According to Insider Intelligence, Retail Media is the latest wave of digital advertising – the third, to be exact, after Search and Social Media. It might even be the biggest, as it is growing exponentially. This is because retailers are developing their media offering, and brands are pouring advertising budgets into it like never before.
It’s true that retailers and brands implemented Retail Media as a tactic to encourage customers to convert in the last step of the funnel. However, the offering has, and continues to, evolve. So much so, that awareness and consideration tactics – including advanced targeting and sales attribution clarity – are now available. These still aren’t much available through traditional media channels, or at least it is not as straightforward and convenient.
For retailers, Retail Media offers an additional revenue stream. It’s about monetising high volume and high-converting (aka ready-to-spend) customer traffic on their website. This makes website visitors valuable even when (or even if) they’re only window shopping.
For brands, it’s the opportunity to reach retailers’ own first-party customer data on other platforms such as social media (Meta), connected TV (Channel 4 and ITV with Dunnhumby and Nectar), and display on web publishers based on audience insight. In turn, this attracts traffic to the brand’s website.
As with many cases in our industry, access to first-party data is the new battlefield. With the erosion of third-party cookies, tracking customer behaviour across different websites is more challenging. However, Retail Media allows retailers and brands to target customers based on their buying and search intentions, lifestyle, demographic, life stages and more.
In addition, the wide range of available KPIs allows retailers and brands to identify opportunities and issues and ensure the former are amplified and the latter are fixed or scaled down. All of this can be done on-flight while the campaigns are still live, allowing great control over spend and performance and ensuring better decisions in portfolio prioritisation, targeting and investment optimisation and customer propensity.
GroupM predicts Retail Media advertising to increase by roughly 60% by 2026 – exceeding the growth rate expected for all digital advertising. This suggests that brands and retailers are well aware of the growth opportunities this represents. The results prove it too.
Just look at Channel 4’s testing of its aforementioned RET4IL Nectar offering. The brand targeting (including six brands: Garnier, Weetabix, Walkers, McCain, Pepsi and McVities) delivered a 29% uplift in sales. Moreover, ads that were product-led performed even better, with a sales uplift of 56%, while targeted ads that match All 4 emails to Sainsbury’s Nectar data had a brand halo effect on products across a brand portfolio.
However, the immaturity of the sector – added to this the maturing attitude of the industry to data protection and privacy – means significant questions remain to be answered. How do we want the industry to operate in the future, and what standards need to apply for that to happen?
At Wavemaker, we believe that further improvements, especially on data, regarding granularity, tracking offline performance, connecting offline and online, and measuring brand growth would be beneficial. For example, on the latter, brands tend to focus too much on ROAS that might ignore growth opportunities.
In fact, studies show that when trying to reach incremental customers, efficiency is affected, reaching points of diminishing returns. Therefore, it’s essential to look at the bigger picture to ensure growth opportunities are not overlooked.
An alternative KPI could be total ROAS, including organic sales (not only media-led direct sales) or growth at the other steps of the funnel, such as reach and consideration for the brand/product (think about search volume trend for branded terms). Unfortunately, most of the time, this type of data is not readily tracked or available.
For all its opportunities, Retail Media is still an emerging and rapidly evolving space, with increasing complexity of dealing with different retailers, ad networks, targeting rules, and innovations. As a result, it’s not an easy space to navigate.
Brands’ objectives are almost identical: getting customers’ attention along the funnel. Once they’re clear on their objectives, their strategy becomes easier to execute; and Retail Media is just an additional tool for this.
To win at Retail Media, brands should build relationships with media owners, retailers, and emerging platforms (like quick commerce), continuously upskilling their teams, and approach such innovation with an open mind focused on capturing insights, then quickly optimise and move on to the next test and learn opportunity.
Retail Media is essentially a teenager in advertising channel years, but it’s growing the right way to set itself up for success. Constant and increasing innovations – including new placements, smarter targeting options, and increasing data granularity and speed – make it exciting for retailers, brands, and everyone in the industry.
Article originally published in LBB Online.