Simpatico PR’s B2B PR agency thought-leadership series Ahead of the Curve offers a brief digest of some of the newest thinking in marketing, technology and creativity that our team is working with on behalf of our clients.
The speed of change in retail media this year has been staggering. Twelve months ago, extraordinary figures about its potential growth were being bandied about. In the UK for example advertising investment is predicted to grow from £5.3bn in 2024 to £7.9bn in 2026. Tesco predicted retail media would end up bigger than linear TV.
These predictions seem justified given UK retail media hit £3bn in income in just seven years in comparison to social media which took 13 and search 17 years respectively.
But what is retail media and how does it fit into the advertising media investment planning picture?
Over the last twelve months we’ve worked with agencies, operational retail media network (RMN) experts, the retailers themselves as well as research companies to explain what’s happening. We’ve looked at immediate changes and opportunities in the retail media space, what brands need to do to get the best out of their investments in retail media networks and we’ve reported on audience and shopper behaviour and looked into the future to share the next steps in the evolution of the medium.
One of the areas we identified that we as a B2B PR agency should explore, explain and promote on behalf of our clients was understanding what the retail media eco-system looks like and how it integrates with other media.
The retail media Rubiks Cube
We talked about the evolution of retail media being like solving a Rubiks Cube. It cannot be done in one move, because it is a complex eco-system of different overlapping elements.
In a recent article in The Media Leader, our client Sam Knights, CEO, SMG explained:
“We already think about retail media as an ecosystem including data (sales, CRM, loyalty, contextual), digital commerce, in-store media, measurement and optimisation technology, and integration of the wider hinterland of media including TV, radio and OOH.
“The big challenge is integrating these elements seamlessly to maximise the return on brand investment and understanding how each element (and the interaction between them) changes consumer behaviour.”
Re-setting an industry’s concept of where the retail media audience is and how it behaves has been another challenge in a marketing industry where digital commerce in the form of Amazon and a multiplicity of brand DTC platforms have a strong share of voice.
We’ve needed to repeatedly point out that the vast majority of retail media audiences are not online. They are in shops. According to Office of National Statistics figures most retail sectors achieve no more than one quarter of sales online and for Grocery its less than 10%.
Beyond the Amazon retail media model
Which means for most retail brands, building a RMN does not mean copying Amazon. It means investing in in-store media and aligning those touch points with online estates as well as third party media such as CTV and OOH.
Another article by Sam Knights, CEO, SMG for The Drum, explained how shopping had influenced consumer’s media consumption behaviour over the last decade.
“Shoppers want a seamless retail experience, and they expect seamless communications that are contextually relevant, enhancing their ability to shop and their enjoyment of the process. They don’t think about touchpoints.
“Since SMG launched 15 years ago, the shopper mindset has changed beyond recognition. What we’ve seen over the years is the gap between a mindset receptive to brand messaging versus the shopper mindset (being ready to buy) narrows significantly. Where brands used to create fame through marketing at the top of the funnel to increase conversion further down, by habituation, the gap between brand messaging and action is far closer for many categories – big ticket items obviously tend to be researched and are a slower burn.”
No retail media utopia
Underpinning the development of retail media is the ability to capture behavioural data across digital and in-store estates and integrate this with point of sales data, CRM and loyalty information. But creating the infrastructure to use data well is challenging and there is a problem. Many retailers simply do not have the quantity of good first party data to optimise retail media campaigns effectively.
B2B adtech PR is never simple. In a piece for Nick Graham is a senior consultant at Kepler in The Media Leader we helped explore the challenges retailers faced in creating RMNs particularly in terms of the data they had available and measurement of results:
“Some groupings will be bigger and better than others. Larger retailers will invest in technology to have more control of the data, activation and measurement. They may also expand their media offering beyond their digital outputs and focus on in-store, video and audio. This will see a more manageable market emerge.
“While the publishing of the first Retail Media Measurement Standards for Europe is a positive step, there is still a way to go as the IAB addresses the need for standardisation of audience measurement, creative formats and brand-salience metrics.
“The idea that retail media could become some kind of advertising utopia offering a cohesive single alternative is wide of the mark. But, by the end of the decade, we could be looking at an enormously powerful ecosystem providing another focal point for scaled investment alongside search and social, but this time offering performance marketing.”
So how should brands invest in retail media right now?
In an article for The Grocer, Katie Streeter-Hurle and head of strategy, SMG asked: “When it comes to retail media, which fmcg brand advertiser are you?”
“In broad terms, we’re seeing that fmcg companies in the UK fall into three categories when it comes to retail media.
“Sitting at the advanced end of the scale are large multinational brands with significant in-house marketing resource, and the right combination of data and experience to deliver strong performance. They have budgets big enough to allow for test and learn investments, and this is enabling them to learn fast. Some are developing retail media divisions that are entirely dedicated to this pursuit.
“At the other end are small challenger brands, emerging out of the startup phase and achieving listings in large retailers. Historically these brands found the cost of retail media prohibitive, but the scaling of biddable channels on e-commerce platforms is now giving them a ‘way in’.
“And then there is the middle territory, probably representing the biggest proportion of brands. Medium-sized brands have both the biggest challenges and the biggest potential gains to make from retail media investment. These brands will have enough budget but often don’t have the marketing infrastructure or on-call agency knowledge to embrace retail media optimally.”
The impact of in-store media
Leveraging robust research is always a plus for a B2B PR agency. Co-op Retail Media Network’s study with Circana, which found that its convenience retail media not only boosts sales in Co-op, but also generates up to four times more sales in surrounding grocery stores.
We penned an article in Internet Retailing for Kenyatte Nelson, CMO, Co-op which explained the halo effect retail media in Co-ops had on brand sales across shops in a wider area.
“There’s shopping and then there is convenience shopping. We all know there’s a difference because the majority do both every week – whether that’s a repeat online grocery shop, a planned trip to the supermarket on Saturday morning, or a more frequent, convenient trip into a local store on the way home from work.
“The convenience experience is quite distinct. It is usually an unplanned shop. Rarely is a shopping list involved. Yes, it can be about plugging a grocery gap at home, but often it’s an impulse action and can result in experimentation and inspiration with the chance to try something new.
“Now that this distinctive human experience has become a media channel, we are beginning to understand its impact on shoppers in more detail, and we are starting to prove that convenience shopping has to an extent, a symbiotic sales relationship with other forms of retail.”
B2B PR thought leadership development never stops so we’re looking forward to the SMP and Path to Purchase Institute Retail Media Summit where leaders from the FMCG brand world, retail, marketing agency and adtech fields will congregate to discuss the next chapters in the retail media story.
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