Igniting Retail Media's Flywheel of Performance

Today Wanamaker most likely would have put Retail Media Networks in the quotadvertising that is not wastedquot category given its strong propensity to drive purchase in an immediate closedloop marketing ecosystem where viewing the ad can be directly correlated to customer action Importantly these networks also are dynamic brand building platforms reaching audiences before they are in transaction mode Achieving both sales performance and brandbuilding has been an area of challenge that other digital advertising networks continue to struggle withInvite job candidates to apply live during the Media and Advertising Communityamp8217s Black Talent Outreach Week at MediaVillagecom and AdvancingDiversityorg October 1720 Apply for jobssubmit your resume hereWhat exactly are Retail Media Networks They refer to a collection of digital channels owned by a retail company web app instore digital signage and instore television which is offered to thirdparty businesses for advertising purposes enabling brands to advertise to prospects who are already in spending modeThe Playing Field Dynamic Forces Drive GrowthquotRetail media is digital advertising39s third big wavequot Andrew Lipsman principal analyst at Insider Intelligence said in 2021 quotFollowing the search ad market led by Google and the social ad market led by Facebook this third wave led by Amazon is now cresting and ad budgets are ready to be unleashed with a furyquotWith the acceleration of ecommerce in the face of a ravaging pandemic more businesses rushed online in a bid to explore every available revenuegenerating opportunity technology could offer leading to the explosion of Retail Media NetworksIn 2022 US digital retail media ad spending will reach 4081 billion more than triple its prepandemic total and over 54 of the total global spending based on Insider IntelligenceeMarketer estimates BCG estimates that the retail media market will grow by 25 per year to 100 billion over the next five years and will account for over 25 of total digital media spending by 2026With 74 of brands having dedicated budgets for retail media advertising global retailers are eyeing the 75 billion 2022 highmargin prize with retail giants Amazon and Walmart disclosing that their global retail advertising revenues in 2021 were 321 billion and 21 billion respectivelyAdoption is increasing not only among these retail heavy weights but also smallersized retailers who are recognizing the value of their first party data to drive sales and capture ad dollars from their brand customers A summary of the top motivations for US consumer packaged goods CPG brands to work with Retail Media Networks is in Table 1 below based on eMarketer researchRetail margins have always been small especially in the CPG sector and there is continued pressure on pricing due to inflation and rising logistics costs Retailers face intense competitive pressure from Amazon39s low prices and free shipping and having an incremental revenue source enables them to compete on price and win customer loyaltyCartology a leading Australian grocery Retail Media Network owned by Woolworths is a great example of how to elevate customer loyalty as a competitive advantage With over 135 million onetoone relationships they quothold a deep understanding of customer attitudes and behaviors and that39s invaluable to brandsquot according to Stacey Lawson head of campaign operations and delivery at the network The business continues to innovate and partner to drive more delightful shopping experiences quotWe can focus on creating the best instore experience for Woolworths shoppers and drive sales overnight and customers over time for our valued clientsquot Lawson saysThe Players In the Land of Giants the Innovator ReignsThere are different categories of retailers Table 2 below capitalizing on the power of Retail Media Networks from mass merchandisers like Walmart and Target to digital marketplaces like Amazon and eBay to specialty category retailers like Lowes and Kroger to quick commerceretail enablers like Instacart and DoorDashTo protect their data retailers have taken a walled garden approach with their emerging ad platforms Today the most innovative players are charting a different course than the traditional walled gardens approach of Google Meta Amazon and Snapchat While retailers still erect protective walls around their customer data they also rely on programmatic partners to pipe data and demand between their walled garden and the open ecosystem For example Walmart uses The Trade Desk as its DSP tech for Walmart39s offsite ad sales while Target39s Roundel uses Index Exchange and Criteo supplyside tech However the major walled garden platforms including the industry juggernaut Amazon work minimally with open programmatic if at all according to AdExchangerThe Promise Purchase Trigger and Brand BuilderOften brands start with retail media as a sales driver but that approach is going through a transformation as the brandbuilding power of retail media becomes increasingly evident quotMost brands are considering and approaching retail media as a performance and revenue driver focusing on the lower funnel of the journey but when they do that they39re missing so many opportunitiesquot says Damien Lemaitre Global Commerce Director at dentsu international quotThey39re just capturing the demand that already exists and not building demand to capture new customers They39re not building the brandquotWith the overall operating margins of Retail Media Networks in the 50 to 70 percent range companies across the retail spectrum are fully aware of the economic upside in a marginpressured business Amazon is a prime example of a company using its deep repository of ecommerce data to create an advertising business that extends beyond sponsored ads on its own shopping site quotWe still see strong advertising growthquot says Brian Olsavsky CFO Amazon quotIf companies are looking to potentially streamline or optimize their advertising spend we think our products compete very well in that regard in addition to maybe longerterm things like brand buildingquotDespite the enthusiasm for Retail Media Networks according to an Ad Age study only 21 of brands are happy with how their retail media dollars are currently allocated This represents an opportunity to