Mars United’s Katrina Smart: why the retail media rocket ship isn’t returning to earth any time soon

In its simplest form, retail media is any omnichannel commerce touch point that’s been bought directly from a Retail Media Network.

Today, it is immensely important. It’s the most transparent audience targeting method for brands, as you can prove who you’re targeting and highlight what the specific action (e.g. a sale) was from that activity.

Through closed loop attribution reporting capabilities, it allows brands to better understand who they were able to reach, when and where you reached them, which creative was most effective and most importantly, who went on to purchase. Collectively, all these data points mean you can re-engage with them at a later date, when and where it’s strategic and impactful.

What truly makes it different?

This is ultimately the differentiator with retail media versus other commerce media elements or more traditional media touch points. Retail Media is key within commerce media and marketing because it enables you to do those things so elegantly and fuels more personalised and impactful loyalty efforts over time. This is what truly makes it full circle – a closed loop part of commerce media.

The industry’s entire premise and effectiveness is anchored around access to and effective use of first-party data from the retailer. Tesco (below) is by far the largest Retail Media Network in the UK outside of Amazon and is an excellent example. They have an incredible audience base through their Clubcard loyalty programme and have clearly tapped into their customers’ dynamic wants and needs, which is why they are consistently evolving their offering with new media touchpoints such as Scan As You Shop, ad capable handsets, and in store digitisation.

So why has retail media been so successful?

First, the pandemic was the initial catalyst for major growth. Though it (thankfully) feels like a million years ago now, being confined to our homes for so long really propelled the growth in online food shopping and ecommerce and supercharged digital and social commerce.

Second, retailers have seen just how much of a profit driver retail media can be to their businesses, all by utilising their own platforms and store ecosystems to get going. By monetising their data, insights, and ad capabilities, they are beginning to move from traditional retailer models to publisher business models.

Walmart and Amazon are always hailed as leading the industry, with the two most successful networks, but there are many others that are now catching up. The likes of Unlimitail, Mercado Libre and Tesco are some of the retailers at the front of the pack. With retailers’ in-store margins getting increasingly thin, retail media is becoming a growing profit centre to drive the bottom line.

Third, cookie depreciation has been a major factor. When Google announced this a couple of years ago, it dawned on people just how valuable their first-party data was. This resulted in a Retail Media Network boom, as it’s a cookie-less solution. Even after Google had a change of heart, this has done nothing to stifle retail media’s meteoric rise.

Consequently, retailers realised that they were sitting on a goldmine of audience data, which is why this development was such a major stimulus. Marketers’ push for first-party data will no doubt continue, especially given the depth and extent of the accessible information (including data on loyalty, membership, transactions, logins, and much more). We haven’t reached the peak of this cycle yet and we’re still some way off it.

Where do we go from here?

In the next 12 to 24 months, several key trends will emerge. Principally, we’re going to continue to see self-serve capabilities increase: where advertisers and agencies can go onto a self-serve platform that the Retail Media Network owns, and book their own media. Sponsored products and search have showcased most of the benefits already, but so too have the likes of Tesco, Sainsbury’s, etc. This will only continue to grow.

Looking at the US, Walmart just announced that they will be moving their managed service to a self-serve model next July. The UK is probably two to three years behind the US, so that’s the general direction we can expect to see.

We’re also going to see an increase in data clean rooms and how we’re leveraging first-party data. This will enable even more laser-focused audience targeting and those capabilities will only grow over time. Scaling off site will be the next step. While it is being offered by some Retail Media Networks right now, it isn’t being done at scale, and it’s still quite costly comparatively speaking.

Retail media isn’t going anywhere, but now the industry is starting to understand the true opportunity that it can unlock on both supply and demand sides. It is now fundamental to start testing, scaling, and finessing retail media strategies as part of the marketing mix to drive growth.

Katrina Smart is VP Digital Commerce – Europe, Mars United Commerce