By Laura Chaibi, Director of International Ad Marketing & Insights at Roku
The advertising ecosystem is witnessing a seismic shift as retail media advertising revenue is projected to eclipse traditional TV revenue by 2028. The allure of retail media has been significantly amplified with the phasing out of cookies and the dwindling availability of third-party consumer data in the digital market.
Retail or ecommerce platforms like Sainsbury’s, Tesco, Boots, Amazon, among others, are now seen as gold mines of first-party data, enabling advertisers to sharpen their targeting and measure the sales uplift from their ad campaigns.
A striking manifestation of this trend is the increasing partnerships between major retailers such as Tesco and Boots and broadcasters like ITV. By integrating data from retailers’ loyalty programmes or registration databases, with broadcaster first-party data, advertisers can now hone in on target audiences exposed to TV ads and assess the impact of TV ads on immediate sales. According to IAB data from the top markets like the UK, France, Italy, Spain, Germany, and the Netherlands, 58% of grocery retailers have a retail media offer.
This model is extending into the connected TV (CTV) landscape, and brands like Walmart are further augmenting the potential for precise targeting and measurement with Roku directly built into the TV platform.
Ad measurement implications and back to the fundamentals
As streaming platforms are poised to capitalise on retail media partnerships, the promise of enhanced advertising effectiveness is on the horizon. With the focus on enabling retail media, a crucial aspect next to be addressed are the implications on ad measurement for long term effects from advertising, namely brand advertising. Industry professionals are noticeably examining retail media, questioning whether it qualifies as advertising or represents the ultimate evolution of in-store promotions transposed onto the larger screen.
It’s important to recognise that this isn’t the allocation of advertising dollars to shape minds and hearts, ensuring brand recall at the point of purchase when consumers are ready to buy. Instead, it appears to be a form of lower-funnel point-of-sale nudging, aligning with the primary objective of supply chain management to ensure efficient stock movement and adherence to quarterly earnings’ expectations. The fundamental question remains: Is this truly advertising, or does it function more as a pre-existing investment in the cost of goods sold, now rebranded under the term “retail media”?
The essence of this challenge stems from brands’ necessity for granular data to evaluate the incremental impact of their marketing across all touchpoints and to understand channel interplay.
Effective measurement requires a comprehensive framework embodied with a clear methodology and access to the right information to be able to calculate total unduplicated reach which is near impossible with so many walled garden media environments and privacy regulations and the meshing of internal data sources that are not fit for the current purpose based on their original design and use case.
Additionally, ensuring that ads are served as intended and averting ad bombardment across media touchpoints continue to be pressing concerns requiring continued industry attention.
Navigating through this complex scenario necessitates a ‘back to fundamentals’ marketing approach – to not confuse the purpose of marketing promotions with brand building, the former focused on nudging at a point of sales in a favourable way to the retailer or brand (i.e. buy one get one free, or two for one, for example) vs. the latter to building reach, acquisition audiences, awareness, mental availability and command the position of being the first brand of choice holding a certain market value. In essence, being in the consideration set before the consideration and ideally the only brand of choice in the eyes of the consumer.
Mastering the synergy between retail data and CTV
Retailers, through their loyalty programmes and first-party data, have emerged as pools of valuable insights into audience behaviours and preferences. This transition underscores the importance of effective measurement in TV streaming, which is pivotal for maximising the return on investment (ROI).
As the dynamics of CTV ad-measurement evolve, it’s upon the industry to cultivate a thorough understanding of the interplay between TV – and connected TV which has trackable actions – retail media, promotion dollars, and measurement. More innovation in TV streaming and connected TV advertising capabilities to interact directly with the TV will come and with it, advertising solutions and strategies to ensure brands and marketers are well-equipped to navigate this evolving landscape.
The fusion of retail data with CTV presents a compelling narrative of how data-driven advertising can transcend traditional boundaries, offering a more nuanced understanding of consumer behaviours and campaign effectiveness. Yet, it also casts a spotlight on the urgent need for a well-structured measurement framework to unlock the full potential of this synergy and the impact on long term brand building where nearly 50% of the impact of incremental sales is driven by creativity in the advertising communication, and sales effects.
Ideally, an independent and holistic advanced measurement solution should be accessible to help brands distinguish between multiple marketing and advertising levers used on the same screen – retail media and brand advertising.
The journey towards unearthing the potential of retail media ads – both as a promotions and brand advertising vehicle – in the CTV space is the next evolution and it will be as much about mastering the established fundamentals of measurement as it is about embracing innovation.
Building on fundamentals
As the industry strides forward, revisiting the fundamentals of ad measurement, aligned with the evolving digital privacy norms and retail data availability, will be instrumental in shaping further accountability and a robust advertising ecosystem that justifies TV level investments in advertising.
It’s also important that we don’t make retail media the equivalent of search in the online world with a potential over attribution, as some TV advertising impacts may take over nine months to manifest, particularly concerning brand attributes, changing brand perceptions and brand associations. This delay is notable in cases where brands construct mental connections to categories or unexplored areas, such as high-profile sports sponsorships without immediate sports-related associations. Moreover, the collaborative synergy among retailers, broadcasters, and streaming platforms forms a robust foundation for a data-centric advertising future.
Encouragingly, robust econometric studies and mixed media modelling, which are the fundamentals of TV measurement, are making a strong comeback for omnichannel strategy with cookie deprecation. ‘Building on the fundamentals’ of measurement will be a prime focus including how the mechanics of ‘promotions dollars’ change as they move into more digital environments including across the TV streamer’s journey with emerging connected TV direct response advertising capabilities. From powering on the TV through to purchase complete, there will be an array of choice and channel optimisation evaluate.
In the meantime, progressive and established brands continue to evolve and experiment with new capabilities and their measurement solutions to see the benefits TV streaming brings to their ability to achieve their marketing and measurement objectives.