July 25, 2024

KT Business

The Business Servicess On for You

Driving Brand Success With Retail Media Innovation

4 min read

The global media landscape has undergone a huge transformation over the past few years, driven by exciting new technologies and shifts in consumer behavior. Innovations such as digital streaming, social media, and generative AI have received a great deal of attention from chief marketing officers, while retail media—another exciting emerging channel—has gone relatively unnoticed. Although retail media has been shaking up marketing practitioners’ day-to-day activities for some time, it has not enjoyed the same level of interest from the C-suite.

Retail media deserves better. With the proliferation of media channels, it has never been easier for companies to reach consumers. But with the fragmentation of audiences, it has never been more difficult to engage them. Retail media has the potential to revolutionize how brands speak—and engage—with consumers, making it a powerful strategic tool in marketers’ arsenal.

Consider one possible scenario. A beverage maker launches a new energy drink. The brand works with its retail media network (RMN) partner —such as Walmart Connect or Target’s Roundel—to reach energy drink consumers on social media (using advanced analytics on previous purchases to select the target audience) and offer them a first-time purchase coupon in the retailer’s loyalty app. When a consumer next visits one of the retailer’s outlets, in-store digital screens encourage them to check the app to see if they have received a special offer. Once the consumer has redeemed the coupon to buy the drink, they are given a “streak” offer or a bulk-buy discount to build long-term loyalty—reinforced by advertisements both in-store and on their mobile devices.

This example shows how the tools of retail media can drive sales and build brand loyalty across multiple channels. Currently, however, retail media is far from this potential. Meanwhile, brands have nearly tapped out the shopper marketing and trade budgets largely funding retail media’s growth to date. And brands are reluctant to turn to other funding sources without a step change in retail media and its results.

To discover what’s needed to unlock additional brand dollars, we interviewed industry leaders from both brands and retail media networks and surveyed over 100 brand marketers and their agencies.

Our findings showed that, to secure brands’ continued support, RMNs will need to take retail media to the next level—Retail Media 3.0—by offering advertisers far more than they do today. Specifically, half of the brands we contacted are looking for retailers to offer data and insights in a way that they have never received from their traditional partners, the retailers’ merchandising departments. But media excellence—including programmatic ad buying and real-time reporting—will need to become table stakes as retail media competes squarely in the digital advertising market.

Time for Retail Media 3.0

For years, major advertisers, particularly consumer packaged goods companies, have struggled with being disintermediated from a direct relationship with their consumers by retailers. This has created two groups: the “Data Haves” (retailers) and the “Data Have Nots” (brands). Historically, that disparity has been mediated by 3P cookies, which have enabled targeted advertising without 1P data. But with third-party cookie deprecation, this fragile equilibrium is already being disrupted. Retailers need to flip the script on data. Rather than hoarding it, retailers need to share data-driven insights with brands to allow the ecosystem overall to thrive and grow. Retail media is the vehicle for achieving that.

Retail media networks enable brands to buy advertising space across the retailer’s owned channels (such as its website, mobile app, or in-store screens) and paid media (with RMNs using first-party data to target relevant audiences across programmatic display ads, search, or social media). With either approach, RMNs use data and access to the consumer purchase journey to connect with consumers, measure the impact of the advertising that reaches them, and provide these measurements to the brands.

Retail media networks have gained favor among brands because they provide an effective route not only to target consumers but to engage with them at critical moments during the consumer journey. Furthermore, RMNs’ closed-loop measurement capabilities enable companies to gauge how successful media campaigns are at generating sales, which as any CMO or CFO will tell you is the holy grail of marketingmarketing.

Within the next two to three years, the US retail media market is projected to be over $100 billion in revenues, more than three times the amount in 2021. Out of the additional market value that is expected to be created in this period, about two-thirds will be net new spending with retailers over and above historical trade dollars. About one-third will come from brands shifting existing budgets. However, getting to these projections will depend on retailers upping their game. If they want to capture the new money on the table and demonstrate real value creation and return on investment, Retail Media 3.0 will need to be an essential part of the strategy and have the buy-in of the CMO.


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