Why have so many retailers, both large and medium, moved into retail media in the last three years? Bernd Bube, founder and CEO of ADvendio, explores how the advent of media networks is redefining retailers’ advertising plays
With eMarketer predicting that US digital advertising will be worth more than $52billion in 2023, McKinsey also estimates that 80% of advertisers currently use at least one retail media network in addition to Amazon. BCG adds that it expects retail media to grow 25% a year to $100billion over the next five years, eventually accounting for over 25% of total digital media spending by 2026.
Retail media was, from 2012 to 2020, a one brand business, specifically Amazon. Only in 2020 did Walmart launch its own media and advertising offer, and three years on its Walmart Connect business reported that Q4 ad revenue alone increased 41% from 2021, to reach a full 2022 total of $2.7 billion.
Retailers were initially prompted to get into retail media during the pandemic as it lost touch with its customers in-store and connected with them only online. Forbes, for example, reported in late 2020 that “a year ago, 81% of consumers had never bought groceries online, but during the pandemic nearly 79% of shoppers have ordered online,” signposting the significance of this accelerated shift to digital. Since then the spur to develop has been down to the restrictions caused by Google removing third-party cookies (delayed now until 2024) as well as Apple enabling users to block the identifier for advertisers (IDFA).
And today, the catalyst has been inflation, which has dampened consumer spending and made it tougher for retailers to maintain their margins even as their own operating staffing and logistics costs rise.
In order to give brands confidence of dealing with professional media organisations, most retailers have set up their own agency divisions. And retail media has been boosted by commercial TV with both Channel 4 and ITV’s video on demand services All 4 and ITVx working with Sainsbury’s loyalty provider, Nectar, as well as Boots and Tesco.
Tesco, with 20 million reward card members, 4879 stores worldwide and 500 in-store digital screens in the UK, launched retail media back in 2021 with its long-time partner Dunnhumby to create Tesco Media & Insight. In 2022, it claimed a 77% increase in campaigns working with 500 advertisers, 150 of them for the first time. Through its website and mobile app, Tesco has 65 million visits every month and offers on-site display advertising and relevant sponsored search, which it has been trialling since earlier this year but has expanded the range of product and category searches that brands can sponsor. In-store, with 11 million shoppers a week, it offers advertising through Tesco Radio, its Scan As You Shop devices and digital displays.
Morrisons, with 497 stores, was the last of the four largest UK grocers to get into retail media with the creation of Morrisons Media Group, which uses customer insight from its MyMorrisons loyalty scheme as well as ecommerce. Brands will have access to Morrisons-owned media channels as well as inventory through a central function.
Across The Pond, Kroger, the US’s largest grocery chain, has doubled down on data science to improve targeting for brand partners, and combines more than 3,000 different variables and machine learning so that it can identify households that are three times more valuable than the average Kroger household.
Away from grocery, ASOS, now supports social media campaigns, targeted emails, and app push notifications. More recently it has added sponsored ads in ASOS search results and product listings, client ads off-site and soon on connected TVs that use first-party user data. Roughly 150 brands currently advertise on its platform, and it aims to onboard 200 more. Eventually, it plans to work with 900 advertisers.
Boots created Boots Media Group based on data from its Advantage Card loyalty scheme, which currently has 17 million active members shopping at 2,300 stores and online. Boots was prompted to expand following a successful partnership with the TV reality series, Love Island which featured exclusive supplier products in the villa which viewers were able to ‘shop’. Boots Media Group has since launched a pilot partnership with rapid delivery company Deliveroo and its Online Doctor service.
With growth has come complexity and retailers large and small are finding that managing so many brand partnerships across so many channels threatens to obscure the value that they need to deliver to brands in order to win more business. Targeting is one thing, measurement is quite another and already the call is out to demand that retailers deliver greater transparency on performance, specifically the core metric of return on ad spend (ROAS).
The ideal solution is to use a single platform so that retailers can sell, book, and monetise media, manage financials and unify data, as well as plug into industry apps available through popular platforms, such as Salesforce.
Retail Media is the single biggest growth opportunity for retailers right now but the right systems to manage will be essential for the day that will come when they are having to compete for brand spend in a much more competitive marketplace.s was prompted to expand following a successful partnership with the TV reality series, Love Island which featured exclusive supplier products in the villa which viewers were able to ‘shop’. Boots Media Group has since launched a pilot partnership with rapid delivery company Deliveroo and its Online Doctor service.
With growth has come complexity and retailers large and small are finding that managing so many brand partnerships across so many channels threatens to obscure the value that they need to deliver to brands in order to win more business. Targeting is one thing, measurement is quite another and already the call is out to demand that retailers deliver greater transparency on performance, specifically the core metric of return on ad spend (ROAS).
The ideal solution is to use a single platform so that retailers can sell, book, and monetise media, manage financials and unify data, as well as plug into industry apps available through popular platforms, such as Salesforce.
Retail Media is the single biggest growth opportunity for retailers right now but the right systems to manage will be essential for the day that will come when they are having to compete for brand spend in a much more competitive marketplace.
