By Hugh Stevens, UK MD at LiveRamp
2022 was the ‘year of retail media,’ according to e-marketer, and it is fair to say that 2023 has really seen the phenomenon enter the UK mainstream of digital marketing. Indeed, one need only look at the agenda of last month’s MAD//Fest event, and indeed our own session talking with Boots, much of which was dedicated to retail media, to see how eager marketers are to explore this developing field.
Retail media is essentially the next evolution of shopper marketing where retailers open up their bricks-and-mortar stores and digital estate to external brand advertisers in a privacy-centric manner. Once upon a time, retail media would have purely referred to physical promotions and partnerships across like posters and flyers or live product demonstrations strategically positioned to drive consumer engagement with the brand or product; in 2023, alongside these physical dimensions, retail media includes ads appearing on a retailer’s online store, mobile app and in-store digital displays, and the data being used to measure campaign impact from digital to in-store transaction.
Major retailers’ rich first-party data – such as long-standing loyalty card programs – have become hugely valuable sources of customer insights for marketers. For advertisers currently struggling to view the full customer journey, as shoppers continue to shift their buying behaviour, the potential to reach addressable audiences and understand customer habits across the purchasing funnel through these retailers’ media networks is becoming more and more attractive.
Indicatively, a recent (Q2 2023) LiveRamp survey of UK brand marketers revealed that 60% of respondents described retail media as “an important part” of their media plan. A further 35% of respondents suggested they are “increasingly beginning to adopt” retail media with the remaining 6% describing it as something that they would like to run test campaigns with.
Clearly, the opportunity is there for other retailers to create a fresh source of revenue by establishing their own – sophisticated – retail media networks.
Getting started on the retail media journey
Nevertheless, despite its rapid rise in prominence, retail media is an evolving field and all parties involved are learning what a successful, mature retail media network looks like. But with retailers now competing to deliver the best insights and largest addressable audiences, there are a number of crucial questions that retailers should ask before looking to start and develop their own offering. These include: does it offer key metrics such as incremental return on advertising spend (ROAS) and sales lift? Can it find net-new customers? How does it find people that aren’t part of the network? The path to success here lies in data collaboration.
The first and most important step in starting up a retail media network is organising first-party data and making its insights available across business. Indeed, in a lot of cases, valuable data can lie siloed within departments – whether it be the commercial or marketing teams. However, by making strategic use of enhanced data clean rooms, this data can be made addressable and actionable all within a privacy-centric environment. Clean rooms also crucially enable retailers to identify and build target consumer audiences for scale.
Retailers must carefully consider what sets these audiences apart and how they can leverage their USPs to attract brands to their network, e.g. smaller retailers with loyal customer bases and extensive data insights may stand out by offering targeted ads to specific demographics. However, for many brands in the market, scale will be key, as the larger the size of the addressable audience, the more potential partners these unique insights will be valuable too.
A common gripe among brands operating within retailers’ data clean rooms is that the addressable audiences they have access to are just too small to drive ROI. Therefore, as well as ensuring that new first-party customer data is being collected and prioritised, retailers should investigate partnerships with third-party data companies. For example, by combining in a data clean room demographic and attitudinal insight from market research companies, with in-house transactional and loyalty data, this can offer far more accurate and scalable reach to your brands. The ability to connect data outside of owned properties is a distinguishing factor in what makes a first-rate media network.
Long-term culture change and innovation
The principle of a retail media network is quite different to what retailers are used to, essentially providing an entirely new service to brands. This means there is a need to evangelise the business on the technology, expertise and thinking. Moreover, stakeholders’ expectations must be set accurately to allow some time for retail media networks to scale up in the right way.
However, when done correctly, the rewards are considerable. By focusing on delivering value to customers through a privacy-centric experience, while collaborating both externally and internally to respond to brand partners’ needs, retailers can unlock the full potential of their vast pool of up-to-date customer data through creating their own sophisticated retail media networks.
*LiveRamp is a client of Bluestripe Communications, owned by Bluestripe Group, publisher of ECA