In the dynamic landscape of digital marketing, strategies for reaching consumers are in a constant state of evolution. While search and social media have historically dominated the advertising scene, recent shifts in privacy laws and technological advancements have paved the way for a new era of marketing sophistication. Enter the third wave of advertising: retail media.
This emerging form of advertising, although hardly new, leverages retailers' first-party data, enabling brands to target consumers at the point of purchase. Unlike social media targeting, which relies on self-reported information that the end user chooses to disclose about themselves, retail media leverages actual shopping behaviours based on concrete transactions, making it a powerful tool in today's marketing toolbox.
The definition of retail media
The concept of retail media has been dominating industry headlines, event agendas, and boardroom conversations with much debate about what retail media is. We could endlessly theorise but, ultimately, retail media encompasses any media owned by a retailer that is accessible to brands or leveraged through first-party data partnerships.
Retail media is not new and has existed in various forms across retailers for decades. So what is causing the retail media ‘boom’? What is driving its rapid ascent to become the most effective advertising method in 2024? Arguably, there are three key drivers at play.
1. The modern-day messy-shopper journey
As shopping habits evolve, customers no longer follow a linear path to purchase. This shift challenges traditional broadcast channels, making it increasingly difficult for marketers to connect with their audience. Amidst this complex shopper journey, one constant remains: the checkout. Seizing this pivotal moment in the shopping journey is now more crucial than ever and is right at the heart of retail media.
2. The post-cookie Era
With the deprecation of third-party cookies, targeting methods relied upon in the past by brand marketers will vanish. This not only complicates the job of the brand marketer but requires a total rethink of how to connect effectively with audiences. Within this upheaval, however, lies an opportunity to innovate and find new, more effective ways to engage consumers. Enter first-party data (1PD).
3. The advancement of technology
Technological advancements, combined with GDPR-compliant data practices, have transformed how brands understand their customers. Whilst retailers have held this customer data for decades, rarely was this accessible to brands. Technological advancements have enabled customer data to become a scalable and legally compliant resource for brand marketers. By tapping into these insights, marketers can tailor their strategies with unprecedented precision and effectiveness.
The shift from traditional ‘shopper marketing’ to new world capabilities
In the UK, shopper marketing was typically used to refer to in-store media whilst retail media was often seen as synonymous with digital media. As discussed above, retail media encompasses all retailer owned media across the full path to purchase; the more traditional ‘shopper marketing’ capabilities as well as emerging capabilities based on leveraging a retailer’s 1PD. This is an important point; crafting an effective retail media strategy is not about channels, rather, it is about the audience a brand is trying to connect with. Conversations should be centred around the audience not channels because the channels can only be decided upon once we understand the audience. Audience first, every time.
I was chatting to a client recently discussing the shift from the traditional realm of 'shopper marketing' to new world capabilities. Whilst the growing options for advertising have undoubtedly played a key role in the advancement of retail media, it is not just about the number of options and the size of the toolkit. It is about the connectivity between channels; how do they work together to feed the desired objective? This is increasingly important in a world with a messy, non linear shopper journey.
Furthermore, with tools like Audience 360, developed by Boots Media Group, brands can target modelled segments of Advantage Card holders across platforms like Meta, ITV, and Channel 4. This allows for a deeper understanding of how onsite, online, and offsite channels connect and influence consumer behaviour, a level of insight that was unimaginable 20 years ago.
Rethinking the relationship between retailers and brands
It would be remiss not to also mention the evolution of the relationship between brands and retailers. Historically, there was a perception within retailers that suppliers were the enemies of a customer-centric plan (particularly where trade investment was involved). This mindset, however, has undergone a profound shift and both retailers and brands now recognise their interdependent relationship. This recalibration of power dynamics has ushered in more collaborative ways of working, with retailers increasingly open to sharing their data and insights for mutual growth.
Similarly, brands have adapted their approach, showing a heightened interest in new ways of working with retailers. Whilst the deprecation of the cookie has nudged this evolution forward, the primary driver stems from an acknowledgment of the evolving advertising landscape and the maturity of retail media measurement. Being able to prove something actually works, and demonstrate the % increase in metrics such as ROI and ROAS, enables marketers to reapportion and reinvest budget into the most effective channels for their audience.
This evolution indicates the growing recognition among all stakeholders that success in the modern retail landscape hinges on cooperation and mutual understanding. After all, we all have the same desire to deliver brilliant, customer centric plans. Which we at SMG, are a huge fan of.
About the author:Â
Rosie Houston has over 15 years of experience in retail and retail media. Rosie spent 13 years at Boots UK, during which time she developed the Boots retail media offering before launching Boots Media Group in partnership with SMG. Today, BMG is a full service, internal media agency that enables Boots to harness their scale, reach, data, connectivity, and brand equity to achieve high-performing connected campaigns. In her current role as Managing Director for SMG UK Retail Media Partnerships, Rosie is responsible for managing several key retailer RMN's alongside Boots, including ASDA and Co-op Media Network.
Rosie will be speaking at SMG's Talking Shop webinar, "Mastering retail media with Boots Media Group: The fundamentals" on the 18th of April 2024 at 11 am.
Joined by a fantastic lineup of speakers including Sam Knights, CEO at SMG, Matt Atlay, Retail Media Director at L'Oréal, Ollie Shayer, Omni-Media Director at Boots UK, and Victoria Keenan, Marketing Director at Bayer.
We'll be exploring the tips & tricks needed to execute retail media successfully and providing actionable takeaways that will help you supercharge your strategy. If you haven't signed up yet, make sure to register here.