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What is retail media, and how does it offer a good alternative to the cookie?
August 23, 2022
For years, retail websites served as nothing more than a means to a transactional end. Now, they’re powerful marketing platforms and key sources of business intelligence. How are brands using this emerging opportunity and squeezing more from their ad spend?
By getting serious about retail media.
What is retail media?
Any marketing that targets people at or near the point of sale counts as retail media. It aims to catch shoppers when they’re already mid-purchase, when their mindset is ideally more receptive. Effective retail media coaxes customers into switching brands, trying something new or grabbing extra items to complement their purchase.
In traditional brick-and-mortar shops, this might include digital signage, in-store radio and free samples. Within the digital sphere, there’s a lot more for marketers to explore.
Retailers themselves, like Amazon and Walmart, have wised up to the power of their own e-commerce platforms. By creating retail media networks (RMNs), they’re giving marketers new audiences and new sources of first-party data.
Wait… what is a retail media network?
A retail company might own a bunch of different digital channels. They can group these together into one platform to offer third parties the chance to advertise on their digital real estate. That platform is an RMN.
- Sponsored product recommendations
- Branded landing pages
- Banner and video ads
- App-based digital coupons and vouchers
- Co-brand campaigns
That’s not nearly a complete list. The full scope of what we can achieve with retail media is still being defined. RMNs are working to optimise the data available to brands. Marketers are taking that data and applying a hefty dose of creativity.
The potential is very real for retail media to make a big impact. Think of what we saw from search marketing or social advertising, that’s the level we’re talking about here. This is amazing news for anyone looking to deepen their relationship with customers.
What are the advantages of retail media?
Retail media is advertising’s big emerging topic right now, and there are a lot of reasons to be optimistic:
RMN data is privacy-first but powerful
As marketers bid farewell to cookies, the hunt is on for a workable replacement. It’s not going to come from any single source, but RMNs are set to be a significant piece of the puzzle.
First-party data collected by retail platforms is arguably more reliable than cookies ever were. If the retailer running the platform offers a loyalty scheme, the info you get on customers could be deeply personalised.
Best of all, it’s collected with consent. Marketers can continue working effectively while visibly respecting customer privacy.
Retail media has impressive growth potential
The smart money is moving towards retail media. Boston Consulting Group estimates the global market will be worth $100bn by the time 2022 is done. Walmart’s RMN alone made $2.1bn in ad revenue throughout 2021, powered by a 136% increase in active advertisers.
According to Criteo, 55% of marketers across EMEA plan to spend more on retail sites and apps this year. Those who get on board now will enjoy the fruits of a predicted retail media boom.
Brand safety is high on the agenda
With programmatic taking over the ad scene, marketers are increasingly concerned about the context in which their ads appear. MarketingWeek says 77% of brands view brand safety “as a key priority.”
Retail media provides a safe, closed environment which is often curated by the platform owners themselves. It lets you get the very best from a programmatic approach.
Retail media campaigns provide solid ROI proof
Marketers are always under pressure to justify their impact on the bottom line. Traditional metrics like engagement don’t cut the mustard any more in many cases. RMN data is hugely helpful in this regard.
Because this data is taken from actions performed by real customers, it’s easier to demonstrate the effect of retail media. You can actually see what an individual customer did after being exposed to an ad.
Why is retail media suddenly such a big deal?
Ok, all this is great. But why now? A bunch of different factors have pushed adoption of retail media into overdrive. In turn, that’s led to more sophisticated platforms and a more compelling proposition for marketers.
It’s not all about the pandemic ecommerce boom either. Sure, 2020 pushed millions towards shopping online, but this is about more than matching a shift in consumer behaviour. Google ditching cookies has dramatically altered the ad landscape. RMNs offer a timely alternative.
That alternative was pounced on by the world’s biggest brands. Retailers realised they were missing a trick by not commodifying the customer data and ad real estate locked in their websites. Back in 2017, Kroger launched Precision Marketing, their RMN.
They were followed by Target’s Roundel in 2019 and Walmart Connect in 2021. Enormous amounts of investment and focus from such giant brands helped create the kind of experience marketers get from RMNs today.
How can advertisers make the most of retail media?
Despite ecommerce surging, the need for new data sources and support from major industry players, retail media has its challenges. It’s relatively new, there’s a lot of work still to do. However, for those of us based in the UK, we have an advantage.
A lot of the very earliest retail media pioneering was done over in the US. We can learn from their successes and mistakes to get a rough sense of how things will take off on this side of the pond. Because make no mistake, retail media is about to get big in the UK. Group M predicts a nationwide spend of £2.4bn by 2024.
Perhaps most importantly, brands need to remember that no one data source will fully replace cookies. The info you get from RMNs might contain critical intelligence for the bottom of your funnel. However, other sources could prove better for informing your brand building efforts.
We’re also likely to see a huge field of RMNs pop up overnight. There’s a big misconception that Amazon will be the only game in town; 80% of today’s retail media marketers use other platforms too. But you don’t have to work with them all. Be strategic about what you want to get out of retail media, work with RMNs who align with your goals.
One critical bit of advice to end on: work with the right team to support you. Some areas of expertise, like excellence in programmatic marketing, are still going to be vital in a retail media landscape. Wherever possible, collab with people who have a proven track record in whatever they’re doing… like us, for example.