Retailers have reported a 24% increase in revenue from ads over the past 12 months alone. We’re already seeing many retailers with the right execution far surpass this rate of growth. IAB Europe estimates that by 2026, advertisers will spend around 29 billion euros on retail media.
Understandably there’s a lot of excitement in this space. But it can give the impression of being a sudden, rapid wave of investment. In truth, retail media has been taking shape within leading retailers for several years now.
For retailers still acquainting themselves with this opportunity, it’s important to be mindful of the enduring gaps between how retailers often want to sell ad space and how the ad industry is used to buying it. Here we explore three of the key pillars retailers must carefully consider when building out a retail media offering.
Many retailers, including almost every grocer, have a huge offline operation including brick and mortar stores. And this is as well as their online environment to look after. Both are creating vast quantities of data every second, whether it’s clicks and orders on web browsers and apps, or in-store unit sales and stock availability. All too often online and offline realms have operated in siloes which must now be broken down in order for retailers to deliver a true omnichannel retail media offering.
Added to this, few retailers have teams or individuals with experience building and selling a media proposition. Layering the right audiences on top of advertising products that drive performance, while at the same time respecting user privacy, requires a very carefully constructed technology stack.
A huge accelerator in getting this right is engagement in retail media at the board level. Embedding the retail media as a strategic topic within the retailer allows it to move beyond a front-end transformation into a mindset change about how to connect customers with products. When that thinking is included in the retailer’s overall strategy, that’s when they will grow profitability and see long-term future growth.
The vision of how retail media will ultimately work for and support the primary business is different for every retailer. It’s when these distinct visions are brought to market that retailers can encounter another hurdle; advertisers managing campaigns across lots of different channels are looking for standardisation.
This is a challenging concept when you think about the ad space retailers are offering. For a sponsored product ad to be native it must match every other design aspect of the product or category page in which it sits. This is a starkly different prospect to buying ads across, say, The Guardian and LadBible, where the same display ad can be shown on both properties.
While there’s a certain amount of give and take with advertisers when it comes to creative, consistent metrics, proving incremental returns on investment and meeting the attribution requirements of different advertisers can go a long way in winning their confidence.
It’s important to bear in mind that how and where ad inventory is made available will always sit with the retailer. After all, ‘sponsored’ or ‘recommended’ products should effectively mirror in-store display, appearing only where they can genuinely help and inform purchase decisions without intruding on a shopping session.
Maintaining relevancy and laying in personalisation while maximising yield is a careful balancing act. Amazon, for example, demonstrates the potential to offer plenty of ad space without disrupting the customer journey. With brands & sellers queuing up to pay for eyeballs on just about every search term and sub-category imaginable, they can serve content without ever breaking relevancy for each customer.
This is where finding the right technology partner is essential. The IAB’s prediction of nearly 30 billion euros in spend by 2026 may seem lofty. But with the right tools in place, retail media offers advertisers a revolutionary means to reorientate campaigns around direct customer relationships and first-party data. Education is required on both ‘sides’ of the ecosystem as media agencies and internal media teams become acquainted with each other’s needs. But the challenges are not insurmountable and the rewards are already turning heads and headlines.