Consulting Insights
The Rise of Retail Media Advertising
Retailers like Home Depot, Walmart, and CVS are setting up their own Retail Media Networks, allowing advertisers to buy space across their online properties and target their audiences to drive traffic and increase sales. Access to first-party data and deep consumer insights make these placements invaluable to marketers. Are you ready to take advantage?
Driven by the surge in e-commerce spending over the last two years, brands’ desire to target consumers close to the point of purchase has opened up a large opportunity for retail media advertising. With extensive first-party data and consumer insights that are invaluable to marketers, it is expected that investment in retail media will continue to increase.1 Read on for how you can take advantage of the next big trend in digital advertising.
What is Retail Media Advertising?
Retail Media refers to ads placed on a retailer’s e-commerce site or app by a brand in order to influence customers at or near the point of purchase. Recently, retail media networks have started to extend their inventory offerings to include upper-funnel display and video ads by offering first-party data for brands to target against. Advertising through a Retail Media Network, an advertising business set up by a retailer that allows marketers to buy ad space across their online properties, has advantages for both retailers and marketers. For retailers, setting up advertising options on their digital platforms and monetizing their first-party data increases revenue opportunities. For marketers, advertising via Retail Media allows for better targeting of consumers at or near the point of purchase or at the point of decision between two competing brands. This includes using techniques like in-store and online advertising, sampling, and coupons. 2/3 of online product searches start on retailer sites2 making retail media advertising a great way to increase marketers’ visibility to desired customers at various stages in their journey – from home page to product details.
What is Driving the Growth of Retail Media Advertising?
E-commerce continues to grow
As consumer confidence and shopping behavior continues to ebb and flow, the shift from in-store to digital shopping is increasing. Though e-commerce has been growing for several years, the pandemic was an accelerant and nearly 34% of customers are shopping online as a result.3 It is vital for retailers and marketers to take advantage of the opportunity to meet consumers where they are, especially considering the high-intent of customers once they reach a retailer’s site. In short, if you are not advertising through retail media, you are missing out.
Personalization is key
Cookies may be a thing of the past, but personalization is here to stay. Loyal consumers who are visiting retailer’s sites are more likely to respond positively to advertising that is personalized to their individual needs. Plus, advertising feels less invasive when done within a brand’s site that is trusted. This emphasizes the importance of first-party data, something that retailers are well positioned to provide to marketers through their RMNs.
How Can You Take Advantage?
For Marketers:
Add Retail Media Advertising into your media mix
In addition to the benefit of moving closer to your customer, Retail Media Advertising provides access to a retailer’s first-party targeting data – avoiding obstacles associated with third-party cookies. RMA also provides an opportunity to closely track spend and control where it’s being allocated, giving marketers the ability to deliver messaging to consumers at any stage in the journey⁴. Now is a great time for marketers to experiment with RMA whether through small tests or larger campaigns. Ovative’s Marketplaces team helps clients define their Marketplace strategy and cross-channel media strategy and activate proven paid strategies, product promotion, and measurement capabilities across Amazon, Walmart, Instacart, and other major marketplace platforms.
Measure the Enterprise Marketing Return of RMA
As with any advertising tactic, the ability to measure effectiveness is key. In terms of performance, each Retail Media Network offers varying degrees of sophisticated measurement to help marketer’s understand the impact of their investment. Some RMNs offer closed-loop, brand level, multi-touch attribution while others might only offer media engagement metrics. Marketers should keep in mind that true effectiveness cannot be measured by looking at digital channels only. It is important to consider the full enterprise impact of marketing efforts to evaluate if the campaign made a true impact on the business. This means looking beyond Return on Ad Spend (ROAS) or “last click”. Marketers should consider the components of Enterprise Marketing Return (EMR) to understand the true value of their campaign. Check out these examples of how the four EMR pillars can be used to understand the holistic impact of your campaign:
- Customer Value: your campaign may help attract high-value customers that will continue purchasing for years to come, which may not be reflected when measuring to last click ROAS.
