Each year, InternetRetailing starts to look ahead to the coming new year in a series of predictions. Today’s prediction focuses on what’s going to be big in the retail media space in 2024. Alban Villani, regional CEO for EMEA at CitrusAd, shares his thoughts on five key trends to watch:
Retail media is no longer limited to on-site and endemic brands
As retail media matures, retailers are starting to understand the opportunities of off-site media, and of selling ad inventory to non-endemic brands. Both are hugely attractive to brands: With the end of third-party cookies approaching, retailers’ customer data will hold the key to personalised customer targeting. In addition, The State of Retail Media Report found that only 37% of retailers currently offer off-site programmatic advertising – the rest are losing out on opportunities to increase revenue.
Those retailers who can master the art of reliably identifying customers on the open Internet, connecting with customers wherever they are and independent of which device they are using, will have the competitive edge. As will those retailers who can offer a unified retail media solution across on-site and offsite, with clear metrics for both that help brands properly attribute results and the success of their advertising campaigns.
We will see more new media formats
There is a clear appetite for retail media technology solutions that support new advertising formats including video and rich media. Channels such as on-demand streaming services and connected TV can be used by retailers and brands to deliver relevant and targeted ads to their audiences. In contrast, the practical reach of traditional linear TV campaigns is now only approximately 50% of their intended audience, according to Samsung Ads.
As streaming is becoming viewers’ default preference, connected TV presents an almost untapped but huge opportunity. It vastly increases the off-site advertising inventory and promises greater reach, capturing consumers at different points in their media journey. Plus, acceptance is growing amongst consumers who are willing to watch ads in return for free content.
Artificial Intelligence will power retail media growth
Brands are well aware of how powerful Artificial Intelligence (AI) is. Applied in retail media, it allows better use of the available customer data to more precisely target and measure advertising campaigns. Retailers can harness AI to improve the site experience, as well as for next-level personalisation. For brands investing in retail media, AI – used correctly – can make the retailer’s first-hand data smarter and more actionable.
In the next few months, we will see more retailers and brands employ Predictive AI to analyse usage patterns, identify customer intent signals and zoom in on their target audience with a granularity that they haven’t been able to achieve before. Coupled with using Generative AI to support the faster creation of personalised ads, this AI-based targeting will allow them to reach the right customers at the right time. Ultimately, advertising will be powered by smart technology that works in the background in near real-time.
Retailers are looking for new ways to monetise the physical world
One fast-moving trend is how retailers are finding new ways of monetising physical retail media, such as digital screens in stores. A study by Insider Intelligence found that for some leading brick-and-mortar retailers, in-store audiences can be considerably bigger than their online audiences. Retailers will want to capitalise on this in-store footfall. The challenge is how to target individual customers with tailored content – for example, using data from loyalty schemes –, and how to do it precisely and at scale.
This is a true omnichannel challenge as retailers will need the ability to make the connection between what they know about their customer and their location in real-time, joining the dots on the entire online and offline customer journey, to deliver truly targeted in-store advertising. They will also need to be able to analyse their data to close the loop on how both in-store and online advertising have affected online and offline sales. After all, return on ad spend is one of the most important metrics for nearly half of brands according to the State of Retail Media Report.
Retailers are outsourcing some of the retail media work
Due to the growing maturity, but also complexity, of the retail media market, more retailers are asking for specialist consulting services to help them understand and maximise their opportunities. This includes strategic advice on how retail media can be applied to their own business models, how to reach target customers with the most relevant content and how to measure and improve profit margins.
Increasingly, retailers are also looking for support with retail media sales. As their retail media offering sees growing demand, in-house resources alone are no longer enough; they need help accelerating their retail media growth. External retail media specialists can add another layer of expertise, complementing in-house sales teams and boosting the retailer’s ability to execute.
Some larger retailers will benefit from a full-service partner who can supply the retail media technology as well as the plethora of services surrounding it. While every retailer has different needs, for some brands, tapping into Retail Media-as-a-Service will be an interesting strategy alongside developing their own in-house resources, and this is another trend to watch in 2024.
Alban Villani, regional CEO for EMEA at CitrusAd