. This tied selling (JBP – Joint Business Plan) is a gray area and a source of tension in B2B negotiations. .

9. The Future of RMNs: 2025 and Beyond

Where is this industry headed?

9.1. Connected TV (CTV) and Streaming

The final frontier. Amazon has already inserted ads into Prime Video. Mercado Livre has launched Mercado Play. Walmart has partnerships with Paramount+. The future is buying a TV (Streaming) ad using retail data. . Example: Show a dog food commercial on TV only to subscribers who bought food 30 days ago and are about to need a refill, and allow them to purchase with a click on the remote control. .

9.2. Data Clean Rooms

To address privacy and collaboration, the following emerge: Data Clean Rooms. Safe environments where the brand (e.g., Unilever) and the retailer (e.g., Carrefour) cross their anonymized data to derive insights without either one handing over their customer base to the other. .

9.3. Generative Artificial Intelligence

AI will make ad creation easier. A small seller on the marketplace won't need an agency; the RMN's AI will automatically generate the banner, text, and product video, democratizing access to professional media. .

10. Conclusion: A Paradigm Shift

Retail Media Networks are not just another media channel; they represent the ultimate fusion between Commerce and Media.

For retailers, it is the key to economic sustainability and profitability in a digital world. For brands, it is the most accurate tool ever invented to convert intention into transaction. For the consumer, it means more relevant, predictive, and useful (albeit more ubiquitous) advertising. .

We are witnessing the end of the era in which retailers merely “distributed products.” In the 21st century, retailers distribute products and audience. And, in many cases, the audience is worth more than the product. .

Glossary of Technical Terms

To aid in navigating this ecosystem, we have compiled the main terms used in the world of RMNS:

• 1P Data (First-Party Data): Data collected directly by the retailer from its customers (transactions, browsing), without intermediaries. It is the most valuable asset of a Retail Media Network (RMN). .
• Walled Garden: A closed ecosystem (like Amazon or Google) where the operator has full control over the data, inventory, and technology, not allowing easy export of raw data. .
• PLA (Product Listing Ads): Advertisements that display the product's photo, price, and title directly in search results. Also known as Sponsored Products. .
• Attribution Window The period of time (e.g., 7, 14, or 30 days) after an ad click or view during which a sale is credited to that ad. .
• Endemic Brand: A brand that sells its products within the retailer's ecosystem where it advertises. .
• Non-Endemic Brand: A brand that advertises at a retailer, but sells products/services outside of it (e.g., automotive, finance, travel industries). .
• DSP (Demand-Side Platform): Software used to buy advertising in an automated (programmatic) way outside the retailer's website (off-site). .
• Incrementality: Measuring the true impact of marketing, by calculating how many conversions occurred. just because of the ad, excluding those that would have occurred organically. .
• JBP (Joint Business Plan): The joint annual planning between Industry and Retail, which now includes Retail Media budgets in addition to traditional trade (Trade Marketing) budgets. .
• CTV (Connected TV): Television connected to the internet (Smart TVs, consoles, sticks) that allows the display of targeted digital advertising via retail data. .