What Is Retail Media and How Will Brands Use It in 2023?

The definition of retail media has been murky to some but at the end of the day what sets this investment apart is its powerful ability to reach consumers in more personalised and relevant ways – at the point of sale. We define retail media as paid media placements within or connected to a third-party retail ecosystem. Investments into this space are becoming increasingly important levers for marketers with growing access to retailer first party data and improved audience targeting capabilities, not to mention their proximity to shoppers and the point of conversion. As the marketing funnel continues to collapse, enabled by digital, the consumer journey from awareness to conversion can be truncated in a manner of seconds, often with each step of the journey occurring in the same place. This is where retail wins the media arms race by connecting brands with consumers who are already within the ecosystem, signalling their intent to buy.

 

All of this sounds compelling but taking advantage of this growing suite of capabilities in the media space can prove challenging to navigate for marketers, especially when viewed in the same vein as their traditional media investments. While the costs associated with retail media placements are often higher, this is perhaps offset by the consumer intelligence that comes with it. Added value is also derived in the form of ‘soft’ benefits that cannot be calculated into a ROAS (revenue divided by cost) equation, such as shopper impact studies, incremental merchandising opportunities, competitor lock-out periods, etc. While retail media isn’t new, it has not yet reached a peak in sophistication where the rules of engagement have been fully established. Brands are contending with a new set of investment expectations that are ambiguous and difficult to financially rationalise to leadership. At the same time, retailers now find themselves in an unfamiliar position as content publishers.

 

But this new reality offers tremendous promise. In 2023, retail media provides a wide sea of opportunities for brands and retailers to align against shared objectives and co-author the playbook for the next era of media best practices and marketing sophistication. The key to success will be a holistic, consumer experience-centric strategy that genuinely understands the ecosystems in which retailers operate, brands live, and consumers engage to drive business growth.

 

With an uncertain outlook on the wider global economy for 2023, demand for and investment by brands for retail media will only continue to grow. When marketing budgets are tight, advertisers will rely on what draws the straightest line for them to sales, and by nature, retail media is a mid and lower funnel tactic for conversion. 

At the same time, the retail media landscape will continue to expand this year, with more retailers and platforms offering retail media solutions. No one has an unlimited media budget, and with more offerings, advertisers will need to be more discerning in the partners they chose to work with that can take their media dollars the farthest. Retail media, unlike classic shopper tactics, is truly connecting the larger brand budgets with media execution delivery that now must be accountable to sales. 

 

Retail media offerings are expanding beyond retailer first party data digital platforms, and to me, retail media has grown into more of a practice versus a product. At its heart, retail media is a lower funnel solution that reaches consumers at the right moments for them to drive retail visits and purchases. Marketers who look at media that drive these moments – even if the platform is not retailer direct – will find improved ROAS for their retail media strategies.

 

For example, this past year, GSTV launched a retail media solution, Amplify. While we are not a retailer, we are a digital video platform that sits at 28,000 fuel and convenience locations across America that offers advertisers a moment to reach attentive consumers in the purchase mindset. Brands and agencies leverage our media to drive consumers both into convenience stores on premise or to major retailers in close proximity. It provides an effective moment for marketers because immediately following a fuel transaction consumers spend more across top retailers, including four times more at big box retailers, 4.8x more at grocery shops, and 3.6x more at drug stores.

 

With more players entering the retail media space, a challenge for marketers will be where to place their buys. In some ways, with each retailer launching its own retail media network to offer access to their first party data, traditional retail media can be seen as a ‘tax’ to do business to sell in at a retailer. However, if marketers and agencies use finding the right moments to reach consumers ready to make purchases as their retail media north star, then the right options become a lot more obvious – whether it be in-store media, retailer direct digital platforms, or more contextual platforms [which are] less reliant on a subset of first party data alone, but make immediate sales impact.

I believe we will see more entries into the retail media network (RMN) space in 2023. Those that have an established brand will gain more market share and develop more unique targeting and omnichannel capabilities.

