As retail media's popularity skyrockets, what are the growth opportunities for brands?

The growth of retail media - which, according to WARC, allows retailers to monetize their first-party consumer data by providing access to addressable media audiences - is set to overtake linear TV ad spend by 2025, Here, Hugh Stevens, head of strategic growth at Liveramp, takes a closer look at the reasons behind retail media’s growth, the need for collaboration and the omni-channel opportunity for brands and retailers alike

While 2022 may have been dubbed ‘the year of retail media’, it is clear that the channel’s growth, in its current digital form, has a fair way to go before hitting its peak . A Group M report from Autumn of last year stated that retail media already accounted for 10.7% of global ad spend, and would balloon to 60% over the next four years. WARC reported in December ‘22 that retail media is already the fourth largest advertising media, and is set to overtake linear TV ad spend by 2025.

This expansion is being driven by a number of factors. For one, retailers are eager to explore new channels for incremental revenue while also giving customers the more personalized brand experiences they desire. Meanwhile, brands are trying to replace the functionality of the third-party cookie, increase their focus on personalized marketing and accountability for media spend. Retail media networks help to solve these objectives, as the promotion and the resulting transaction both happen on the same platform, therefore the relationship between the two is directly measurable. Moreover, developments in the infrastructure of programmatic advertising, the pace of innovation around data collaboration and the maturing attitudes of the industry to data protection and privacy have all coalesced to drive significant interest in retail media.

Retail media provides retailers a means of monetizing the huge pools of first-party consumer data they hold, and which they’ve been building ever since the launch of electronic loyalty cards in the 1990s. Extremely valuable to CPG brands looking to access addressable media audiences, this opted-in, first-party data can be used by brands securely via the retail media network to accurately target and measure their advertising, and better understand customer behavior. The result for consumers is a more personalized shopping experience, including better discount opportunities and more sought-after products.

Nevertheless, retail media in its digital form remains a relatively nascent phenomenon, and there is still space for maturity. To this end, LiveRamp recently partnered with SMG to produce a report, featuring insights from global brands and retailers, which outlined and addressed the lingering questions around retail media:

• How should the industry operate?
• What standards need to apply for this to happen?
• What new opportunities are there for brands and retailers?
• How can we remove barriers to those looking to participate?

The answers to these questions can be accessed by downloading the report but, as will be discussed below, the key to all these questions rests in finding and collaborating with the right partners.

The need for collaboration

The power behind retail media rests in the retail media network. These are the retailer-owned platforms that marketers can use as media properties to reach the retailer’s customers with their marketing messages. They can include the retailer’s online environments like its website, its apps, and any other digital properties. It can also include its offline channels like in-store and direct mail.

The idea of a retail media network is quite different to what brands and retailers are used to. For one, the traditional relationship and roles between brands and retailers has changed, because retailers are now providing a new service for brands. Therefore, not only is there a need to spread education, particularly around the new terminology and technology, but a significant shift in business culture, expertise and thinking is required.

For example, brand and performance teams will become key stakeholders on the brand-side, ensuring that clear goals are set and adequate investment is reallocated from their mixed marketing media spend. Many brands are appointing retail media directors, who are responsible for the bigger picture, ensuring that retail media budgets remain flexible and that data insights are not siloed between teams.

Likewise for retailers, there is an even greater need for structural change, because this new scalable media proposition demands that retailers think more like a publisher or one of the online advertising giants we all know. This shift in thinking will impact the way teams across the business collaborate to establish more holistic thinking in the first instance between loyalty, marketing performance and data teams, with brand demand now being the responsibility of both the brand and the retailer (rather than just previously that of the brand through more traditional digital media channels).

Underpinning team considerations, retailers will also crucially need to invest in technologies that support retail media networks to help them to deliver real business outcomes for brands in a safe environment. Underpinning retail media networks is data clean room technology, which enables data collaboration and brands within the clean room to activate, analyse, and measure marketing spend. With ad budgets currently under scrutiny, leveraging the right clean room technology to provide brands with transparent attribution of spend will be very important to the development of retail media.

The omni-channel opportunity

Some retailers are already more advanced in this sphere, particularly those with long-established loyalty schemes who have access to a fire hose of data. For example, some networks are now able to share their data outside of their owned properties.

Retail media’s ability to combine online and offline environments is significant. With figures from the UK’s Office for National Statistics for November 2022 showing that online still accounted for 30.2% of total retail sales, retail media’s ability to measure, activate and scale data across the funnel is a key opportunity.

Already the market is seeing more and more retailers, although mainly in Health & Beauty and Grocery at this stage, unveil retail media networks as they start to realize the value of the data they hold. In this environment, it is important that retailers ensure their offering remains competitive, particularly through investment in premium technology that enables safe, data collaboration. In addition, for both retailers and brands there is a joint need to prioritize upskilling and directing their teams towards leveraging retail media.

Indeed, retail media is not a negotiation but a partnership - those who collaborate now, working with the right partners, both within their own organisations as well as third parties, to test and learn, will put themselves ahead of the curve.

To read more about why collaboration is the key to retail media’s future, download this exclusive report