The key measure of retail, or any media for that matter, is the extent to which it contributes to (profitable) brand growth.
We know from the pioneering work of Byron Sharp and the Ehrenberg-Bass Institute for Marketing Science, encapsulated in the book “How Brands Grow” that, for FMCG products, this is via acquiring new customers. A strategy based solely on encouraging existing customers to buy more is likely to fail as a consequence of the “double jeopardy” law.
And we know that the three key ways to achieve new customer growth are :
Taking each of these in turn :
1. Physical Availability
There are two key elements of this:
a) Growing our “Physical Distribution” ie increasing the number of physical and digital stores which stock our products
b) Having high “Retail Presence” within those stores. By Presence we mean a combination of shelf space and offshelf display and being highly visible to those customers who are purchasing the category in which our brands compete.
Growing physical availability typically requires interaction with retailers and so tends to be the domain of sales or commercial teams.
2. Mental Availability
The key drivers of mental availability are some combination of awareness / memory association and product consideration supported by distinctiveness in brand assets (especially packaging and messaging).
Growing mental availability requires consistent, always on, advertising and distinctive brand assets and this tends to be the domain of the Marketing or Brand agency teams.
3. Staying competitive means ensuring that pricing and product attributes are in keeping with the brand’s strategy relative to competition (which will vary depending on each brand’s value proposition).
When brand owners come to choose where and how they spend their media budgets, retail media has some significant advantages vs traditional media.
Not only does it contribute to “mental availability” by growing awareness and consideration in the same way that traditional media does, it does so whilst also :
a) Increasing retail presence
b) Guaranteeing perfect reach (ads are not shown to customers who are unable to buy)
Retail media increases a brand’s Presence by amplifying its onshelf viewability and shoppability, driving offsite display and making brands visible to online category shoppers who may never have seen, and therefore were unable to consider, the product during their search or navigation based shopping trips. This, by the way, is a key issue for almost all but the biggest brands and one that retail media uniquely solves. Online sponsored product ads more or less guarantee that new and existing category shoppers will see and consider the brand in question whereas many grocery brands sold online are mainly considered, and therefore bought, only by their existing customers.
So, given retail media is a key, and arguably the primary media choice, how should it be measured ?
The answer is by a combination of :
1. Customer growth and penetration
2. Contribution to growth in retail presence
3. Contribution to growth in awareness, recall, consideration
With due attention given to the relative cost/value equation of achieving the above.
This requires brand owners to know their customer user numbers and penetration scores (by market, region and key retailer) and to assign a value to their growth. Similarly, they must find a way to measure their retail presence and “mental availability scores” and to know what relative weighting and therefore effort to apply to each.
Measuring individual campaigns by their sales growth is largely a waste of time as there are so many factors at play that can influence changes in sales and its the aggregate impact of successive campaigns with the audience in question that matters .
Measuring new (or returning/lapsing) customers is the most important measure supported by the two key growth drivers of retail presence and mental availability.
Retail Media Operators are advantaged vs traditional media operators as they are able to measure the above with high accuracy. Traditional media owners have to rely on proxy measures for reach or mental availability and are not able to track the extent to which these drive new customers or customer growth. Neither are they able to increase retail presence, make it easier for customers to buy the brands (eg via click through to basket) or eliminate wastage from their channels.
Retailers who make it easy for brands to track these measures will have an advantage over those retailers who don’t, but the responsibility for brand growth is with the brand owners and they must find ways to measure retail media effectiveness and not depend on retailers to do it for them.
If there are brand owners who are interested in learning how best to do this we are happy to help.