Entertainment brands are the next retail media frontier, but how easy is the sell?
It makes sense to promote a new yogurt in the dairy aisle, but what about when Sky buys in-store ads at Waitrose? Asda, Boots and Co-op weigh up the opportunity as part of The Drum’s latest Deep Dive, The New Retail Landscape.
Sky, Netflix and Waitrose team up
The retail media market splits brands into two buckets. Endemic brands have long-standing relationships with the retailers, while non-endemic brands are companies that aren’t native to the retailer, like entertainment and leisure.
Retailers are sizing up the opportunity and weighing up the challenges for these new entrants to the retail media space.
Last month, Waitrose introduced its first-ever non-grocery advertiser to its stores in a partnership with Sky and Netflix. The deal saw the two entertainment companies take over the branding of free-standing displays in over 200 Waitrose stores. The ads promote the Sky Stream dongle, which has Netflix pre-loaded on the device.
Along with the in-store ads, the deal includes till messaging, digital out-of-home spots outside Waitrose stores and placements in Waitrose magazine, Waitrose Weekend.
TPF Partnerships brokered the deal and head of partnerships Gill Williams tells The Drum: “The retail space provides an exciting opportunity for entertainment brands to talk to consumers when they are in the right mindset to think about enjoying food at home with quality entertainment.”
According to Williams, buy-one-get-one-free deals appear to be waning. “Retailers will need to offer value in different ways and entertainment brands are well placed to do this and elevate the total night in experience,” she says.
The opportunity to partner with non-CPG brands was touted at the Retail Media Summit UK last month, where retailers and agencies sized up the potential.
Head of retail media at Asda, Steve Gray, tells The Drum the retailer already has a “wide range” of non-endemic brands advertising on digital placements. Asda has done this with the likes of Sky, for example, with a ‘Big Night In’ promotion where customers can buy a pizza and a side and a £5 Sky cinema voucher. “We are starting to build packages that will be attractive to the consumer services companies,” Gray says. “That’s a key strategy for us.”
Despite the enthusiasm, there were retailers who reported challenges when working with these non-endemic companies. While head of Boots Media Group Rosie Houston expressed excitement about the potential investment from the non-grocery category, she says the commercial agreements are very different from what Boots is used to, with a preference for quid pro quo agreements.
She says: “They have a different set of standards that they want to work with and it’s harder to activate in-store; the compliance can be a bit of a challenge, which I think our existing customers are a bit more used to working with us on.”
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Houston advises retailers to ensure that any deal is complementary and makes sense for the retailer’s own brand. “That’s really important that we keep that at the forefront.”
In place of in-store advertising, Houston believes non-endemic partnerships can work better when the two companies cut a first-party data deal. “What they’re interested in primarily is your audiences. If you can successfully set up a kind of first-party data engine, that’s where you can allow non-endemic access to your customer but in a way that is a bit more manageable without those structural challenges.”
Co-op is another retailer “exploring” the opportunity to work with new types of advertisers, but its head of member rewards and retail media, Dean Harris, says forging deals is complicated. “If you think of the grocery brands that we do business with all the time, we’ve got good relationships, trust, there are contracts in place,” he says. When it comes to non-grocery brands, he asks the question: “How do you get them that offer and how do you do the deal?”
While Tesco, for example, has established relationships with entertainment and leisure brands through its Clubcard rewards scheme, exchanging points for Merlin vouchers, Harris says: “At Co-op, we don’t talk to Virgin Media or Virgin Experience Days or Sky or Amazon. We’re not in that arena, so it’s hard. There is an opportunity to do it, but we’ve got so much to focus on the core at the minute it’s on the [growing] list of good ideas.”