The Changing Face of Retail: Retail Media

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Gone are the days when FMCG advertisers had to launch new products using little more than print media and one of the few television channels that even showed adverts. A time when ‘targeting’ was limited to reaching a mass-market audience who could only be segmented by the time of day that they had their television on and the TV shows that they enjoyed.

TV advertising was soon surpassed by digital media, where retailers could use search engine optimisation and targeted online advertising to promote their goods and services. Hot on its heels was social media advertising, which was even more adept at knowing what consumers liked and how to reach and build those essential tribes who were ready and receptive for your product.

Enter Retail Media

We are now already in the third wave of digital advertising, and it’s predicted to be the biggest yet.

Retail media is online and instore adverting which is sold and delivered through a retailer’s own channels. Think of those promoted Amazon products at the start of your search results, or those grocery ads, where you’re prompted to consider buying other products before you check out.

The advantages of retail media for brands are clear. Target customers are already identified and are already in the process of making a purchase. The decision to buy has already been made. Not only that, but digital analytics and customer profiling offers brands multiple options for how and where they promote their products to the consumers who have been identified (by the retailer’s proprietary shopper data) as being the most likely to purchase their product.

Brands get clear data on what works and what doesn’t, and unique insight into that retailer’s shopper behaviour, to be able to tailor offers, messaging and content to a micro or macro audience who are primed and ready to buy. They can then advertise with that retailer at different touchpoints on the shopper journey, including their website, mobile app or even via digital instore signage.

Retail Media Is A Huge Growth Opportunity

The opportunity for retailers too is immense. As a medium, it is forecast to surpass TV advertising revenue by 2028, accounting for 15.4% of total ad revenue.⁽¹⁾ In 2023 alone, it’s expected to reach $125.7bn.

Not only do retailers benefit from brands who pay them to advertise, but they also earn a percentage of the value of every product that is sold because of that advert. It’s a huge revenue shot in the arms for retailers who are looking to make profit – and the profit is as much as 90% on the retail media medium.

Sainsburys is one British retailer who is powering ahead with its retail media offerings. Nectar 360 is their in house customer loyalty, insights and media services agency, and expects to make additional profits of around £90 million by 2026 through brand advertising.⁽²⁾

It’s not just supermarkets who are taking advantage of this retail media opportunity. This year ASOS announced a partnership with ad tech firm Criteo, to optimise its’ retail adverting opportunities.⁽³⁾ Retailers are rapidly becoming more than just venues for selling products. Their media agencies are a fundamental part of their growth strategy.

A Personalised Shopping Experience

Rather than mass impressions, Retail media is all about personalisation and reaching the customer at the final stage of the buying journey, when they are ready to buy and potentially choosing between ‘product A’ and ‘product B’.

It also helps retailers to deliver a more personal service for shoppers both instore and online. Retailers can join the dots to understand that if someone buys X, they will likely also buy Y and ensure that those products are positioned nearby in store. In-store digital signage can be personalised and each combination of adverts or digital signposts can be evaluated and optimised to find the perfect balance that triggers a sale. Placement, prediction and frequency can all be optimised using real-time data, to drive in store conversions.⁽⁴⁾

However, it’s a fine balancing act between market optimisation and market saturation. Tesco found itself having to adjust their in-store retail media offerings, as they found that the customer experience was being damaged through over-exposure. Using customer data from a loyalty reward scheme must be carefully managed to ensure that members are feeling valued, not exploited.⁽⁵⁾

Retail Media is Now an Essential Part of The Marketing Mix

Retail media is already taking market share away from social media advertising, and Meta has seen their ad spend growth slow dramatically, since retail media increased in popularity.⁽⁶⁾

While there is bound to be some flux while brands find the best mix of retail media, social media and other ad spending, there is a potential threat to smaller brands with less budget for marketing. They likely won’t be able to afford to share a percentage of their profit margins to be successful and compete against the bigger brands with bigger pockets.

Rather than wholeheartedly embracing the value of retail media, some advertisers admit that they simply see it as a cost of doing business with those retailers, rather than the media itself being a critical tool in their armoury.

It also doesn’t work as a brand awareness tool for launching new products and building knowledge of a new product to a wide audience. For that, traditional and social media will inevitably continue to be the media of choice. But for established brands who are looking to capture market share it can and will be a powerful tool for accessing the kind of customer demographics previous generations of advertisers could only dream of.

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The Changing Face of Retail: Retail Media

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