Sean Crawford: five things retailers need to do to build a successful media network
Despite the hype, retail media is not a new phenomenon. It has been around for nearly two decades. While not new, it has evolved significantly in recent years. Retail media is now fully omnichannel, offering full-funnel campaigns, leveraging loyalty programs, and utilising first-party data to enhance the shopping experience. For brands, this evolution brings more possibilities than ever, including unprecedented abilities to target consumers and directly link marketing efforts to the point of sale.
It’s no wonder everyone seems to be jumping on the retail media bandwagon—so much so that there are now more than 200 global Retail Media Networks (RMNs). Realistically, not all these networks can survive, much less thrive, which has pushed the industry to an inflection point.
Brands do not have unlimited advertising budgets and must make increasingly difficult decisions on where to allocate spending across the vast number of RMNs. Some may choose to invest in those that offer the greatest reach, but to achieve the most success, brands must focus their investment on networks that provide a strong value proposition and a clear point of differentiation.
Convenience RMNs, for instance, cater to a completely different shopper on a different mission compared to RMNs tailored for large-format grocery store shoppers. If a network has a distinct point of difference, reaches an incremental audience, and unlocks new opportunities for brands, then those brands will bring their advertising dollars.
For any organization considering launching its own media network, here’s what will set you on the right path:
1. Think Like a Media Company, Not a Retailer
While any retailer can offer an RMN, retail media should not be seen as a quick way to make money or an easy extra revenue switch to turn on. Success in retail media requires a strong value proposition that enhances the customer experience. It’s crucial to remember that retailers are not inherently media companies. A grocer excels at selling produce, but media is a completely different story.
Without the right internal organizational structure, retailers can’t properly build and operate a media agency and, therefore, won’t be able to compete with RMNs powered by the appropriate organisational framework. Retailers must align retail media priorities with merchandising priorities to ensure cohesive campaigns that speak to consumers who no longer shop linearly. To drive ROI, media must be aligned with merchandising offers to create the optimal customer experience.
In retail media, retailers must treat brands as clients, not customers, creating data-backed and creative campaigns that reach intended consumers effectively.
2. Adopt the Right Media Strategy
Recognizing that retail media isn’t just about generating cash flow is essential. Ultimately, retail media success is about achieving mutually agreed-upon KPIs, including short-term ROI and long-term factors like brand equity. Retailers of any size can succeed if they have a strong value proposition, onboard the right expert team to manage their media services, aim to improve the customer experience, and maintain transparency in their measurement.
We’ve all seen the data — retail media is encroaching and overtaking spend from more traditional advertising methods. To capitalize on this, retailers must take a truly creative approach to retail media campaigns. It’s not just about ad space sales. Campaigns developed with creativity at the forefront will, over time, unlock incremental budgets and win spending from traditional channels.
3. Leverage Data to Power Relevant Communications
Shopping habits have evolved and continue to do so. Consumers are shopping everywhere and all the time, making it crucial for retailers to engage with them wherever they are — whether watching CTV at home, browsing the web on their phones and tablets, commuting to work, or approaching a store. It’s essential to deliver relevant and timely advertising, from before they decide to shop to checkout and beyond.
Brands need access to the data required to reach consumers wherever and however they are shopping. Fortunately, most retailers have a wealth of robust first-party data powered by loyalty programs. Leveraging this data for use by brands is key to supporting relevant and timely communications.
4. Create a Full Omnichannel Experience
Retail media is not just a digital play, and for long-term success, retailers must offer omnichannel advertising capabilities in-store, off-site, and online. That’s why everyone should stop comparing themselves to Amazon. Amazon is an outlier in retail media and has been very successful in its approach. But as a predominantly pure-play online retailer, it can’t offer the in-store experience that most retailers can.
Retailers with brick-and-mortar stores can absolutely compete and offer something different from Amazon. While many retailers are undergoing in-store digital transformation, in-store retail media is already possible without it. Analog retail media—such as shelf tags, end-cap displays, or floor vinyls—are effective and can create in-store opportunities for brands that resonate with consumers.
5. Keep It Transparent
There has been a lot of discussion over the past two years about improving measurement in retail media, and for good reason. However, measurement will never truly improve until retailers commit to being transparency with their advertisers.
Transparency is crucial and should not be feared. In the long term, it is far better to show brands what hasn’t worked so that both the retailer and the brand can learn and ensure investment is spent on the right channels to drive the greatest top-line retail sales while boosting bottom-line profitability from ad revenue. Winning strategies can be repeated, while those that underperform can be adjusted or discontinued.
Sean Crawford is managing director of Threefold, part of the SMG agency network.
This is a ridiculous declaration. More fairy tale manifesto than econometric blueprint.
Retailers – spurred by Management Conslutants and Scrambling TechTitans – are chasing Google & Amazon & programmatic funds from CPG’s with the promised of “first-party” data. Slide the DSP model over and, et voila, generate new revenues. The problem is that Retailers only know the sales-side of their CPG clients who have been given no choice but surrender their shopper marketing budgets for mandatory RMN fees, without the displays, merchandising or pricing discounts. Meanwhile all the ad agencies and trade rags hold back their budgets trying to justify spends. They can’t get any ROAS data because the RMN can’t give it to them. Worse, shoppers are NOT engaging digitally. With fewer than 5% of customers ACTUALLY USING a retail digital app on a more than once monthly basis, the prognosis is not good. And the lack of price discount pass-through’s is the PRIMARY inflation problem at the moment. Sure, Kroger can claim to double their digital media revenue business each year but look at the actual grocery revenue numbers. All that “revenue” has been spent on infrastructure and digital staff. The RMN percentage increase may sound great, but starting at zero digital grocery revenue dollars has left them pretty close to zero impact, and any competitive differentiation is easily replicated by the other digital fools hired into other retailers.
Will someone with a brain please report on the facts and not the press releases?
This is not gonna get fixed any time soon. Meanwhile, customer prices remain insanely high. Bring back shopper marketing, coupons and BOGO’s.