Demand from shoppers for engagement through in-aisle digital signage and ads served at the shelf edge is driving the growth of retail media in-store. What do newcomers to retail media need to know so they can get their share of the spoils, asks Bernd Bube, CEO and founder of ADvendio
Because retail media was essentially invented by Amazon, in the early days it was easy to think that this was an online revolution, one where companies used their assets to provide marketplaces for third party brands. And maybe for some, this feeling persists, yet, look at the size of Walmart’s ad revenues, it quickly becomes clear that the store is the prize asset for retail media. The US’s largest retailer hit $2.1 billion in ad revenues in 2021, while eMarketer estimates this will hit $3.16 billion in 2023.
This has been welcome news for some years to other retailers in both the US and the UK, all of which have built separate units to offer a professional retail media ad service to advertisers, most notably Ahold Delhaize and Albertsons in the US and Tesco, Morrisons, and Boots in the UK.
The strategy has paid off particularly because now, consumer demand for curated ads from trusted brands is prompting retailers to tap even greater retail media opportunities and open up new revenue streams from monetising their firstparty audiences.
Our latest research, where we polled over 1,000 UK shoppers proves what has been shown for some time; that the impact of customer engagement via traditional advertising alone is diminishing, exacerbated by cookie depreciation and engagement levels on social media and PPC plateauing, prompting lower ROI on what were previously lucrative channels. The reason? Unpersonalised and poorly targeted advertisements and engagement strategies that over-rely on one channel (predominately digital) when an omnichannel approach is what’s needed. Over two-thirds (68%) of shoppers said they often received ads from retailers and brands that are unpersonalised or irrelevant, and 74% report they regularly receive ads for products they aren’t interested in. A further 68% also said they frequently get served content digitally that’s not relevant to them.
While this may come across as standard performance, neither consumers nor retailers are happy with the status quo. Consumers now demand content and personalised ads curated and served to them by the retailers they are already loyal to.
Half (50%) of those polled said they would like to receive highly curated, personalised advertisements and brand communications from the retailers they already shop with, rising to 65% of Gen Z and 62% of Millennials. Moreover, based on findings such as 38% of consumers saying they would be most likely to buy from a product recommendation they received from a retailer they already regularly shopped with, retailers see the importance of adapting how they leverage and monetise their own firstparty data and audiences.
This approach changes the inequities in the relationship between retailers and brands around advertising. Retailers continue to own and control their own data, without any privacy fears because it is not shared. In addition, the ability to influence shoppers before they start shopping when they get to the store or website and at the virtual or real shelf – or ‘prime, prompt, purchase’ as Tesco puts it – is a powerful one as it enables brands to focus marketing spend on particular groups such as current shoppers, lapsed shoppers, competitor shoppers or possible shoppers.
A further benefit to this personalised approach is the store is now the most impulsive shopping channel for 54% of UK consumers, a finding from further research by ADvendio among over 1,000 UK shoppers. This compares to 41% who make unplanned purchases when shopping online and 10% who bought on impulse on social media platforms.
What is clear is that, as ecommerce and social engagement reach a point of maturity, consumers are coming full circle and the shelf edge is now the next battleground for share of mind and share of wallet. And, because of this, retailers are turning to the store to explore – and invest – in ways to digitally reach and engage customers and, ultimately, influence their spending.
Consumers are noticing; in the same research, 61% of UK shoppers say they are now noticing more branded ads from third-party brands when shopping in-store, while 34% have been influenced to try a product having seen a digital advert at the shelf-edge in-store, rising to 50% of Gen Z.
