Incrementality: Connecting the dots between paid search and sales growth
Navigating the Retail Media Revolution: Strategies for Success in 2024
The rise of retail media is transforming the buyer-supplier relationship. To make sense of this rapidly shifting market, we summarized the strategies brands need to navigate the retail media revolution from our recent podcast episode.
In the fast-paced world of retail media, staying ahead of the curve is essential for brands. As we approach 2024, it’s crucial to understand the evolving landscape and harness its potential. Following our interview with Colin Lewis on The Digital Shelf Cast, we delve into key insights and uncover the strategies and trends that will shape the retail media landscape in the coming year.
What is Retail Media?
Before we deep dive, let’s first understand the basics.
Retail media is a dynamic and evolving facet of digital advertising. At its core, it involves using digital advertising within an ecommerce environment. Whether you’re scrolling through Amazon’s product listings or exploring your favorite grocery store’s mobile app, you’re likely to encounter retail media in action. It’s the advertising that seamlessly integrates with your online shopping experience.
Retail media isn’t just about advertising on an ecommerce website; it’s a concept that’s constantly evolving. Initially, it focused on onsite digital advertising, such as sponsored product listings. When you search for a product on an ecommerce site and see sponsored results at the top, that’s retail media at work.
However, retail media is now extending its reach offsite. This means that the data and insights gathered from a retailer’s website are used to target customers when they’re browsing the broader web. Imagine searching for a product on a retailer’s site and then seeing ads for the same product on social media or other websites you visit. That’s the offsite dimension of retail media.
But the evolution doesn’t stop there. Retailers are increasingly incorporating digital advertising within their physical stores. This innovation is shaping the way brands engage with customers both online and offline.
What’s the Hype around Retail Media?
You might wonder why retail media has generated so much excitement in the marketing world. Let’s delve into some of the reasons behind this buzz. Colin Lewis sees three key drivers.
1. Explosive Growth in Ecommerce
The pandemic accelerated the shift toward online shopping. Ecommerce witnessed exponential growth over the past few years, with more consumers turning to digital platforms for their shopping needs. As a result, the traffic on retailers’ websites and apps has surged
2. The Amazon Effect
Amazon, often viewed as the poster child of retail media, has played a pivotal role in popularizing this advertising channel. Amazon’s advertising arm, Amazon Advertising, has been a significant revenue generator, with advertisers flocking to leverage its vast user base.
3. The Death of the Cookie
In the world of digital advertising, the impending “death of the cookie” is a hot topic. With increasing privacy concerns and regulations, tracking users through cookies is becoming less viable. This has made first-party data collected by retailers more valuable than ever.
The Changing Buyer-Supplier Dynamic
Colin Lewis emphasizes that the rise of retail media is transforming the relationship between buyers (brands) and suppliers (retailers). Traditionally, trade marketing agreements were the norm, with brands providing funds to retailers for joint marketing efforts. Retail media is often seen as a reinvention of trade marketing, but it comes with a significant shift in dynamics.
The new era of retail media brings transparency and accountability. Both brands and retailers now have access to data and metrics that allow them to measure the return on investment (ROI) more precisely. Brands can no longer accept vague responses like, “I don’t know the ROI of your marketing spend.” This shift forces brands and retailers to collaborate more closely and share insights and data, leading to a more transparent and data-driven relationship.
The Shift in Supplier Negotiations
In the past, supplier negotiations were often based on personal relationships and trust. However, retail media introduces a new level of transparency and data-driven decision-making. Brands are now demanding more accountability and measurable results from their suppliers.
The Role of Data
Retailers possess a goldmine of data about their customers. This first-party data, combined with the demise of third-party cookies, has shifted the power balance. Suppliers are increasingly reliant on retailers for access to valuable audience insights.
Who’s Buying Lunch?
In a symbolic twist, the question of who’s buying lunch is becoming a reflection of the changing dynamics between retailers and suppliers. In the past, it was common for suppliers to host retailer lunches as a show of goodwill. Now, the tables are turning, and retailers are demanding more value from their suppliers.
Overcoming Challenges in Retail Media
While Retail Media presents exciting opportunities, brands often face challenges when navigating this space. Here are some common hurdles and strategies to overcome them:
1. Skills Gap
Challenge: Brands may lack the necessary in-house skills to navigate the complexities of retail media.
Solution: Invest in building internal capabilities. Recruit team members with a strong foundation in performance marketing (that means you won’t be looking nor finding someone witgh 10+ years in TikTok advertising), as the principles align closely with retail media strategies.
2. Internal Alignment
Challenge: Different departments within a brand, such as marketing, trade marketing, and ecommerce, may have conflicting interests when it comes to retail media.
Solution: Foster alignment by creating a dedicated team that oversees retail media strategies. Allocate budget for testing and learning to mitigate internal conflicts.