further engage across retailers brands and agencies on how the medium can address both brandbuilding and performance marketing goalsWith the proliferation of greater digital channels the lines are blurring between traditional media digital and shopper marketing budgets Ecommerce shopper and agency teams need to take into account that only 132 of all retail sales in the US come from ecommerce websites To scale Retail Media Networks must reach the huge numbers of consumers who shop in brickandmortar stores using mobile phone ads and digital displays inside of stores as well as on ecommerce sitesThe Potential Data as Oil Personalization as EngineThe COVID19 pandemic was a major catalyst that not only raised the bar on consumer expectations but produced valuable signals on customer behavior that advertisers could learn from The removal of cookies from web browsers is expected to be another major tailwind for retail media with firstparty data being the oil that will drive the personalization engine to create a formidable competitive driver enabling retailers and brands to claim a greater share of wallet and ensure enduring customer loyaltyThe valuable insights about why how and where people shop will be the most critical currency as brands look to differentiate their offerings in categories that live in a sea of sameness When CPG brands spend with a large retailer they are immediately reaching customers just before or at the first moment of truth instore or digital aisle and are able to successfully identify people with purchase intent and as a media customer the brand may also have potential access to better product placements within the store or on the retailer39s ecommerce platformImportantly firstparty data comes into play to deliver on mass personalization at scale personalization that is based on individual customers not simply customer personas Walmart as a top retail brand relies on human connection to build their relationship with customers from 11 relationships in fixing luxury cars in their auto center to immediate and expert help from their pharmacistsAccording to Jeff Clark Officer and Vice President of Walmart39s ad network Walmart Connect some 230 million global customers a week visit its physical stores or site quotWe39re not just a grocery store we39re not just a pharmacy we39re not just an autocare centerquot he noted quotWe39re all those thingsquotThe Places You39ll Go Marching Towards Market GrowthThe future of the Retail Media Networks sector is looking very bright McKinsey predicts that commerce media has quotthe potential to generate over 13 trillion of enterprise value in the United States and create a paradigm shift in digital advertising not seen since the rise of programmaticquotBrands retailers and agencies together can collaborate to share consumer insights tweak creative and targeting tactics and inform datadriven marketing strategies Customerdriven retailers and brands can share responsibility for the full customer experience and measure success with sales metrics loyalty indicators and importantly in the measurement of customer lifetime valueFrom the agency point of view to ensure success leveraging Retail Media Networks brands and retailers need to set shared goals and benchmarks and then follow through with strategic testing to evaluate and refine offers and outcomesOne exciting development will revolve around how the Metaverse and Web3 will impact Retail Media Networks Today Goldman Sachs cites this technology as an 8 trillion opportunity with unbridled enthusiasm among retailers on the potential business upside Powered by a Metaverse platform the networks could leverage a collective shared space and encompass both fully digital environments and digital enhancements to the physical world with quotmultiworldquot edge technologies including augmented realityvirtual reality ARVR 5G artificial intelligence AI and the cloudRetailers have to decide if they will use the Metaverse for selling or promotion or both Today the consumerfacing initiatives have focused on direct commerce such as Nike selling branded NFTs or Forever21 opening a virtual storefront in the Metaverse These initiatives will extend to immersive marketing where Retail Media Networks could incorporate AR for hyperpersonalized experiencesFurther retailers globally face a multitude of options on how to drive sustainable performance with Retail Media Networks increasingly becoming a core part of their growth and profitability strategy due to their closedloop measurement dynamic optimization and personalization capabilities Retail Media Networks overcome the privacy and data issues plaguing the industry but need to elevate their performance through better shopper experiences demonstrate impact on instore purchases and across longer decision cycles and prove return on ad spend as well as enhancement of customer lifetime valueThese enhancements will catapult Retail Media Networks to the top echelons of the media food chain amp8211 a position that would make a modernday Wanamaker say instead quotHalf the money I spend on advertising is wasted the good news is that retail media spend is part of the half that is notquot That39s a proclamation we will undoubtedly hear more on as brands retailers and agencies follow the road to marketplace supremacy capitalizing on a medium that beautifully brings together data story technology and immediacy to drive both sales performance and brandbuildingWatch the latest edition of Jack Myers Think Tank on the hidden 50 billion retail media business that39s disrupting the purchase funnel Click the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNet

SUBSCRIBE FOR FREE MEDIAVILLAGE CONTENT | BECOME A THOUGHT LEADERSHIP CONTRIBUTOR

Igniting Retail Media's Flywheel of Performance

Author

Publish date

Channel

Archived in

Raquelle Zuzarte

FEMA and the Ad Council Encourage AANHPI Communities to Enhance Disaster Preparedness in New PSAs - Ad Council InSites

More Videos:

SUBSCRIBE FOR FREE MEDIAVILLAGE CONTENT | BECOME A THOUGHT LEADERSHIP CONTRIBUTOR

Igniting Retail Media's Flywheel of Performance

Enjoying This Commentary? There's More to Love

Raquelle Zuzarte

Stay in the know with more from MediaVillage

TAGS:

FEMA and the Ad Council Encourage AANHPI Communities to Enhance Disaster Preparedness in New PSAs - Ad Council InSites

Cookies