- Enterprise Return (online and offline results): looking at immediate campaign performance through ROAS may help you understand how many clicks or impressions your ad garnered, but will not fully reflect purchases or site visits made after the initial ad is served.
- Incrementality: understanding if brand awareness would have occurred without the advertisement is key. Ask yourself, “did this campaign reach an audience that would have already visited our site or shopped with us?”
- Profitability: testing to determine which action is most effective to put paid media behind will help you maximize your budgets long-term.
For Retailers:
Adopt the RMN approach
“High barriers to entry are the one of the biggest misconceptions to setting up a Retail Media Network”, says our Senior Director of Measurement, Zach Darkow. There are a variety of ways to monetize smaller marketplaces and allow them to get started right away. Email monetization, leveraging existing external platforms (DMP/DSP), and implementing self-service technology for sponsored ads are just a few of the ways to get started. Retailers who recognize that their first-party shopper data can provide them with a valuable revenue opportunity are one step ahead. Beyond diversifying revenue, building a Retail Media Network also increases e-commerce profitability by providing retailers the opportunity to increase ad sales and add new features that will increase ROI. This return on investment can then be used to invest in additional tactics that drive greater customer loyalty and a seamless experience.
Optimize your measurement and reporting
The ability to take advantage of this new landscape, however, is dependent on how far along retailers are in their digital transformation journey. For example, retailers should ask themselves questions such as, “do we have the resources and infrastructure in place to leverage our data in service of advertisers?”, “where are we on the maturity model as far as data and digitization is concerned?”, and “what measurement can we provide to advertisers to offer transparency and demonstrate value of investment?”⁴. Questions like these are best answered by finding a partner, like Ovative Group, to support with measurement and optimization.
Retail Media Networks In Action – Client Case Study
Situation: Ovative recently helped elevate a home improvement client’s Retail Media Network strategy through measurement and reporting optimizations to increase investment from vendors and drive incremental sales.
Approach:
- Advised on a Retail Media Network go-to-market strategy based on business goals, competitive landscape, and unique value proposition.
- Created vendor reporting strategy for all vendor investment tiers that showcased newly enhanced measurement solutions and capabilities.
- Built dynamic and robust vendor reporting and supporting QBR deck templates based on carefully designed wireframes.
- Providing vendor program management support to aid in the rollout, socialization, and adoption of new Retail Media program reporting and measurement for internal and vendor teams.
Ovative Client Data, 2022
Results: These program strategy recommendations (including reporting) contributed to a +315% YOY increase in vendor contributions and a 51% decrease in time spent on reporting for QBR and MBR development through standardized reporting. Read the full case study.
The rise of Retail Media is predicted to continue increasing as more retailers and marketers learn of the advantages. Whether you are a marketer looking for ways to get closer to your consumer or a retailer who wants to use your first-party data as an additional revenue stream, Retail Media can increase ROI and customer loyalty. In an age where brand trust is at the top of consumer priorities, there has never been a better time to add this growing channel to your media mix. For more guidance on how you can take advantage of Retail Media as a marketer or a retailer, contact Ovative.
Ovative Group is a digital-first media and measurement firm. We bring together the best of media, measurement, and consulting to enable an enterprise approach to marketing that increases our clients’ profitable revenue, strengthens their customer base, and creates sustainable competitive advantage. Connect with us to learn more.
SOURCES:
1 | eMarketer, Retail Media Advertising 2021, Sept 2021. https://www.emarketer.com/content/retail-media-advertising-2021
2 | Criteo, WTF Is Retail Marketing Guide, July 2020. https://www.criteo.com/blog/wtf-is-retail-media-guide/
3 | Forbes, Retail Media Networks Poised For Growth, Jan 2022. https://www.forbes.com/sites/garydrenik/2022/01/12/retail-media-networks-poised-for-rapid-growth-in-2022-whats-driving-this-50-billion-market/?sh=368b17102569
4 | ANA, Retail Media Networks 101, Aug 2021. https://www.ana.net/miccontent/show/id/aa-retail-media-networks