RMNs are curated media networks that bring together the power of the retailer's first party loyalty and site data in conjunction with onsite (retailer.com) and offsite ad inventory. Offsite ad inventory is a bespoke network of publishers that enable targeting of that retailer's first party data. This enables the scale and reach of a campaign. Brands and retailers can take advantage of these networks by utilising the robust first-party data spine to target consumers who are most important to the brand while using shopper trade dollars as the investment for these campaigns. Signal loss across the open web is creating a buying shift to retail media networks. RMNs will have the upper hand moving into 2023 and 2024 because of their unique data, onsite inventory, bespoke offsite ad networks, and their relationship with their customers.

There are three big challenges we are seeing with retail media networks:

The convergence of investment from performance media, brand and shopper trade dollars. All three investment areas are pushing into this space, making it hard for RMN to create strategic investments across all brands and their agencies.

Technology – The RMN space is a bit of the ‘wild west’. There is little to no standardised technology. Each RMN is built differently which means each agency and brand must approach buying in a unique way for each RMN.

Measurement – Measurement services are in a huge shift right now and that is no different for those that work with RMNs. This overall market shift is causing agencies and marketers a bit of turmoil as they sort through the new approaches (incrementality, etc.) on the market and if those tactics will work for Retail Media Networks. Also, if an RMN is standardised against one tech stack, does that stack have interoperability with the leading measurement partners? We are seeing a bunch of hiccups in that interoperability which leads to delays in reporting and insights.

The opportunities for RMNs and those who work with them really align with the top three challenges: if you can create more strategic and streamlined ways of buying and working, if the stack can develop to enable automated buying across onsite, offsite, and social; and when the measurement can become more widely adopted and streamlined – we will reach RMN utopia!

 

Recently, retail media has experienced huge growth as its enhanced capabilities are directly connecting a brand’s investment to ROI and retailers are looking for new ways to drive revenue. A 2022 Boston Consulting Group/ Google study estimated retail media will grow by roughly $74 Billion between 2021 and 2026, yet few understand how to harness its strength. So, what is it and how can marketers take advantage of it?

 

Retail media can be used for brand-building, sales or both. It’s important to map the appropriate strategy and tactics to the right objective, then use the retailer data to identify the right time and place to engage in the right way with their customers.

As the costs for retail media rise, brands are asking retailers to enhance their retail media networks with greater control over their investment and better data transparency. 

 

Looking ahead, there are many opportunities emerging across the retail media landscape:

 

Enhanced Measurement: Retailers are being challenged to elevate their closed-loop measurement capabilities, ensuring they can connect multi-channel campaign investment to omnichannel sales impact.

Data Integration: Retailers and suppliers are further partnering by co-mingling their first party data sets, allowing for a more strategic reach of key audiences.

Channel Innovation: Customer-led innovation will be focused on specific areas like AR, social experiences and new payment methods.

In-Store Opportunities: There will be more ways to engage with customers in-store as retailers create new experiences and re-invent legacy experiences.

 

The true winners in retail media – across brands and retailers – will be those that listen and respond to their customers. In the future, customers will demand more personalised, dynamic experiences and the responsible use of their data. As retail media networks evolve, customers will expect these standards to be maintained and direct their loyalty to the retailers that offer those possibilities. 

 

 

Recent figures suggest that retail media is on a huge growth trajectory and will only continue to take a bigger chunk of global ad spend. This means that competition on retail media platforms from 2023 is only going to become more intense. Brands can benefit from jumping on the media wagon ASAP. The sooner they crack the code for ROI, the better their position in an increasingly crowded marketplace. 

Retail media refers to an advertisement placed on a retailer’s website or app – from the home page, search page, and product page to cart and checkout. With retail media platforms, brands can track shoppers across their journey from browsing, scanning for information, and comparing prices to purchasing the products. This gives brands greater clarity on their ad spend effectiveness and higher efficiency as they target

shoppers when they are in a buying frame of mind.  

