Revolutionising Advertising: The Rise of Retail Media
In today's ever-evolving advertising landscape, retail media networks are making waves. As Helen Thomas mentioned in the FT this morning, "the idea of 'retail media' is an old one." As the adage goes, everything old is new again, however this time round, the difference is how digital has unlocked new areas of growth. Retail giants like Walmart, Target, and Kroger have stepped into the spotlight by offering robust advertising platforms, providing consumer packaged goods (CPG) brands with direct access to shoppers. As Thomas reported, "In the more developed US market, Walmart has mentioned an aspiration of roughly 6 per cent of sales, compared to less than 1 per cent last year. Kroger’s media income sits within “alternate profit streams”, which includes other businesses like financial services. It accounted for a quarter of operating profit last year."
With over $50 billion in ad spend up for grabs, retail media represents one of the most significant opportunities in advertising today.
This blog explores the growth, benefits, and future of retail media networks.
Unleashing the Power of Retail Media:
Retail media networks leverage retailers' first-party data and strategic ad placements to help brands enhance awareness and drive sales. By targeting shoppers based on purchase intent and history, CPG brands can deliver personalised messages at the perfect moment, overcoming the challenges posed by the planned phase-out of third-party cookies. Investing in retail media allows brands to achieve two critical goals: gain valuable customer insights and maximise return on ad spend. Early adopters who fully embrace this trend and build scalable strategies to maximise this medium will secure key partnerships, data advantages, and cost efficiencies that competitors will find hard to match.
A Win-Win Situation:
The emergence of digital retail media is advantageous for both brands and retailers. Brands gain access to new consumers, enabling them to expand their reach and influence. On the other side, retailers benefit from a new revenue stream that offers higher margins compared to traditional product sales. This mutually beneficial relationship is further strengthened by the democratisation of technology, as a larger number of retailers can now provide retail media solutions. Previously, only tech giants had the resources to build their own in-house ad exchanges, whereas now there is growing access to off-the-shelf capability allowing more businesses to take advantage.
How Retail Media Will Evolve:
Looking ahead, the future of retail media is poised for exciting advancements. Here are five key ways in which retail media networks will evolve:
Proliferation of ad formats beyond keyword-triggered listings: Retail media networks will expand their offerings beyond traditional keyword-triggered ads, providing brands with a wider range of advertising formats to engage shoppers effectively.
Leveraging retailers' rich browser/buyer-targeting data across the web: Retailers' extensive data resources will be harnessed to target and engage shoppers across various online platforms, extending the reach of retail media campaigns.
Extending activation options to out-of-home ad formats within physical stores: Retail media networks will embrace out-of-home advertising formats within physical stores, allowing brands to create a seamless omnichannel experience and reach shoppers at different touchpoints. Of course, offline retail media has been a feature of the grocery sector for decades, the next phase will see advancements around the ability to better coordinate campaigns.
Increased adoption of programmatic display advertising and paid social via retailers: Retailers will increasingly integrate programmatic display advertising and paid social media options into their platforms, offering brands more avenues to connect with their target audience.
Greater coordination between retailers and brands for more effective campaigns: Collaboration between retailers and brands will intensify, enabling more cohesive and impactful campaigns that resonate with shoppers and drive results.
The rise of retail media networks has ushered in a new era of targeted advertising, providing brands with unprecedented opportunities to engage shoppers on a personalised level. As the retail media landscape continues to evolve, CPG brands must prioritise these partnerships to shape tailored experiences, offerings, and messaging that align with individual shopper needs. In her article, Thomas cautions that "...supermarkets need to tread carefully in using customer data, even when they have permission via loyalty schemes, as retail media expands its horizons... the biggest test may be whether retailers can resist the temptation of high-margin advertising sales in the name of preventing food customers’ from feeling overwhelmed by marketing, either in-store or online."
If you're interested in exploring this space further, our Innovation team is here to help.
The future of advertising lies in the hands of those who embrace innovation and leverage the power of retail media networks. Are you ready to revolutionise your advertising strategy?