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GUEST COMMENT The C-suite roadmap to becoming a profitable retail media owner

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Emma Dean, chief operations officer at SMG, details why it’s no exaggeration to say that retail media is enjoying exponential growth.

Emma Dean, chief operations officer SMG

This year, investment in retail media advertising in the UK alone is expected to hit $4bn and predicted to double to almost $8bn by 2027.

In the space of seven years, UK retail media advertising spend has reached £3bn and there are now more than 200 retail media networks worldwide and more are coming.

US retail media networks such as Walmart, Target, CVS and Walgreens have been heavily skewed to digital estate enhancement and are ahead of the UK generally when it comes to digital sophistication. This is in spite of the fact that most retail brands in the US have bigger audiences across their physical environments than their digital ones.

In the UK, according to recent ONS figures, digital commerce accounts for little more than a quarter of all retail sales across all categories, and for grocery stood at a shade under 9% last year. 

The rise of ecommerce has meant retailers are being hit by more costs on top of their existing store footprint, hitting their margins even further. Media and data can provide high margins, meaning it can play a significant part in retailer profitability. 

All of this suggests to C-suite retail decision-makers that retail media isn’t just a sideshow providing useful additional income. It is an integral element of overall operational and growth strategy. 

There is of course no one-size-fits-all approach, but retail media investors can structure their roadmaps to media growth around some key areas.

Consider your data capabilities
First-party customer data, loyalty data, point of sale data, behavioural data in-store and online, third-party audience data, and contextual data such as the weather, have combined in the retail media space to provide brands with an unprecedented opportunity to communicate with people across the path to purchase. Data is the fuel that is driving retail media’s stellar growth.

But let’s face it, not every brand has access to sufficient first-party data or a loyalty scheme large enough to add this layer to their proposition. There are alternatives. Third-party partners can plug-in data to create further information depth or provide historic learnings to inform media strategy based on vast quantities of campaign analysis.

Shopper data is also enabling retail media to integrate with multiple channels such as connected TV and digital out-of-home networks and is therefore becoming the core of many brand’s media strategies.

Arguably the first building block of any retail media network is data capability and an assessment of current and future data resources.

Using media to support your overall business growth objectives
Your retail media network will not operate in splendid isolation. It will become an integral part of your business operations. It is essential therefore to be clear about how the media offering supports your overall business positioning and growth objectives. 

In the context of consumer behaviour, it is essential to consider how your media network speaks to people and understands them on the path to purchase.

Running a sustainable retail business relies on putting the shopper first. If shopper behaviour doesn’t change, sales won’t increase, and brands won’t invest. Successful retail media networks will prioritise effective campaigns over simply selling media and aim to create retailer, brand, and agency collaboration.

Basic, Better, Best – measurement and omnichannel 
If you don’t deliver results, you won’t attract repeat investment. Advertisers demand increasingly transparent and sophisticated measurement across every touchpoint. 

Plugging in historic data optimisation resources to facilitate more effective client planning can make a huge difference. SMG’s proprietary software, Plan-Apps, is geared to enhancing performance through learning, having measured more than 15,000 in-store campaigns.

Meanwhile, omnichannel status can only be achieved by connecting in-store media touchpoints with digital commerce and creating a closed loop of data capture, performance optimisation and results measurement. The difference between true omnichannel and multi-channel is significant.

Over the next year or so, moves to define national and international standards of measurement and predictive analytics will be key to future growth.

Get your physical and digital technology mix right
Not every brand can be Amazon, nor should they be. The biggest slice of the commerce audience is not online. It is in-store.  SMG’s own research suggests that consumer behaviour is blurred across digital and in-store. A minority 12% just do digital shopping. Meanwhile 45% just shop in store. But 43% of shoppers do both.

Behind the retail media publicity, retailers are facing a fiendishly complex task in unifying and effectively managing their physical retail stores and infrastructure with their media and advertising estates in a way that will make retail media commercially viable.

You’ll need to build a phased, long-term approach to technology investment that will provide the infrastructure to integrate commerce and physical operations, data creation, management, and optimisation, as well as delivering a great experience for customers, and of course brilliant results for client advertisers.

Brand visibility and leadership
One of the biggest challenges in the retail media space right now is fragmentation. There are many different options for brands and their agencies seeking to maximise ROAS through retail media and integrate it into wider media investment strategies.

Not only will you need to invest to create an effective proposition, but you will need to compete for share of voice. Thinking of your retail media network as a B2B brand and supporting it as a distinct entity that speaks to the interests and demands of your advertising customers is essential.

You’ll need to think like a challenger brand, with a B2B marketing strategy that uses thought-leadership PR and a speaker platform strategy that contributes to the debate about the future shape of the sector. 

Not every retail media network will succeed. But for those that have a sustainable and robust strategy, coupled with the internal and external resources to deliver results that secure advertiser loyalty, the rewards could be transformative and shape the future of retail brand success across every sector.

Emma Dean, chief operations officer at SMG

SMG are a keynote sponsor of the brand new event dedicated to Retail Media Networks.

Retail MediaX, held 11 June 2024, will explore the experiences of well-established retailers in this space to new entrants and the agencies who are helping make things tick. It aims to uncover any entry barriers and discusses what advertisers, particularly in the FMCG sector, should consider when making investments.

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