How to succeed in retail media
The emergence of retail media has triggered the start of a major overhaul of the digital advertising industry, one that will drive structural changes in how media is planned and bought
A cut above the rest
Retail media data is the best data marketers will ever see. From start to finish it is privacy-compliant, individualized, cross-channel, cross-device, and long-lasting. Furthermore, marketers can track and measure every interaction from exposure to online or offline purchases to loyalty. This closed-loop feedback and pinpoint accuracy are what marketers have been dreaming of for years.
The rise of online shopping over the past two years gave retailers and brands the opportunity to get to know their customers better than ever before and those that seized this opportunity have emerged from the pandemic stronger than those who didn’t. Why? Because they have a deeper understanding of consumers’ shopping habits and single-customer views that enable them to understand how behavior is changing as shoppers move towards a hybrid shopping experience.
This data is being translated into highly effective marketing strategies that speak to individual consumers and deliver superior revenue and loyalty for brands and retailers. So much so that retail media has the potential to become bigger than social media.
Laying the foundations
We know that retail media is a complex area and one that will continue to evolve. It is vital that the industry comes together as a whole and defines what success looks like and how to get there in a standardized way. Future advances in other digital channels (especially connected TV (CTV) and audio) will also impact retail media and cross-channel best practices which we need to be mindful of.
One of the biggest differences between retail media and other channels is that domestic retailers will be more prevalent and have the ability to compete with global giants like Amazon. There will also be category-specific sectors that will emerge triumphant over mass retailers, particularly in beauty and luxury. This additional layer of complexity will need to be carefully navigated.
Consolidation needs to be part of the vision too. If every retailer builds their own solution, there will be no standardization and media planners will be swamped with disparate data which we know is a recipe for disaster. Retail media also needs to be integrated within today’s supply-side platforms (SSPs) and demand-side platforms (DSPs) to enable media buyers to orchestrate optimal ad spending across all channels.
The opportunity: a brand perspective
Investing in retail media alongside other channels provides brands with a close-loop 360-degree view of their customers both online and offline. The challenge for brands is to find a way to connect the dots between the data that each channel contributes and engage consistently with consumers on all channels. This is a complex process, made even more challenging when you consider that brands don’t own the data - the retailers do. To overcome the challenge, brands need to work closely with retailers and platforms to enable them to operate seamlessly.
Brands also need to be mindful that their messaging will need to evolve if they are to capture and maintain consumer attention. Establishing authentic partnerships with retailers will create opportunities for brands to build highly engaging programs for consumers, such as discount coupons and content partnerships. They must also focus on delighting consumers beyond brilliant products and building lasting relationships.
The opportunity: a retailer perspective
At its core, creating a media offering provides an additional revenue stream for retailers but it must be easy to invest in, measurable, transparent, and engaging. As with CTV, retail media opens up opportunities for smaller brands that can not necessarily afford to invest in in-store promotions. However, retailers need to approach this opportunity carefully to avoid damaging existing relationships with brands.
Another key consideration is ensuring that retail media doesn’t canibalize other advertising revenue streams that existing clients are already investing in. To avoid this, retailers need to clearly communicate the unique value of their digital advertising offerings and partnership opportunities. Finally, retailers need to keep a careful eye on the volume of advertising they present to consumers and ensure that the user experience does not become one whereby consumers are bombarded with sponsored products.
We must not lose sight of the fact that retailers are also advertisers. Now is the time for retailers to experiment and find the best combination of channels to promote their own brand. To do this retailers will need to leverage the data they have from on-site, in-session ads, and use that to inform how they target audiences. Again, this will need to be a seamless process that will require interoperability between platforms.
The future of retail media - four trends to watch out for
Improving lower-funnel performance is perhaps the biggest opportunity right now but with the reach that retail media offers there will be developments in the upper funnel. Clearly defined key performance indicators (KPIs) and robust testing will prove the uplift in brand metrics that retail media brings and further stimulate growth.
We know that simplification will be key to the success of retail media and that may come in one of three ways: Retailers may form a consortium, an independent solution (similar to Ozone Project) may emerge, or we may see specialist retail media DSPs emerge. The benefit of any of these approaches is that they provide a springboard for independent retail media to compete on a global scale with the Amazons of the worldmore effectively and provide consumers with more choice.
There will be two other battles: one between retail media and social media, and the other between retail media vs search. Retail media’s superior data, granular targeting and measurement have the potential to spur brands to move budgets from the industry changes and providing a much-needed opportunity for leveling of the playing field.
Programmatic will be the predominant buying mechanism for retail media once there are robust first-party integration capabilities, the right optimization tools, and retail media-specific algorithms. This will enable a move to a self-service model giving buyers more control which will provide a further boost in revenue for retailers.
Finally, B2B companies will follow suit in certain categories such as office supplies and construction where products and materials made by multiple brands are largely purchased through a central supplier.
One final word
It’s indisputable that retail media will catapult digital media into a new era, and the data and potential technology opportunities that are massive but, we must never lose sight of the fact that the consumer must always come first if we are to build and sustain a healthy balance of targeting and trust.
Babs Kehinde, senior director, publisher development at PubMatic