Retail media: Unlocking the power of the brand
With the next wave of digital commerce already surging, your next channel play should be in retail media networks, says Bernd Bube, CEO and Founder of ADvendio, who offers 10 key considerations for retailers on getting started in monetising owned 1st party data and unlocking new revenue streams from retail media capabilities.
Many retailers have been slow to recognise the potential of their existing owned off and online channels to sell advertising to third party brands. Even where some are now expanding into newer channels, such as marketplaces and social, they are often simply increasing their costs without significantly boosting volumes or ROI. With retail media, they are in control because they own the route to the customer. As a result, the likes of Tesco, Ocado, Boots and Sainsbury’s are leading the way in morphing their direct and non-core businesses into offering retail media and are already seeing the benefits of monetising the traffic and data that they already own to create new – and sizeable – revenue streams from ads.
Retail media is defined as the additional sales potential of the retailer’s existing store and digital assets to promote third party brands. Once large retailers made the link between their huge traffic volumes and their advertising revenue potential, a new market was born that, while it has been talked about for nearly five years, only in the last two has it emerged as a major revenue channel.
The size of the retail media prize
Another way to look at is, retail media is as close to the marketplace model practiced by the likes of Amazon, eBay and Rakuten as you can get. For the US’ largest retailer, Walmart, global retail media advertising revenue was worth $2.1billion in 2021 according to Statista, and rose 30% to $2.7billion in 2022. Insider Intelligence estimates that will grow to $4.52billion by 2024, or 8.2% share of total US retail media digital ad spend.
For the market as a whole, advertising group WPP recently estimated that retail media already represents 10.7% of global ad spending, and forecasts this will grow 60% by 2027. And BCG reckons the market will grow by 25% per year to $100billion over the next five years and will account for over 25% of total digital media spending by 2026.
For Walmart, ad revenue comes through a single asset, Walmart.com while in store, it is derived from a broad mix of physical assets – TV walls, front-of store kiosks, between-aisle digital signage, digital shelving, checkout aisles, self-checkout terminals, smart carts, end caps, and cooler doors – that deliver advertising prompts to the shopper.
This is not just any media, this is retail media
According to Skai, retail media delivers higher returns to advertisers than traditional media, with 61% more impressions and 12% lower costs per click. This is good news for retailers as they can now compete with traditional media where costs are rising more dramatically than the returns to advertisers. It also helps retailers and brands address the diminishing returns and ROAS that social media channels and search are also experiencing, placing it as the heir apparent for customer engagement.
However, retail networks are not just for the big boys, or the enterprise level, tier 1 retailers, particularly as some service provider apps can boast multi-million views per day. What was once called affinity marketing has now become retail media for all, once channel owners understand and therefore can value their traffic. Eyeballs are therefore moving ahead of brand presence and presenting retailers with huge growth opportunities.
It’s all in the data
The revelation for retailers was that retail media represents a major opportunity for them to finally get big returns from their investments in first party customer data gathered through transactions and loyalty schemes; in fact, any traditional channel would kill for these volumes and granularity, and loyalty schemes in particular is where advertisers look for value.
Key considerations in your next retail media play
Firstly, for the big players who do it right, retail media could be a multibillion dollar / pound business division, and that requires building dedicated resources to support and grow this new revenue channel. New ventures such as retail media deserve and require their own dedicated departments, and the retailers succeeding in the space have done just this. With dedicated departments, comes the need for new talent – that might well be found outside a retailer’s typical recruitment pools.
Consider also that the digital marketing landscape is in a state of flux, so forward-thinking retailers will be exploring new avenues to drive the next iteration of retailer-brand relationships. Retail is a multichannel, multi-faceted sector, and retail media strategy should reflect that by filtering into all customer channels – online and offline. But don’t lose site of overall Customer Experience (CX); retailers must ramp up retail media without negatively affecting their core business.
And finally, think end-to-end: advertisers require high quality data sharing and transparency – they say it’s the biggest challenge they face working with existing retail media networks.
To explore how to power Retail Media Network capabilities, download ADvendio’s latest whitepaper ‘Where the Retail Media opportunities lie in 2023’.
