There are three key benefits for retailers from a retail media network:
1. Improving the customer experience
2. Growing sales
3. Generating media income from advertisers
Well placed ads create value for customers beyond just the offer itself, they can speed up the shopping process, remind, inform and entertain. They are highly personalisable and increase conversions and grow sales. They also can generate huge income streams as brands compete to show their ads to undecided customers who are looking to make a purchase within a particular category.
Amazon generates more than $30 billion in ad income, major USA retailers are generating in the low $ billions and UK supermarkets in the £ 100's of millions.
Retail Media requires clarity of strategy, the right technology and operating model
Retailers need to consider how best to balance the 3 core goals, where to place ads and what type of ads to show and how they help customers through the shopping journey. For example sponsored ads for Ariel or Persil after a customer searches for "detergents" or "washing powder", enabling brands to sponsor certain key pages, showing explainer videos or special offers on the appropriate pages.
Retailers can also buy ads on behalf of brands on 3rd party websites that show only to customers who are known to the retailer.
Technology is needed to serve ads using adtech from companies like Criteo who use AI to mine search, contextual and historical purchasing data to show the most relevant ad for a particular customer in order to optimise their chances of buying and of optimising ad income.
Adservers need to integrate with a varierty of data sources including product availability, customer shopping habits (derived from loyalty programmes) and web browsing behaviour.
They also have to integrate with the DMPs that are used by media agencies to set up campiagns and bid for their preferred audiences and ad slots.
Operating model involves multiple stakeholders, new roles and new processes. Leadership and effective programme management skills are key.
There are multiple stakeholders involved in retail media projects with almost all key functions from e-com, retail ops, marketing, commercial, IT, legal and finance involved.
New roles are required to set up and manage campaigns and to sell these to advertisers. Advertisers are typically either the commercial teams who are working with the retailer to optimise distribution, availability and marketing or their specialist media agency partners. Many retailers are choosing to create specialist in house or outsourced retail media teams to carry out these tasks.
Thought must be given to the people and processes involved and especially the overall programme leadership and governance and how it integrates with the core retail business.
We can advise on the objectives, strategies, technology, people and processes required to win. We can help with set up, getting started and ongoing programme management.
Steve Gray designed and led Tesco's retail media business whilst MD at dunnhumby which was also became the template for Kroger in the USA, Sainsburys in the UK and many other retailers worldwide. This team continues to generate £100's of million in incremental advertising income from suppliers and advertisers. Steve has also worked with Carrefour, Asda, Waitrose, John Lewis and Boots on retail media projects