Why retail media is more than just a buzzword at Cannes 2023
Amir Rasekh, Director of Nectar360, discusses the significance of retail media at Cannes 2023 with Nich Weinheimer and Adam Skinner.
There’s been much buzz lately around retail media – long overdue, in my opinion. I’ve seen retail media evolve significantly over time, with the most notable changes over the last five years being onsite (e-commerce) and offsite (wider web and social media advertising based on first-party retailer data) as the main beneficiaries of this progress.
As a consequence, GroupM expects retail media to grow 60% by 2027 – a growth trajectory that is expected to outpace overall marketing and digital advertising investment.
The enabler is a scaled first-party data asset, which allows brands to engage customers brilliantly based on actual buying behaviour and directly measure the impact on sales, both in-store and online – transparency and ROI performance is the point of difference here vs. traditional media. In addition, the most sophisticated retail media networks, such as Nectar360, Amazon Ads, Target’s Roundel or Walmart Connect, have developed their capabilities to offer a super credible full-funnel proposition.
But as an industry, how can we stay ahead of the curve and make the most of what retail media networks have to offer? We will be answering this live in Cannes at a Retail Media Accelerator masterclass where Nectar360 will be joined by Accenture Song, Skai and CitrusAd.
In preparation, we caught up with Amir Malik (managing director at Accenture Song), Nich Weinheimer (EVP strategy at Skai), and Adam Skinner (global managing director, retail media networks at Epsilon/CitrusAd) to get the lowdown.
Retail media has been hyped as the topic of Cannes 2023. Why has it become so important?
Retail media provides a closed loop to sales, which means brand marketers can easily justify marketing investment, particularly as there is now greater scrutiny over advertising budgets. This new revenue stream, for many retailers, is important when margins are being squeezed to ensure value for consumers.
Amir Malik: I agree. Retail media enables retailers to create new revenue streams, leveraging their strong brand relationships, premium data, and digital/physical inventory. By leveraging this rich retailer data, which is brand safe, contextually relevant, and close to the point of purchase, brands are seeing far greater ROI. The ability to dive into how many customers are newly acquired, previously lapsed, purchased online vs in-store etc is incredibly valuable. Additionally, the closed-loop measurement (e.g. a loyalty card) that retailers can provide, enables brands to really understand the impact of their advertising on sales.
Nich Weinheimer: The hype around retail media isn’t limited to the French Riviera; it has been advertising’s most talked about channel for some time now. For retailers, it offers a wide profit margin at a time when efficiency and profitability are highly scrutinised. For brands, it offers direct access to rich first-party data, allowing for highly targeted and personalised advertising without third-party cookies, and measurable performance that ties easily to the bottom line. For consumers, if retail media can deliver on its promise, then better customer experiences should result. In a 2022 Skai survey, three in four consumers said they don’t mind being targeted with ads on Amazon – they actually find them useful in helping to make a purchase decision.
Adam Skinner: Brands are already allocating more budget to retail media and this will increase as we head towards the demise of the third-party cookie, as retailer first-party data and true identity solutions start to enable more brands to engage individuals in a privacy-protected way. Measurability is also driving the rise of retail media – whether it’s online sales from an on-site ad or, increasingly, off-site sales influencing in-store sales.
How does retail media bridge the gap between online and in-store purchasing, advertising, and tracking? Is it seamless or does it come with challenges?
We do this already at Nectar360. The current lack of standardisation in the market makes it difficult for brands and agencies to compare like for like, but progress is being made. For instance, Nectar360 is part of ISBA and IAB’s working groups striving to reach a sufficient level of standardisation.
AM: The power of retail media is its ability to provide that coveted closed-loop measurement which unites the digital and physical. For the digital advertising industry, this is already a huge step forward from third-party tracking and inferred measurement. For retail media, it is still relatively early days, so a few teething pains are to be expected, but these will be quickly ironed out as the industry matures.
NW: This new connectivity is not without its challenges, both for the retailer as it relates to systems and technology, but also for the brands as they wrestle with greater onus on marketing to the end customer, and the associated scaled investments retailers are demanding.
What’s more, nowhere in retail media does it say ‘digital.’ The long-term value to the retailer, brand and consumer is the promise of a cohesive, measurable brand-consumer connection across any consumer touchpoint. In fact, in the increasingly ‘phygital’ consumer path to purchase, the offline conversion still represents around 80% of retail sales (if you take pureplay e-commerce giants such as Amazon out of the equation).
In both digital and in-store conversion, retailers exchange identification for value: enter your phone number at retailer check-out, ensure you get the posted ‘member savings’. Your logged-in account will also ensure you get your member savings or discount pricing, and retailers can continue to map your ‘phygital’ buying behaviour. This allows retailers to tie your purchases to their omnichannel view of you as a customer, and it allows brand advertisers to better understand how much to invest in traditional shopper marketing activations vs highly measurable (and rapidly growing) digital shopper marketing activations.
AS: Retail media is everywhere – on-site, off-site and in-store – and influences both brick-and-mortar and ecommerce purchases. The challenge of joining up these channels can be solved with consistent and persistent identity solutions, but retailers need to make bold and potentially disruptive action to ensure their end-to-end adtech stack is built with a common identity layer, interconnected campaign management, and universal data structure.
The key takeaway? This is a rapidly evolving form of media that keeps the customer firmly at the core. When done right, it’s a win-win situation for brands, retailers, agencies and customers that no other channel can claim.
Also published in: The Drum