by Bernd Bube, CEO and Founder of ADvendio
Retailers and brands need no reminders that their on- and off-line assets are valuable to third parties. Amazon alone made $31.2billion in 2021 from advertising and there is lots more to come as the company pushes further into video advertising. The mindset change has therefore been made; the challenge now is how to take full advantage of retail media in ways that generate revenue of course, but also complement the experience that customers expect. If it is intrusive, irrelevant, inconsistent and poorly targeted, retailers risk turning their valuable assets – their customer data – into advertising junk yards.
Problems with getting started in the right way start with the simple fact that 81% of companies are still dependent on third-party data, which they do not own, may have no connection at all to their business, cannot be controlled in terms of accuracy, security or recency. And all this despite that fact that managing third party data has become harder since the advent of GDPR protections. The two types of data are actually complementary, but retailers should start with their own data and then enrich it using third party.
And they need to be able to manage the data. Research from the Path to Purchase Institute published at the start of 2023 indicated advertisers’ main challenge when working with retail media networks was data transparency and sharing.
Know the risks and get started
US grocery giant, Kroger, is aware of these risks, which is why it relies on its own data about its customers through its loyalty scheme to plot its ad strategy. Last year, its ad division, Kroger Precision Marketing (KPM), expanded its private marketplace launched in 2021 to include video and connected TV inventory. Advertisers are tapping into Kroger’s data to reach relevant households by applying first-party retail sales data to programmatic campaigns within their preferred ad-buying platform and reach 85million households.
On a smaller scale, but no less successful, online only grocer Ocado is delivering an average ROI to advertisers of 250% and has been in retail media longer than most. It offers advertisers the chance to reach customers through multiple channels – email, push notification, social media, and OcadoLife magazine. Key to the success of this multimedia approach is the advice Ocado gives brands on matching messages to media to customers.
Talking of multimedia, grocery chain Tesco is excited by the prospects for in-store digital as it adds to what is already the UK’s largest closed loop grocery media and insight platform, having rolled out digital screens in 150 stores this year.
The digital displays feature animated content to support in-store campaigns and new product launches and complement traditional POS promotional assets. Nick Ashley, Tesco MD at Dunnhumby, said at a recent event: “Retail media gives brands the opportunity to focus at scale on the customers that matter most to them and to target highly specific audiences. With advanced measurement at its heart, advertisers can be more sophisticated in their spending while seeing the true impact of their activity.”
Help is at hand
What all of these companies recognised was there was plenty of help at hand to build internal teams, meaning they are recruiting people from external channels that already have these skills, particularly the more rarefied experience from social media whose commercial advertising journeys have only just started. They can also tap into a wealth of software tools. The next step is about scale, having a sufficient number of campaign managers able to work with external agencies and media buyers, and also people able to work with new tech.
There is great comfort to be taken from the fact that it is still early days for most retail media owners and that everyone will make mistakes. There is no template and even so-called best practice should only be regarded as guidance. But retailers can rely on a wealth of external experience and the benefits of working collaboratively with partners, setting up iterative processes so that development always continues at pace.
For example, Paula Bobbett, chief digital officer at Boots reports: “Our journey is going well, and suppliers are invested. It’s about showcasing the rich data to show return on investment (ROI) – the more you do that, the more brands are willing to invest. Sometimes if a campaign doesn’t work, it’s still a learning opportunity and you can do it/ measure it differently in the future. Think of it like A/B testing on a website – you’re always testing and if it works you roll it out, if not, it stops.”