Retail Media Networks Should Take a Page from The Mobile Gaming Playbook

Retail media combines the exciting areas of commerce (direct-to-consumer digital and physical in-store), digital advertising as well as audience addressability. eMarketer forecasts that retail media networks in the US alone will grow to over $52 billion in ad sales by 2023.¹ These networks must find the right platform that helps build an incremental advertising business. In examining the opportunity and path to success for retailers, it appears, interestingly, like another approach: the mobile game publisher growth platform.

Getting to Know the Growth Platform 

Sometimes referred to as the growth loop or engine, the growth platform is a software-driven approach that in-app publishers commonly leverage to generate consistent value. The cyclical process has three core phases: monetization, optimization and acquisition. In-app gaming has perfected these three phases and sets a blueprint for how retail media networks can drive success.

Monetization

The name of the game is profitable diversification. App publishers have learned not to focus on a single revenue metric like CPM, nor what type of revenue they are driving (advertising or consumer), but rather on finding the right mix to drive up the lifetime value (LTV) of a consumer. Such revenue can come from ads within the game or consumer spending, primarily through in-app purchases (e.g. coins, skins, level-ups). Gaming publishers succeed by continuously examining the data on player experience as well as implementing the proper advertising placements and formats.

For example, once players have gotten through a few levels, a game like King’s Candy Crush will deliver strategically placed rewarded or interstitial advertising. In addition, they will also consistently offer in-app purchases in their “Shop” area, for players to get boosters and advance levels.

Retail media networks can take a similar approach to gaming, determining whether to deliver advertising or push more consumer revenue, through digital or physical goods. Advertising can serve as an incremental profit contributor, as it will deliver more revenue at a higher gross margin compared to (re)selling consumer goods. Impactful monetization means retailers are effectively capitalizing on their site and app visitors with optimization tools and unique demand.

Mobile gaming companies do an incredible job examining and activating on the closed-loop reporting they access. While privacy changes have limited their view, notably around identifying the exact person or which ad campaign that individual came from, mobile game publishers can leverage all this information to develop a clearer picture of their players.

Games like Scopely’s Walking Dead leverage a range of data sources via API to aggregate and curate multiple analytics views. They look at multiple user cohorts to determine the LTV over different time periods, examining their monetization and retention behaviors. This detailed analysis is crucial for a core genre game that has a long player lifecycle. so

Retail media networks can follow these examples, securely leveraging the incredibly valuable customer sales data to inform future decision-making. At PubMatic, we saw campaigns that leveraged these retail-driven optimizations deliver as much as a 36% reduction in cost-per-acquisition (CPA) and 10% efficiency in eCPM.⁶  Retailers can also tailor all optimizations to their specific goals, move beyond just pricing data and improve acquisition and business outcomes.

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Acquisition

The last but critical part of the growth platform is acquisition, which not only kicks off the flywheel effect but also has been fundamentally disrupted due to the advertising industry’s latest privacy changes.

Mobile publishers, especially gaming ones, are surgical when it comes to user acquisition. Before Apple’s app tracking transparency (ATT) implementation and the IDFA limitations, publishers leveraged a myriad of outlets, notably Facebook and Google, to drive users to their games. Currently, only 40-50% of users are opting in to provide their IDFA to games. Gaming apps continue to invest heavily in acquisition; yet, they have had to alter their approach. As analyst and author Eric Suefert notes, gaming publishers transitioned from an intensive focus on segmentation in their acquisition efforts to increased customization within the app experience they control. They acquire mass groups of users (often at lower prices than highly targeted segments) and then can bucket them in ways like pre-privacy times based on the type of game those players engage with.⁷

Retail media networks can model some approaches of mobile gaming publishers; however, they have options: enable their suppliers to execute acquisition that utilizes the retailer’s data assets or execute the acquisition themselves. First, retailers can monetize their users on the open internet by allowing vendors to execute audience extension deals against those users. Retailers can also choose to execute their own acquisition campaigns, like mobile gaming publishers, by applying a data-driven, targeted and strategic approach to fuel their growth platform. Because this is all retailer first-party data, retail media networks (and their suppliers doing acquisition) can circumvent the third-party data deprecation resulting from all the industry privacy changes.

Taking The Next Step

The opportunity in retail media is and will continue to be substantial. Through a strong growth platform, retailers can exponentially accelerate their businesses despite the targeting and measurement uncertainty the larger ad industry faces. This all may seem daunting to take on, especially if retailers have their current, core jobs to focus on. An experienced, unbiased partner is a great resource to help make sense of the ecosystem as well as recommend technologies that can support the business goals. It is important that those partners provide solutions that are retailer-specific, purpose-built for them as well as can aid in providing verified and quality measurement. Finding the right partner can make it an easy onramp to a successful growth platform, which will generate success in the short and long term.

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