Retail Media the next big trend in digital advertising with massive revenue opportunities
First, what is Retail Media? The best way to describe is the Shopper Marketing version of digital advertising, where brands use in-store promotions to drive sales in close proximity to where the consumer actually buys their product. So, you can imagine the appeal for brands who spend significantly on this type of advertising to access a retailer’s 1st party sales data for accurate measurement and targeting.
Access to this data is driving massive growth in retail media, which is of huge value in the advertising data landscape and is the most robust way to target lower-funnel consumers vs. top and mid-funnel advertising, which is moving to more of an aggregated data model (cohorts).
Larger retail platforms have created walled gardens where advertisers can work inside this environment using data from retailer consumer data platforms ( CDPs ), but no user data leaves. Advertisers can target users based on their purchase behaviour and other prediction signals, which are an extremely efficient way to target digital spending.
In terms of players, Amazon is the 50 foot giant of course, launching an entire advertising suite including Amazon DSP ( Demand Side Platform), but Walmart has been doing this for some time and was an early adopter in developing an ad platform for the digital space. Now we have large retailers following the trend: Lowes, Target, Kroger, Home Depot and more in just two short years. In Canada, Loblaws is leading the charge, with other major retailers on the way.
In the travel space, now we see Marriot launching their own advertising platform with this trend pollinating into other verticals. Travel is one of the largest categories in both online spending and web searches, so this feels like a natural evolutionary step. Utilizing a massive amount of data and leveraging the role they play in a customer’s business or personal travel, Marriot has the advantage over even a behemoth like Google. They can drive an entirely new revenue source while at the same time improving their customer experience with app features like wireless keys and concierge services that book dinner reservations plan tours etc. It’s a beautiful marriage of monetizing data to improve user experience as social networks have been doing for more than a decade now.
Pitfalls to ponder…
How will the user experience be connected across all these channels so you can properly measure and plan the user journey?
How will a brand measure the sales that come from these networks?
A consumer does not buy your product from seeing one ad but considers it through a combination of awareness and engagement and that last push needs to be measured as part of an entire journey or advertisers could end up missing the real opportunity to drive sustainable growth.
This is the same issue brands face when using outdated last click attribution models before purchase or online conversion. If you end up spending all your dollars on the last click or last impression you will ultimately fail and never be able to really grow.
Advertisers need to be careful not to fall into the trap of giving all the credit to that last engagement and properly measuring the journey utilizing omnichannel measurement to achieve ultimate success. Once Google’s next evolution of the cookie is revealed the game will change, but either way Shopper Marketing and Retail Media will still have a whole new face. Brands will have even more channels to consider as they try to understand where to spend and balance their finite ad dollars and understand the part that each channel plays in the overall success of sustainable and incremental growth.