In the past few years, retail media has become the hot-button topic for brands. Spurred on by the pandemic, this new industry has seen skyrocketing growth – 82% year over year from 2020 to 2021.
It’s easy to understand why. By giving brands the ability to buy and place ads on retailers’ owned properties – or through external ads pointing to them – retailers give marketers new sources of behavioral insight, direct access to first-party retail data, and microtargeting and personalization at scale. They also connect brands with consumers who have already signaled their intent to buy. This has created a shake-up in the industry with so much investment shifting to retail media that by 2026, it should account for $100 billion in spending and 25% of all digital media.
Of course, retail media isn’t new. Most marketers are familiar with the concept through huge e-commerce platforms like Amazon and Walmart. However, today it encompasses retailers from Ulta Beauty and Best Buy to Nordstrom and everything in between. These brands offer their own varieties of media services and placements, which can disrupt industry best practices and performance benchmarks mostly due to the lack of universal KPIs for retail media in general.
This new ever-expanding and complex landscape can unfortunately be challenging to navigate, not least because it has converted retailers into accidental publishers. Put simply, the retailers just can’t ignore the potential for additional revenue but selling and displaying media content lies outside their core competency and the very design of the apps and websites they have honed over time. Many of these properties lack the basic tenets of media best practices, such as viewability standards and safeguards for brand safety. With each and every retailer coming to the supplier community seeking incremental investment in their ecosystem, it can be hard to make heads or tails of the space and know where to invest your next dollar.
In all such cases, its best to take a step back and not chase every retail media investment opportunity as a shiny new object. True, the space brings brands enticingly close to shoppers and point of purchase conversion, while allowing them to build better relationships with retailers.
But for all its promise, it is only one element of a holistic brand strategy, bringing the full experience of the brand to life along the customer journey. Therefore, it’s best to heed some practical advice before investing in retail media.
Start with the customer experience
While it’s tempting to focus on the media tactics themselves, that shouldn’t happen at the expense of the customer’s entire journey. Media is a means to an end to deliver an experience, it is not the experience itself. Consumers encounter your brand at multiple points along the path to purchase and staying focused on their experience at all phases is key to presenting your brand as a solution to their needs.
To create this reason to believe you must over-index on your brand’s ownable attributes, paid off through your brand promise. This is at the heart of journey-focused experience planning. Simply showing up won’t convert. Rather, harnessing retail media to convey what you want consumers to do, think and feel at each touchpoint builds on your brand’s story. Are you consistent in your messaging? Are you delivering helpful information to drive the decision-making process? Are you doing so in a way that delivers a positive outcome for the end consumer? These questions will define the experience you want to create at every touchpoint, including within the retail media ecosystem.
Research the platforms for the right “fit”
Retail media is not one-size-fits-all, and not all media networks are created equal. The sophistication of paid placements across a retail ecosystem varies widely by retailer. Brands need clarity from their partners on what touchpoints are available and how effective they are. Key questions to ask:
- What data will they share and at what cadence?
- Do they have brand safety standards in place?
- Do they offer any value-adds, such as shopper impact studies?
- Can they block out your competitors for a period of time?
To say this space is rapidly evolving is an understatement. Retailers can’t win in the return on ad spend
(ROAS), reach and frequency arms race of traditional media yet. The point of difference for them is the proximity to the shopper, the personalization derived from a wealth of data, and the ability to create exclusive opportunities and marketing windows for brands. Brands need to hold retail media accountable to the results it is designed to deliver at this juncture.
Ensure that your retail partner is a true network
Retailers offering opportunities for paid placements does not make them true advertising networks. Consumers do not live inside one platform; they bounce from one online destination to another. Brands need their placements to follow them along their entire journey so that they can effectively shape their desired narratives.
To be a true media network, a retailer must offer on- and off-platform integration to maximize reach and deliver a holistic, quality customer experience. Brands should scrutinize any potential partner’s level of sophistication and integration with social platforms and national publishers before committing to an investment.
Rethink measurement
ROAS may be the gold standard KPI of traditional search, display and social ads, but when it comes to retail media, that is often not the case. This is a more complex landscape, in which pricing comes at a premium. You cannot expect every dollar spent across a retail journey to deliver a strong return.
Instead, you need to look across the entire journey and set realistic KPIs for each individual action. Some touchpoints will influence a conversion, while others will deliver on it, and you need to know the difference and how the two interact. That way, you can measure the success of any retail media campaign overall supported by individual touchpoints that may not deliver positive returns by themselves.
Hold your retail partners accountable
Whether they intended to or not, your retail partners have now become publishers. They are in the business of selling media, and they need to be prepared for and dedicated to delivering results for brands. This involves a seismic shift in power dynamics. Retailers are no longer just pushing product categories; they must adhere to the same standards that drive growth for brands. At the end of the day, you have plenty of options for placements, and if they are not delivering growth, you should invest elsewhere.
With paid media ubiquitously available, and thus a commodity, the old-school rules of fair and equitable spend go by the wayside. Leave those decisions to your trade spend. Marketing dollars should flow to where brands are finding growth.
Be patient: Clarity will come with time as the market matures
The retail media landscape is akin to the tech startup boon of the early 2000s. So many options, a complex web of connections and certainly not a lot of regulations, leaving investors and brands bewildered as to where to place their bets. Tellingly, you can find the space flourishing in lightly-regulated markets, which are some of the largest in the world today: the UK, the US and Brazil. Given this, the industry will normalize in the not-so-distant future. Retailers will become more sophisticated publishers. Shoppers will become more discerning media consumers. And brands will become more savvy investors as the trajectory unfolds.
It’s important for brands to have a holistic, consumer experience-centric strategy that anticipates change, includes partners who understand the space, and has the agility to evolve quickly. If trends continue (which of course they will), nearly every brand is going to need some kind of retail media strategy, and the ones that have a clear understanding of both the space and their overall customer experience will likely be the ones that make the most of it.
- Jacquelyn Baker is Chief Experience Officer at VMLY&R Commerce US
Originally published in WARC