Retail media: everything brands need to know

Now retail media is not a new concept with networks like Dunnhumby, Boots Media Group, Walmart Connect, and Carrefour Links existing in the market for a while now, but most major retailers are now looking to open a media arm with Morrisons and Asos recently cohorts.

How do retail media networks work?

Retail media networks use purchase data from the retailer’s loyalty accounts (and therefore email IDs), and then segment audiences into groups. For example, customers who regularly buy vegan products or crisps.

What is driving growth?

These retail media buys are being positioned as privacy-first solutions to cookie deprecation. The economic downturn also plays a role as marketing budgets get squeezed. Chief marketing officers need to eliminate wastage, and this service guarantees to reach viewers with a propensity to buy.

A big attraction of retail media is measuring performance. Since both ad placements and product sales take place on the same platform it offers advertisers a unique ‘closed loop’ of insights: real data-backed advertising that can be accurately linked to sales. Therefore, it allows advertisers to track the impact and ROI of their ads and be able to optimize their strategies more accurately.

Why should brands invest in retail media?

1. Reasonable cost of media

2. Access to audiences otherwise not reachable

3. Best performance delivery

4. Unique shopper insight

5. Scale of audience

6. Omnichannel measurement

How retail media can be combined with TV

In the UK and the US, retail media networks have teamed up with local broadcasters and streamers including Walmart Connect's deal with Paramount+ and ITV and Channel’s partnerships with Dunnhumby and Sainsbury’s Nectar network. In the case of Channel 4, it matched its 24 million All 4 users to Nectar’s six million members and carved out 80 audience segments.

Post-campaign the broadcaster and retailer then provide a brand with proof of who then went on to buy that product after being exposed to the ad – a process termed closed-loop analytics. Broadcasters then match IP addresses from video-on-demand registrations and match them with the emails collected by the loyalty accounts to serve targeted ads.

So, how do you buy it?

Media agencies can go either go direct to the publisher or the retailers to purchase, but buyers have previously told The Drum that they prefer dealing directly with the publishers to better evaluate the media buy. For example, Channel 4’s market proposition is to let them handle the entire process from the segmenting right the way through to delivering the results. According to Channel 4, all brands have to do is pick the segment that is most relevant to their campaign.

How much does it cost?

Brands will pay a premium to data match. The more targeting you ask for, the more money publishers can charge. Although pricier, advertisers should weigh up that it is a more efficient media buy though when you consider you are only paying to reach viewers who you know will buy your product. With a mass buy, millions of viewers are seeing an ad without any possibility they will buy. A simple example is only targeting pet food to audiences who have bought pet food – why hit a viewer who doesn’t have a pet?

What do advertisers need to bear in mind?

Retail media is for incremental reach and isn’t a tool for brand building. Advertisers excited by the prospect of a retail media buy need to ensure they are balancing it with other brand-building marketing.

Advertisers need to be cautious of only measuring short-term sales lift. Only using data matching within a media plan as it could lead to a strategy of only reaching a small pool of people repeatedly.