3. Budget Allocation
Challenge: Determining the right budget allocation for retail media can be challenging, especially when ROI isn’t immediately apparent.
Solution: Set aside a portion of your budget specifically for testing and experimentation. Consider it an investment in learning and adapting to this evolving landscape.
Building Internal Retail Media Expertise
Retail media isn’t just about outsourcing tasks to agencies. Brands should focus on developing internal expertise to drive strategy and innovation. Here are some critical skills Colin Lewis likes brands to consider building in-house.
1. Performance Marketing
A solid foundation in performance marketing is invaluable when venturing into retail media. Individuals with experience in managing Google AdWords or Facebook advertising can adapt their skills to this new domain.
2. Creative Strategy
Creative plays a significant role in the success of retail media campaigns. Brands should invest in creative talent capable of producing compelling and effective content.
3. Data Analysis
Data-driven decision-making is essential in retail media. Brands should have analysts who can derive insights from the wealth of data generated by these campaigns.
So, what’s then left to outsource? Brands are advised to outsource executional tasks, such as the day-to-day management of campaigns, including ad placements and bid management. These can safely be outsourced to agencies.
Fostering Internal Collaboration and Alignment
Aligning different departments and fostering collaboration is essential for successful retail media implementation. As with any ecommerce and cross-functional initiative. Here’s how brands can achieve this for retail media specifically.
1. Senior-Level Buy-In
Initiating change often starts at the top. Ensure that senior leadership understands the value of retail media and is committed to supporting its integration.
2. Cross-Functional Teams
Create cross-functional teams that bring together representatives from marketing, ecommerce, and data analysis. This ensures a holistic approach to retail media strategy.
3. Data Sharing
Break down data silos and promote sharing of insights across departments. A unified view of digital shelf data is crucial for effective retail media campaigns.
Impressive Brands in Retail Media
Several brands have excelled in the retail media space, showcasing the potential and effectiveness of this advertising channel. Let’s take a look at L’Oréal as the standout example Colin Lewis mentioned.
L’Oréal’s approach to retail media is a testament to its commitment to brand visibility and consumer engagement. Recognizing the intimate and personal nature of health and beauty products, L’Oréal invests significantly in understanding how their brands are portrayed and perceived across various online channels.
This dedicated approach enables them to craft compelling and impactful creative strategies that resonate with consumers, further solidifying their brand’s position. Beyond their creative prowess, L’Oréal also demonstrates the importance of collaboration and alignment within their organization, ensuring that all teams are working toward a unified goal.
Brands like L’Oréal, along with others such as Unilever and Procter & Gamble, serve as beacons of excellence in the retail media landscape, showcasing the immense potential and possibilities this platform holds for brands willing to invest in strategy, creativity, and alignment.
Retail Media Trends 2024
As first-party data becomes increasingly valuable, retailers and brands will focus on hyper-personalization. Advertisers will leverage customer data to deliver highly targeted and relevant ads.
2. Integration of Physical and Digital
The line between physical and digital retail will continue to blur. Brands will explore innovative ways to integrate Retail Media into the in-store shopping experience, creating a seamless omnichannel approach.
3. Enhanced Measurement and Attribution
With advertisers demanding greater transparency and ROI, there will be a surge in tools and technologies that provide enhanced measurement and attribution capabilities. This will enable brands to track the impact of retail media campaigns more accurately.
Colin Lewis is also quick to point out that, in the tech world, we encounter typical cycles of hype followed by disillusionment before rationality prevails. Expect no less for retail media, he argues. Claims of its demise will emerge, echoing past declarations about the end of email, Facebook, and other digital stalwarts. Yet, this is a signal of maturity, not decline. Rather than heeding these declarations, savvy brands will recognize them as harbingers of progress. Embracing maturing technologies will be the key to staying ahead of the curve.
Key Takeaways: Thriving in Retail Media in 2024
As we prepare to step into 2024, it’s clear that retail media is here to stay and will play a pivotal role in digital marketing strategies. To thrive in this evolving landscape, keep these key takeaways in mind:
- Invest in Building Internal Expertise: Develop in-house capabilities in performance marketing, creative strategy, and data analysis to drive retail media success.
- Balance Outsourcing and In-House Efforts: Determine what tasks to outsource and what to keep in-house to strike the right balance.
- Foster Collaboration: Break down departmental silos and promote collaboration to ensure alignment in Retail Media strategies.
- Stay Ahead of Trends: Keep an eye on emerging trends like hyper-personalization, integration of physical and digital, and enhanced measurement to stay competitive.
- Embrace Change: The world of retail media is dynamic. Embrace change, experiment, and adapt to the evolving landscape.
With these strategies and insights discussed in our latest podcast episode, you’ll be well-prepared to navigate the retail media revolution and make the most of its exciting opportunities in 2024 and beyond.