6 ways that retail media will help drive sustainable growth in 2023
2023 is the year for retail media networks to take off, writes Lindell Bennett, chief revenue officer at Cooler Screens, a retail media tech partner for Kroger, Walgreens and others.
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As 2022 came to a close, the conversation in retail media centered around the opportunity for growth and evolution, particularly in digital. As we enter 2023, retailers must take a step back and evaluate their growth for the long term. To do so effectively, retailers must identify the most efficient and relevant paths for sustainable growth and find practical solutions to their specific challenges, both online and offline.
As retailers assess their current position and determine the resources needed for success in 2023, these points can serve as a guide for the process:
1. Retail media must evolve to sustain growth
Investment in retail media is expected to increase as brands aim to reach consumers at the point of purchase and demonstrate the value of their media buys through return on ad spend and subsequent incremental lift. In order for this space to continue growing in the coming year, it will need to diversify its inventory sources.
Barring giants like Amazon, a retail business’s on-site inventory will be limited, and off-site inventory will be challenged by third-party cookie loss. Retailers and their advertiser partners will need to shift their investments to where customers are and in 2023 that is simultaneously online and in-store.
In-store media, for one, presents opportunities for retailers and brands to reach the bulk of their consumers by stretching digital learnings and tactics into the in-store environment in tangible ways – and many have only begun to explore what’s possible.
2. Still, retail media must evolve naturally
Retailers must locate new avenues that add value to the customer experience and increase engagement, guided by the ultimate goal of making shoppers’ lives easier, better and more informed.
For example, for grocers, recipes and cooking shows, or for pharmacies, wellness-minded content and apps, are experiences that feel intuitive and align with the goals of both the retailer and the consumer.
Retail businesses must balance media ambitions with what’s best for the customer experience. Those who gain traction in retail media in 2023 will center their evolution around experiences that enhance shoppers' lives in a way that feels natural to how they shop.
3. Retailers and their partners need increased integration with physical stores
Following the industry’s heavy focus on digital in 2022, it’s time for retail businesses to look into the underdeveloped elements in physical retail. Here are four areas to consider:
In-store digital signage has to be more intelligent in order to be truly effective and add value. This requires ensuring the correct signals are used to maximize the messaging’s relevance and appeal and delivering the right messages in the right places, without inundating the shopper and degrading their experience.
The shopper data loop marketers use to inform online media and measurement currently doesn’t exist for in-store signage.
One-to-one personalization is becoming nearly impossible without implementing personally invasive technology, such as facial recognition. This compels marketers to consider contextual signals – such as weather, time of day, seasonality, or in-store location – and data around trade areas, propensity scores, and consumer demographics.
For a truly omnichannel strategy, retailers will need to learn to utilize their loyalty programs to improve the entire shopping experience – informing customers and allowing them to opt-in for greater trust. Shopper benefits and incentives will help to build the credence necessary for shoppers to willingly share their behavior.
4. Data privacy and security are coming to a head
This year comes with the inevitability of new data privacy regulations in more jurisdictions around the world aimed at further limiting highly-targeted media. Meanwhile, businesses must have plans in place in case of the very realistic event of a data breach. Regulators and consumers alike demand accountability, transparency, and, when needed, action from retailers and brands.
Retailers in 2023 must prioritize consumer privacy in all data-driven processes and look to publishers and ad tech businesses for precedents in remaining privacy-compliant. We’re already seeing some retail media networks embrace cookieless identifiers to personalize experiences.
Similarly, contextual relevance is becoming more important as methods to track and target a shopper behaviorally dwindle. Serving ads when customers are within the context of shopping or shopping within a category is becoming paramount for retailers. Privacy-minded initiatives such as this will increase as retail media grows more sophisticated through 2023.
5. Retail media needs attribution standards and independent measurement
While the need is apparent, a consensus is lacking currently among retailers on key factors like attribution standards and measurement definitions. Each retail media network has set its own attribution and measurement standards and this fragmentation hinders consensus at this early stage, similar to mobile and streaming video in their early stages.
As retail media networks continue to attract more ad spend through 2023, it will necessitate metrics to address issues like viewability and ad fraud. But advertisers won’t want to see retailers grading their own homework. As such, independent third-party measurement will be best suited to distinguish the actual impact retailers have on a final purchase, which is unclear today.
6. Retail needs more unified, omnichannel data and insights
Leading retailers and advertisers are heavily focused on digital strategy – but let’s not forget that 90% of consumer packaged goods products are still purchased in-store. Clearly, holistic omnichannel measurement must include offline events. Combining online and offline signals is a complicated task, given the fragmentation of sources of reliable in-store insights.
Retailers like to tout their omnichannel or multi-modal audiences, while in reality, they have limited ability to measure across that audience. As shoppers move more frequently between online and offline shopping on their path to purchase, retailers will need to mirror this capability in their technology across not just POS and delivery as they do today, but also media and measurement. This year, we’ll be seeing further investment in retail media solutions that provide more offline insights, which businesses need to treat as crucial for illuminating the integrated customer journey.
Retailers and their partners need to keep these takeaways in mind while developing strategies for 2023 and beyond. With all of the evolution we’ve been seeing in consumer behavior and the retail media industry, success will depend on a business’s ability to understand this hot new channel and the big picture.
Lindell Bennett is chief revenue officer at Cooler Screens.