Retail media needs to sell measurement first
To win over advertisers’ hearts – and dollars – retail media networks need to showcase their media measurement capabilities, argues Advertiser Perceptions‘ Nicole Perrin.
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Over the last year, we witnessed especially dramatic growth in the retail media space. From Microsoft’s Retail Advertising Network and Walmart Connect to Best Buy’s Criteo DSP partnership, headlines touted a future where retailers could steal a bigger piece of the digital advertising pie. In fact, GroupM projects retail media advertising to grow by about 60% by 2027, exceeding what is expected for all digital advertising.
As we get further into 2023, retail media networks are in a solid position to answer advertisers’ most pressing needs. But they will need to lead with measurement in their sales efforts.
There are three principal challenges that retail advertisers will confront this year. Macroeconomic tightening increases the pressure to prove results. In the face of this, advertisers need to gain category share by winning back consumers they lost during the pandemic. And they need to do it with fewer data signals, thanks in part to the opt-in requirements of Apple’s AppTrackingTransparency (ATT) framework.
As a result, many advertisers are looking down-funnel. A substantial percentage want to add media partners that can yield higher performance for their investments.
That signals a great opportunity for retailers with solid adtech partnerships. They have the audience advertisers need at scale. They have them in the place where marketers are selling their products. And rising prices make it more essential to advertise at the point of sale.
Measurement is the new sales priority
To seize the opportunity, retail media platforms need to base their sales efforts on the ability to prove performance. Advertisers that are cutting budgets from major channels such as social media, linear TV and connected TV cite lack of measurement or poor performance more than any other factor.
Before they sign a new media partner, advertisers want assurance they’ll get the data proof they need. They need to see a retailer’s measurement capabilities upfront, in specific areas, meaning the sales conversation needs to start with measurement.
Retailers need to prove they are reaching the right people. Luckily, they already have a great asset to start with: first-party data. By providing insights about audiences based on their first-party data, retail media networks can answer questions such as: what is the audience demographic composition, what is the total reach and how many of the audience are active in the product category of the advertiser?
And it’s important to remember that this information can be verified. With clean room technology, sellers can show actual buyers evidence of campaigns reaching an agreed-upon percentage of targeted people based on deterministic matching.
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So what does a winning pitch look like?
There are several key considerations for retail media networks when pitching advertisers to spend with them. With a measurement-first lens, sellers need to demonstrate a match between brand and retailer audience, often including a fit where the product is sold at the retailer. For example, grocery stores match well with consumer packaged goods brands (think Kroger), electronics big box stores with tech brands as well as department stores with apparel and home furnishings brands.
Other less intuitive examples might include a more luxury-focused retailer attracting users who are interested in certain types of financial products like asset management, or a mass market retail attracting users who are interested in affordable family vacation attractions.
Additionally, retailers need to beat competitive ad prices and format options. This might be a little harder to do since retail media ad rates are down 12% over the past year, according to data from Skai, but with cost being one of the top challenges of digital retail advertising, it's an important factor to address. Finally, retailers need to provide in-depth insights about who their customers are and how they shop to the brand decision-maker.
There is no doubt that retail media, including both on-site and off-site options, are on the rise, but to reach their full potential, they need to be able to provide the peace of mind that advertisers desire–measurement. Solutions are already being launched to help retail media advertisers understand the returns on their investments. They can be great partners for these networks, but retailers also have the ability to offer measurement in-house as they are equipped with troves of data that they can use to target ads and attribute sales.
Advertisers today, while cost-concerned, are more likely to focus on audience reach, audience composition and their desire to buy ads on the same platforms where they are selling products. Retail media tends to be more expensive than other channels, but with the appropriate measurement and attribution, advertisers will feel confident that it’s worth paying for.
Nicole Perrin is vice-president of business intelligence at Advertiser Perceptions.