Retail media is very exciting as brands can target shoppers when they’re looking to buy and when they are in the buying frame of mind. Retail Media activates audience segments that are more likely to make a purchase with the ability to measure and optimize conversions, thereby resulting in increased online sales and spend effectiveness.
For brands, the obvious advantage is that they can tie attribute advertising spend directly to results.
With the planned phase out of third-party cookies, first-party data has become more important than ever. We’re entering a world where retail first party data matters. For brands to really be successful, they need access to first party data, because their own first party data will never be sufficient compared to what the retailers are able to collect. The starting point for better collaboration is to work with the retailer to get access to their data because once they understand that, then they can understand the consumer…
For brands, the first thing is to establish: what sort of relationship do you have with your retailer? Can you access their first party data?
In some respects, Retail Media is not that different from Google Advertising or Facebook Advertising in that it can be classified as Performance Marketing. But to make Retail Media work, brands cannot approach it like it’s Google AdWords. The measures used – clicks, impressions, spend, sales, cost of sales, and ROAS are still the same, but we need execute in a totally different way.
In terms of innovation, the most exciting aspect of Retail Media is that smaller brands can compete on a level playing field with the bigger ones, because they can use trialing or use even brand awareness style media to get their product in front of customers. Using data and insight and collaboration with Retailer, smaller Brands can unlock all the resources needed to shorten the cycle of getting their product out in front of real customers. This is a fundamental shift – no more 5 years product innovation cycles for them to fail.
The question of size in retail media is very interesting for a number of reasons: first of all the current crop of people offering retail media tends to be US-based and tends to be of scale. If they’re in Europe or Australia, they tend to still be a reasonable scale brands. If you’re looking at Coles in Australia or Carrefour, or Ahold,…they’re all fairly big. And the reason for that is many of these retailers are early adopters, and they’re looking for a slight edge, but the technology is reasonably new. One of the biggest vendors in the market that I know of is actually less than three years old. So if you look at the constituent parts of what makes retail media, the way to think about it is : we’re not even in the first five minutes of the 90 minutes soccer game :).
It’s still very early, so there’s nobody who can say that the winners will be the larger retailers because there’ll be different tools and different technologies available for the smaller ones to do that, which therefore means they can then work with smaller brands who may suit their scale.
The investment analysts are getting excited by retail media, as they’re seeing it as a vehicle for funding some of the costs of eCommerce and the delivery costs that eCommerce has. So it’s a very operational perspective. But for retailers, I would say: don’t look at it purely as an opportunity to move trade funds into retail media,
We’ve got our standard in terms of KPIs: conversion rates, clickthrough rates,…
However, there is another set of measures we can use: what if we looked at Retail Media as a different opportunity to get more innovative and more products in front of customers?
Consumer needs are changing, but brands and retailers are stuck in their perspective of long innovation cycles, Retail Media is the platform that underpins all this.
So that’s why I’m speaking in terms of new and different KPIs rather than just ones that are digital-advertising focused.
Some retailers believe that by combining data, insights and retail media, they can reduce time to market for innovative products out there. They believe that we can also reduce the risk of failure and get better products with higher margins faster into the market that tap into what consumers need.
Therefore, we can now add in other measures: velocity, speed of innovation, time to market for new products, number of new brands or new products within existing brands that we are getting out front of consumers, and the margins associated with those.
In other words, new Retail Media KPIs can include answers to questions such as
Owned media is a natural next step to social. Why? The pandemic triggered exponential growth in eCommerce, in marketplace.
The prime example of this is Instacart. Instacart grew exponentially during the pandemic because they were able to do delivery, which is obviously a part of the eCommerce. Since launching their retail media proposition in April 2020, they achieved $300 million in revenue- purely on retail media.
Instead of saying, Retail Media is an extension, in fact, it’s more a natural outcome of what is happening with eCommerce and retail.
There are different types of conversation that you hear about retail media:
All of these conversations simply reflect a lack of understanding of what is happening with eCommerce.
I just mentioned Instacart and the hint is already there. Instacart’s self-service advertising was only launched in May, 2020, but all of its new hires: its chief revenue officer, are all media executives. And in many cases, they’re actually all ex-Facebook. There’s a very interesting article from Business Insider whereby they listed companies in the US who just actually hired media execs. So I think that the profile of the future retail media manager will be somebody who’s got domain expertise in one of: Facebook advertising, Amazon advertising, Google AdWords advertising, or possibly even something like The Trade Desk and an understanding how the whole programmatic aspects work as well.
With retail media and eCommerce in general, the challenge is that it’s abstract. You’re talking about pixels, you’re talking about pictures on the screen. And what I have found is that people who come from brand management backgrounds or retail backgrounds don’t get that. They are used to see things in the world of tangible things.
I’ll give you two examples of this, one is from a conversation I had with the Head of Ecommerce from a very well-known US CPG brand. She asked me to recommend best practices in eCommerce measurement and KPIs as she had some very specific challenge she faced: her senior management team insisted that she actually give her e-commerce KPIs, but in a retailing frame of reference: stop talking about CPCs, stop talking about conversion rates…just use the language of retail, …and, of course the two are not comparable in terms of KPIs. They’re just different channels for selling products and they have different KPIs. So the retail media manager is going to be a person who understands both worlds, but will draw from the world of digital advertising to develop a new set of KPIs.
One of the potential outcomes of Retail Media that people are not seeing is an echo of what happened with Facebook Advertising and its impact on the Direct-to-Consumer eCommerce market. There is as comparison here: what if there were new brands that had Retailer.com and Retail Medias their main go-to-market strategy. As Fidji Simo , Instacart’s new CEO recently commented, “With Facebook advertising, we saw the emergence of lots of new companies purely built on Facebook, and I’m seeing the same thing happening with Instacart: new companies, having the potential to be created.” So if you think about the world through the lens of dark kitchens, fast delivery, fast innovation and retail media, we’re talking about the emergence of a different type of brand that is completely unrelated to how we thought about brands before.
My very first role when I was 21 and the company made jams and marmalades, and they had bought this little company just after I joined, and they gave me the keys to a van full of jams and marmalades, and I had to drive around the country calling pretty much door to door to individual retailers going: ” Do you have our product in store? And where is it? And do we even have a relationship with you?” This role taught me that the most important thing in consumer goods is: “can people find your product?” It doesn’t matter how good the brand is, what the taste is, what the size is. The only question is: “can they find it?” That’s why I like retail media, as it really delivers on that topic.
Have a war story to share about your first campaign? Feel like others would benefit from your insights on how to work smarter with brand partners?
Wait no more! and send us your email.
Don’t be shy, you can withdraw your application at any time!