Why success doesn’t just mean being fast, it means being good as well.
Whenever I watch surfers, I’m always struck by two things. The first is the speed at which they move when they commit to catching a wave. The second is the skill and grace of a successful run.
There are more than 600 retail media networks (RMNs) already in existence; worldwide spending on digital retail media is expected to reach $125.7bn in 2023 (up from $114.36bn in 2002); ad revenue from retail media is predicted to pass that from TV by 2028. It’s obvious that the retail media sector is moving fast. To keep up, retailers need to know how to pick up the pace.
However, to win sustainably, being fast is not enough. You’ve also got to be good at what you do. Very good. As more RMNs are established, the long-term winners will be the ones that offer unique value to advertisers.
So what will set those RMNs that are fast-moving and effective apart from those that aren’t quick enough, or who move fast but wipe-out?
1. Be clear about what makes you different. Advertisers can’t work with all the RMNs currently operating, let alone the ones yet to be launched; they simply don’t have the resources. So, if you won’t win based on your scale (compared to market-leaders like Amazon or Tesco), what is it about your retail media network that’s going to make it different or better than what’s already on offer?
Can you leverage the strength of your brand or your relationship with your customers? Boots is a great example of this – people love and trust the Boots brand, and advertisers benefit significantly from Boots’ implied endorsement. Or does the depth and quality of your data create a unique asset for you? An example here would be Curry’s, whose incredibly rich customer data can power very effective, highly-targeted digital advertising.
To win, knowing what makes you different as an advertising owner and building on the strength of that capability is key.
2. Think carefully about how you’re going to take your retail media network to market. Today, retailers have huge financial opportunities to go after, but the risk and complexity in unlocking them is greater if you have a foundational retail media business (which almost every retailer does). If you launch new capabilities without careful thought and consideration, you may divert brand money to advertising that is expensive to run, cost-inefficient and margin-dilutive. You need a more nuanced go-to-market approach that drives total media network growth and attracts incremental spend from advertisers.
3. Build your capabilities in collaboration with your partners and suppliers. The more you increase the sophistication of your media offer, the more demanding brands will become, and rightly so. So retailers need to work with advertisers to really understand what they want.
The big CPG brands have always wanted control of their advertising, and we’re now seeing them building their own retail media divisions. By contrast, for small to mid-sized brands, retail media can unlock previously unavailable opportunities, such as access to Connected TV. But because retail media represents a very large share of their total advertising budget, they’ll probably require a managed service to help them navigate the opportunity and maximise the effectiveness of their campaigns.
All of this means you need to be building your service model in collaboration with your advertisers, and properly understanding their needs, because sometimes those needs may be the opposite of what you’d thought.
4. Integrate your retail media capabilities with trading and marketing. We’re seeing a trend for retailers to set RMNs up as an independent capability within the business. Retail media does genuinely require specialist expertise, so operating independently means you can make quick decisions about how you build the team, how you grow capacity, and so on, without the restrictions of being part of a bigger corporation.
But the reality is that it’s retail media because it’s happening at the point of purchase; the advertising is happening in your stores or on your website. That means retail media needs to be functionally integrated with trading, because it’s directly intertwined with the commercial agreements between you and your suppliers. It also needs to be integrated with marketing, to act as a massive engine driving growth in the scale, depth and value of your customer data, especially when advertisers are running campaigns with you offsite.
5. Measurement is not a nice-to-have, it’s the absolute foundation of any retail media network. All types of retail media are incredibly measurable, including in-store media, but with online you need to have closed-loop measurement in place from day one. Otherwise you have a leaky bucket; you get advertisers in and then lose them because they don’t know what’s paying back. The best way to drive growth sustainably is by growing advertisers’ ROI. And even if you run campaigns that don’t work, you need to be transparent about it, because that builds trust, and trust is what advertisers are looking for.
6. Get in the water. Because, like surfing, you can only learn so much by watching.