Retail Media: what is all the fuss about?
Retail has seen marked change over the past few years, with Covid accelerating the shift from traditional retail to ecommerce. For retailers, it has been an interesting time indeed — where in some cases wholesale changes have been required across businesses from an operational and commercial perspective in order to compete.
If we park the obvious macro changes which have occured, traditionally retailers have acted as middleman — selling branded products to consumers, whilst taking a margin on the volume of items sold. This approach has led to the creation of mega retail businesses, including Walmart, Tesco and Groupe Casino, who have helped drive growth for the end brand, including the likes of Samsung, P&G, Unilever and more.
Positives & challenges of this approach
For retailers, this approach has yielded a number of positives, including the ability to leverage their online and offline footprint to deliver high volumes of sales, whilst also retaining ownership of the customer relationship and the associated data which underpins this. However on the flip side, it has meant in many cases that the retailer has typically yielded a low % of margin overall.
For brands, these partnerships have provided access to a large volume of customers (online and offline), whilst enabling them to retain a higher % of the profits. However, for brands, this approach means they have had little access to the customer relationship and the associated behavioural and transactional data.
How could a retailer yield incremental, profitable margin, by leveraging their key asset — access to high volumes of customer interaction and sales? How could a brand gain a clearer understanding of their customers, by leveraging their additional profits?
The answer is Retail Media — a sector which is growing at pace, which allows brands to advertise their products nearer to the point of sale.
So how does this work in practice?
Retailers, who have access to the large volumes of behavioural and transactional data as mentioned above, by proxy will have access to significant volumes of online traffic, on the web and in-app. This valuable asset can be leveraged by a retailer to build a strong retail media proposition — enabling them to become a media publisher as well as a product reseller.
By leveraging their customer data, a retailer can package up highly granular audience segments, which can be sold onto brands in the form of advertising campaigns. These campaigns can either be executed on the retailers site (e.g. sponsored products, onsite display advertising) or offsite (display, email, push notification etc.). As an example, Tesco could identify each and every customer who has purchased a P&G product in the past 3 months — and sell this as a campaign to P&G.
An evolution of this process could see P&G leverage their own first-party data, and match their own audiences against a retailers’ own audience to identify a common subset, by using an identifier such as a hashed email. This audience could either be activated in a specific marketing channel — or increased in size by leveraging ML capabilities to deploy look-a-like modelling to identify similar, new customers.
For brands, perhaps the most interesting opportunity a retail media proposition presents are the rich analytics and insights which are available. Retailers can leverage technology to help brands by providing them with in-depth reports relating to how consumers have engaged with their campaigns (from the top of the funnel through to the bottom of the funnel). The more granular the data provided in these reports will set a retail media proposition apart from the rest, by providing brands with the rich data they crave.
Advanced reporting such as ROPO, or research online purchase offline, can provide brands with insights into who has purchased their products in store after seeing an ad in an online environment.
So, what is all the fuss about?
For a retailer, there are huge incremental profits to be gained, where BCG recently stated that the market is expected to reach $100 Billion in the coming years. From a brand perspective, gaining access to more targeted audience segments will fundamentally drive media efficiencies — as well as provide a higher level of customer knowledge to better plan future marketing campaigns across all channels.
What is needed to deliver an effective retail media proposition?
Retailers need to identify and invest in strong and stable data marketing technology, which provides a range of core capabilities. Considerations should include real-time data onboarding, ability to manage identity at scale, the ability to connect to an existing marketing tech ecosystem, real-time activation and insights.
The technology selected should also provide brands with the comfort that they can also bring their own first-party data to the table, ensuring data protection and regulatory compliance.
And on a final note, but certainly not least, retailers must ensure they have a team in place with the right skillset in order to deliver a media + analytics led business — including sales, operations and support.
For both brands and retailers, I am a big believer that the Retail Media space is prime for multiple players to make positive moves, and look forward to seeing the evolution over the coming years.
About the Author
Phil Raby has over 13 years experience in the media and technology industry, having worked for businesses like Microsoft, Criteo, Quill and TradeDoubler. He has predominantly worked with brands and ecommerce players in the enterprise space, including the likes of British Airways, John Lewis, Marks & Spencer, TUI and more. Most recently he has joined mediarithmics, the market leading Data-First Marketing Cloud (CDP, DMP and alliance capabilities), helping clients deliver a 360 degree view of their customer data and deploying advanced data marketing use cases including acquisition, retention, upsell, personalisation and more.