Instacart & OpenAI Will Transform Shopping. This is our Breakdown.
Winning Omnichannel Retail Media With a Single Source of Truth
Retail media is in a phase of explosive growth. Insider Intelligence estimates the industry is growing by at least $10 billion annually in the US. While three out of every four dollars is still spent at Amazon, others like Walmart, Target, and Instacart operate sophisticated retail media platforms, each with a distinct approach to ad types, placements, and bidding. The growth doesn’t stop there; many other retailers are eager to scale their platforms and claim a piece of the pie. For instance, Lowe’s launched One Roof Media Network in October 2021, Albertson’s Media Collective launched in November 2021, and Best Buy Ads launched in January 2022.
Though many brands are used to investing almost all of their retail media budgets with Amazon, they are receiving a huge influx of new options at a time when brands are increasingly concerned about profitability over growth. For brands, retail media has rapidly become an integral part of effective Retail Ecommerce Management (REM) that optimizes performance across retailer accounts and multiple KPIs. Yet the most important question remains the same: Where do I spend my next dollar? The answer to that question is becoming more complicated. For a brand to address this central question effectively, it must fundamentally reenvision how it builds its retail media strategy.
Data, Data, and More Data
As retail media usage, platforms, and features grow, brands must decide how to handle an exponential increase in available data. Successful retail media strategies rely upon the accurate collection, tracking, and analysis of data to lead to better outcomes. A best-in-class approach will track performance across multiple attribution models (last-touch and multi-touch attribution) as well as measure the immediate sales impact vs. the lifetime value of an initial conversion, especially for replenishable CPG products. As retailers implement new loyalty programs, this data will also be integrated into their retail media platforms. For instance, Walmart Rewards impacts brands’ bidding process for important search terms.
The growth of DSP will only contribute to this trend. DSP’s usefulness extends far beyond raising brand awareness since it can retarget shoppers based on numerous viewing and purchasing criteria. Increasingly, retail media not only focuses on conversion at the point of purchase but also on shepherding new-to-brand shoppers through the discovery, research, purchase, and replenishment phases of the purchase journey. Being able to easily track the behavior of the same set of shoppers over time is imperative. Finally, data is only useful if it is easy to access and seamlessly incorporated into a brand’s decision-making tree.
A Single Source of Truth
Instead of asking “Where do I spend my next dollar?”, let’s reframe this central question and solve it at scale: “How should I decide where to allocate my whole budget?” The answer lies in the broad integration of data across a brand’s retail accounts and operational divisions into one accessible platform. This is the foundation of Retail Ecommerce Management (REM) in retail media.
At CommerceIQ, we’re devoted to building this platform and providing brands with the freedom to easily track, analyze, and make decisions across the entirety of their retail media business. Best-in-class brands should be able to compare ad spend, ROAS, share of voice, CPCs, and more across all relevant platforms with the click of a button. Furthermore, this data should be accessible to all relevant internal stakeholders.
Break Down Operational Silos
A brand’s sales, marketing, and operating divisions must share their data to enable a successful retail media strategy. Keeping any operational silo out of the discussion risks losing sight of important KPIs. Marketing must track ROAS and CPCs. Sales pays the most attention to incremental sales and profitability. Supply chain tracks inventory and out of stocks among many other metrics. All of these measures need to work together to achieve the best result.
For instance, ad spend used on products that are either out of stock or soon to go out of stock is effectively wasted. In fact, misallocated ad spend on these products results in a net detriment to the brand as more frustrated shoppers will be unable to complete their purchase. By having supply chain and inventory data as an input for ad spend allocation, brands have more control over their out of stocks and the resulting shopper experience.
Another example of a great KPI is share of voice, defined as the weighted presence of a brand across online placements for all relevant keywords and digital shelves within their category. ROAS is a powerful metric to determine marketing efficiency, but, as CommerceIQ has examined previously, it cannot uncover all growth opportunities. ROAS lags sales as a reporting indicator. Share of Voice, on the other hand, acts as a leading indicator of sales and can boost a brand’s business, even when those sales might have little impact on ROAS. Visibility is king, and whoever wins the shelf wins the sale.
Finally, average selling price and contribution profit are tools to measure and improve profitability. When all of these variables are used in tandem, the entire organization is more likely to be on board with the broader retailer media strategy.
An Omnichannel Approach
Consistently making the best decisions is only possible when all options are considered. Just as the operational silos within brands need to be connected, data needs to be shared across accounts and retailers. All else being equal, a retail media strategy that considers Amazon in isolation will not be as successful as one that compares actions and performance at Amazon against other opportunities at Walmart, Target, and beyond. The list of retail media platforms is only growing. Brands will be spoilt for options on where to spend their dollars. But with more opportunity comes the potential for more mistakes. Brands that can tackle this increase in complexity systematically will win more share compared to their competitors. A retail media budget should not be constructed one retailer at a time, but most incorporate overall company goals across retail ecommerce.
When allocating ad spend between retailers, brands must look beyond shopper traffic. They must also consider the distinct categories, shopper profiles, and trip occasions that each retailer brings to the table within its retail media platform. Amazon may be a dominant player in much of ecommerce, but Walmart has Amazon beat in online grocery revenue by most estimates. Instacart, on the other hand, can most closely mimic the browsing experience of a physical store trip. A visit to Target.com may be more impulse and entertainment-driven than a click on Walmart.com. For every product line and shopper persona, these factors must be considered when determining where to spend.
The CommerceIQ Difference
More data means more decisions. Unprepared brands can easily be overwhelmed by the number of actions needed to succeed. The final piece of the puzzle for retail media’s future will the ability to automate and optimize routine tasks like bidding adjustments in real-time according to changing market and competitive conditions in alignment with a preset strategy. CommerceIQ’s automation tools and comprehensive dashboard keeps brands from becoming overwhelmed by details while freeing them to craft a better, data-driven retail media strategy.