What most people are missing about retail media

What most people are missing about retail media
Tesco retail media (credit: Dunnhumby)

Measuring the effectiveness of campaigns, and then using those insights to inform media planning, is where the true value of retail media lies.

Retail media is maturing, but not in the way most people think.

Yes, we’re seeing digital transformation, with some retailers quadrupling the number of digital screens in the past 12 months. And others are already starting to track the conversion rates of wobblers and endcaps.

But we’re moving to a point where we’re closing the measurement loop for marketers, where brands can track the effectiveness of an advertising campaign down to the SKU.

Soon, we’ll start to see programmatic capabilities for buying in store on retailers’ digital screens — something that will enhance the opportunities again and, with it, change how brands buy media.

In-store opportunity

According to research, 75% of retail sales are still made in store. The closer you are on the path to purchase, the more critical the right message in advertising becomes. And the return on effective in-store activity is impressive, with a return on advertising spend of 5:1. It’s where brands want to spend their money.

Retailers are in a unique position, through transactional data, to understand consumer behaviour. Even if retailers are not ready to solve some of the in-store measurement problems, the desire to do it is certainly there. They know they’ll need to in the future. And brands want access to that data.

Advertising budgets will follow the channel that can deliver the best measurement.

Nielsen’s global marketing report recently found that barely one-third of marketers measure their traditional and digital marketing efforts together. Audiences don’t consume media in silos — and neither should measurement.

Improved reporting

Technology and useful clean data, combined with advancements within AI, now mean retailers are able to understand their customers better and help marketers know what is and isn’t working from a media spend perspective.

See it, click it, all the way through to purchase and down to SKU level. Being able to combine digital and traditional advertising reporting has been talked about as the future — omnichannel marketing at its best. And we’re starting to see it now.

Measuring the effectiveness of campaigns, and then using those insights to inform media planning, is where the true value of retail media lies.

Using automation to understand what channels (off site) are resulting in the highest sales (in store) was unheard of just a few years ago. This rapid evolution is bringing bigger benefits.

The likes of Procter & Gamble and Unilever are starting to use that SKU-level data gleaned from campaigns to better inform their media strategy. A well-tuned retail media network will now be able to offer greater insights for joint business planning and we’re already seeing one or two in the UK with this capacity.

Dynamic and programmatic

Through conversations I’ve had with brands, marketers are already planning on how to best use in-store data. It will unlock an appreciation for how their audiences are engaging with their ads together with their products for the first time.

Campaigns are going to become more dynamic. Programmatic in-store will allow a real-time dashboard of what is being purchased and how digital and traditional campaigns are performing. It’s an evolution that will bring change in media planning and how campaigns are bought.

The IAB has spoken about the importance of measurement within retail media. AI advancements within in-store retail means it’s here quicker than anyone would have bet against.

It will be interesting to see how the relationship with brands and agencies develops as a result of this. Will it quicken the in-housing trend, given the priority that first-party data now has amid the deprecation of cookies? What impact will further AI developments have on agencies’ ability to aggregate multiple clients’ data sets and still provide an objective perspective?

I’m not sure yet, but much like the generative AI genie, retail media’s is now out of the bottle.

Troy Townsend squareTroy Townsend is CEO of Zitcha

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