Lyndall Campher, former media director at L’Oréal and group director at UM, Mindshare and MediaCom explains that retail media demands a new kind of organisational layout than traditional media.
There have been a plethora of articles written about retail media, especially since the Stanley Morgan Report was released in December last year.
It has been predicted by the IAB that the size of the market will grow from some $850 million to approximately $3 billion over the next few years, possibly as soon as 2026.
Morgan Stanley posited that this growth will be at the expense of traditional media to the tune of $1.1 bn, which has aroused much comment.
Some other aspects of this trend deserve consideration as companies learn to maximise the effectiveness of all their communications.
The Importance of Dovetailing
We anticipate that there will be a further blurring of the lines between what we used to call Above-the-Line media (ATL) which was focused on broad mass reach media e.g. Television, radio etc. to Below-the-Line media (BTL) which tended to be more narrow-cast; media options such as retailers’ websites, catalogues, and instore audio to drive sales. Digital communications, initially a narrowcast medium, has evolved into broadcast media and now forms an integral part of ATL.
The status in most marketing organizations is that the sales teams undertake the negotiations to take up options to spend on retailers’ media as they negotiate shelf space, retailer promotions, gondola ends etc. Depending on the organization, there is full or limited participation by the marketing team, media agency or internal media department.
A lack of synchronicity can result in too much emphasis on certain target audiences and too little on others.
The implication is that organizations are going to have to change their way of undertaking negotiations with retailers. They need to involve assistance from marketing, media agencies and media divisions to dovetail all communications and so achieve the best possible reach and frequency combinations.
Retailer Offering Fragmentation
The retail media landscape in Australia has become more fragmented as illustrated by the different retailer set ups below: Now, advertisers have to deal separately with a whole list of retail media platforms:
- Coles 360
- Cartology (Woolworths)
- MixIn (Dan Murphy’s and BWS screen network)
- Myer Media Network
- Amplify (David Jones)
- Catch Media Network
- Kmart Group Media
- JB Hi-Fi Solutions
- Harvey Norman Media
- Officeworks Media
- Bunnings Warehouse Media Centre
- Chemist Warehouse
- Priceline.
Retailer ads can take on very different forms or formats, the list below from the Retail Doctor Group includes what is available to advertisers currently:
- Audio Ads: tapping into the rise of podcasts and music streaming.
- Dynamic Creative: ad content dynamically updating in real-time, based on the shopper and personalised context.
- Signed Media: retailers forming exclusive partnerships with brands in certain categories.
- Digital OOH: digital billboards, signage, and mall media offering bold impact.
- Voice Commerce: ads on voice assistants guiding consumers to purchase.
- Connected TV: streaming ads reaching cord-cutter audiences.
- Shoppable Video: interactive video seamlessly bridging entertainment with shopping currently being pioneered by News Corp.
- User Generated Content (UGC): customers co-creating compelling digital content around products.
- Retail Media APIs: open APIs allowing advertisers to directly tap into retail media platforms.
- Business Messaging: leveraging mobile messaging apps for customer engagement.
- Product Sampling: brands providing free product samples to key retail media audiences.
- Influencer Marketing: Collaborating with social media to promote products.
- QR codes: using scannable codes to unlock deals, product info, shopping features.
One could also add in Affiliate Marketing which is an advertising model in which a company compensates third-party publishers to generate traffic or leads to the company’s products and services. The third-party publishers are affiliates, and the commission fee incentivises them to find ways to promote the company.
As the above examples demonstrate, the possibilities with retail media which span the omnichannel spectrum are extremely varied. To stay ahead of the curve, retailers will need to “test and learn” different formats as an example, e.g. Live streaming which to date has not had much traction locally but is set to grow, based on Chinese retail experience as have TikTok shops.
JBPs and APIs
The one area that is becoming critical to the success of retail media is the signing of JBPs (Joint Business Partnerships) between advertisers and retailers whereby shopper data and behavioural data of customers can be negotiated as part of the value exchange between retailer and advertisers. In addition, APIs (application program interfaces) should be included in the JBPs so that advertisers can have direct access to the reporting of sales and the ROI delivered: thereby owning ‘the last mile’ of the shopper journey. The current situation is that there is little, or no reporting being delivered to advertisers.
Advertisers need reporting at all stages of the consumer journey: from awareness to interest to consideration, desire and, finally, sales of the products or brands.
It is important for advertisers to ensure that their advertising agencies are involved so that retail media is an integral part of the media mix and can be used to dovetail brand building with retail media or alternatively, use retail media to focus on different segments of the audience, whilst ensuring coverage of a different segment. As an example, most retailers still rely on linear TV to reach the all-important grocery buyers and older segments of the market, whereas the brand advertising could focus on the younger element by using TikTok or gaming.
The rise of retailer media in terms of money and sophistication necessitates adaptation and increased skills across the spectrum of advertisers, media agencies and retailers to maximise effectiveness.