The challenge lies in ever-present, nonlinear customer journeys; customers may browse products on Amazon but buy them at a local store. A retail media platform alone does not paint a complete picture of the whole journey. Moreover, click inflation can occur when the competition rises, which sucks up the marketing budget. Brands will harm themselves by reactively focusing on price – ending up losing against companies with bigger dollars.  

The opportunity lies in steering away from looking at retail media as a siloed channel, but as part of an integrated ecosystem. As customers go back and forth across many channels before making decisions, brands should be visible where customers are to stay top of mind. Awareness plays a big role in driving buyer intent. Without creative brand-building activities, brands risk going unnoticed. By integrating data from different sources including retail platforms, brands can unlock meaningful insights and build a data-driven marketing campaign that resonates with customers.  

For retailers that benefit from an enormous revenue stream, they could develop more dynamic onsite and off-site ad options to drive better conversion on the platform.  

 

The use of retail media has grown steadily in 2022, as have conversations around how marketers and retailers can best take advantage of it. Looking ahead to next year, we can expect to see the continued growth of its use by marketers (25% per year to $100BN over the next four years), as it continues to transform the advertising landscape as we know it today.

 

Our 2022 global study shows that 94% of consumers are buying through digital channels and retailers are starting to realise that in the same way social media platforms capture the attention and engagement of consumers, they can use their digital properties for engagement. In the same way, retailers used to sell the shelf in the grocery store for trade promotion such as placing goods of certain value at eye level, they are now using the digital shelf as a place where they have brands compete for the attention of the consumers. 

 

Simply put, retail media is where advertisers are increasingly spending more to target consumers, using some of the largest consumer brands in the world as a new advertising platform. This shift in the advertising market means increased ad revenues for major retailers. Working in the industry, you can see all the forces coming together – with retailers changing their business model to become publishers. Retailers start acting more like media agencies on behalf of brands – with their own data on brand preferences in their ecosystem, connecting to advertising channels such as social media platforms.

 

Media agencies still have a lot of the skill base for media trading, audiences, planning and activation. But there are also new technologies and new partners helping connect what used to be independent silos to increased democratisation of data. This new avenue, however, is not without its headaches. While the increase in consumer engagement with digital channels isn’t going to decline, at the same time, a relied-upon method of segmentation (the cookie) is going away.

 

The upshot is brands are keen to understand how they find the consumers they want to target. If retailers can offer them customer insights, plus channels for advertising that offer clear ROI on attribution, that’s very attractive. The challenge right now is putting a value on that and changing the dynamic of budgets for marketing. The CMO is now working with their head of trade or the chief growth officer to decide what portion of the trade promotion budget is going to fund retail media.

Retail Media is unsurprisingly gaining attention in 2023, with it already representing 18% of global digital advertising in its short history. In the grand scheme of things, retail media is still very much in its infancy, with many large retail chains launching RMNs (Retail Media Networks) due to the pandemic e-commerce boom. While it seemed a no brainer for retail brands to monetise their existing digital real-estate and data arsenal, there is a large scope of untapped growth in areas of measurement, analytics, and operations.  

With the opportunity for product visibility and reaching target audiences close to point-of-purchase on the ‘digital shelf’, consumer packaged goods are likely to capitalise most on retail media, particularly smaller brands with lower budgets. However, this is just the beginning of the opportunity for advertisers who can harness a wealth of first party data in a post-cookie landscape.

As retail brands leap into the media owner space, they have almost passively become publishers as well. Buying with multiple RMNs will be a challenge for brands, namely in having a unified view of performance across these new ‘walled gardens’. Digital marketers are going to expect more if they are going to reallocate media budgets from other channels such as Facebook and Google this year. Much like the early stages of many digital spaces, there are concerns for brand safety and measurement of standardised metrics - something that will need to be a priority this year.

This is where experienced agencies and consultancies will excel in helping advertisers understand what success looks like, how to upweight their activity, and allow single-view reporting.