‘Retail Media’ is the buzzword right now, and just another element of a tech-driven Commerce Revolution. For retailers, it’s big business. According to WARC Media data, Amazon’s ad revenues hit $37.7bn in 2022, up 20.8% year-on-year, while eMarketer notes Walmart’s US digital ad dollars will grow by 42% in 2023, faster than Google or Meta.
For brands, it’s an area you can’t ignore. But if you are diving into retail media and basing your approach on traditional marketing and media models, you are almost certainly doing things entirely wrong. The strategic, commercial, and organizational requirements of retail media demand a different mindset and methodology.
First things first: what is retail media?
Retail media refers to advertising and promotional opportunities available for purchase within (or connected to) a retailer’s platform-based ecosystem. Because we’ve gone from Single Channel (store) to Unified Commerce (end-to-end) over time, retail media can now appear in any form – website, digital display, mobile app, email, aisle end, on the shelf – at any point in a shopper’s journey.
In its modern incarnation, retail media is barely a decade old, kicked off by Amazon Advertising in 2012. Technology exploded the possibilities for retail media, not just in terms of targeting, placement, discoverability and transaction, but also connected creative expression.
The attraction of retail media for brands is simple – it’s super targeted, gets closer to the point of purchase, and leverages rich retailer data about the shopper.
Beyond ROI and ROAS, think ROR
While retail media can measure campaign effectiveness in near real-time, it’s still challenging to accurately calculate return on investment (ROI) or return on ad spend (ROAS). And that may not be the point anyway, if your objective is about getting new users to try the brand, for example. Nor are traditional media KPIs like “reach” particularly useful.
We believe in an expanded view of retail media metrics, that recognizes return on relationship.
ROR considers the full scope of the relationship with the retailer - not just the performance of the retail media itself, but also additional value negotiated, like competitor lockouts, exclusive placements, or incremental merchandising. ROR can be agreed upon with the retailer and pay off joint business planning (JBP) commitments and partnership requirements.
Experience first, retail media last
Conventional brand marketers often start with a media plan (“who do we want to target”, “how are we going to reach them”) before briefing an agency to build out communications.
In retail media, it’s more productive to ask “what is the experience we want to deliver” to shoppers, and then decide how to achieve that experience. Increasingly, the experience needs to entertain and engage in the form of Creative Commerce. The result is to stimulate an interaction that ultimately leads to a transaction. We call it 'experience planning', and from that perspective, retail media is the manifestation of the experience. It’s not the experience itself.
The funnel is finished
Marketing has been 'funnel-focused' forever. Start with creating awareness and interest in brand media. Then, shift to consideration and action as you move closer to purchase.
Well, the funnel is no more, because it’s possible to build a brand, engage consumers and deliver commercial outcomes all at once, at any point on the journey. That’s particularly true in retail media, where the aim must be to build your brand and build baskets at the same time.
How's the health of your digital shelf?
Having your products 'available' and 'discoverable' are two different things. A digital discoverability strategy is a critical aspect of your total retail media investment and the experience you create.
Think of it this way: if you did a physical store walk and saw zero facings for your brand, or poor representation, you would fix it immediately. The same goes for online.
In a digital shelf environment, every keyword becomes an aisle. Each new search query results in a planogram. The endless aisle of e-commerce offers growth opportunities for brands but comes with the added responsibility of aligning search, content, and brand experience strategies with investments.
Don’t operate in silos; integrate your teams
Retail media is a team sport. To get the best results, you need everyone playing together, not on separate fields. So, unite your brand, shopper, and trade functions, and involve your commerce agency partner upfront.
To make this happen, CPG companies are currently trialing various organizational models; some complete restructures, others cross-functional collaboration. Budgets are being sliced in different ways too – funding for retail media can come from both brand and trade teams.
The imperative is the same, however – to enable a holistic approach to planning (rather than in a fragmented fashion), get folks talking and ultimately ensure that someone 'owns' retail media.
What the future holds
There is a retail media gold rush right now, with retailers of all sizes, national and regional, creating their retail media networks (RMNs). That’s partly because retailers see retail media as incremental revenue, helping to offset the significant investments made to meet the expectations of today’s shoppers (new stores, distribution centers, websites, apps, and so on).
But consolidation is coming, and a couple of key retailers will emerge victorious, thanks to their unmatched level of connectivity both on and off their platforms, in-depth data, and national reach. As retailers and brands work together to combine shopper and consumer data (another emerging trend), the importance of retail media will only increase.
It’s time to get comfortable with being uncomfortable and lean into the opportunities that brands can create in the new medium. That’s why, when clients ask me “where should I invest my next dollar” or, “help me unpack what the retailer’s trying to sell me”, I say, “absolutely, but let’s forget the old models and KPIs, and create some innovative solutions together".
- Jacquelyn Baker is Chief Experience Officer at VMLY&R Commerce US
Originally published in The Drum