Retail media is a revenue juggernaut. With margins of 70-90%, it’s no wonder retailers like Amazon and eBay have jumped on the opportunity.
So, what’s the secret behind executing retail media effectively? It’s simple – first party data. Since the pandemic, retailers have witnessed increasingly digital-first consumer behaviour. But despite collecting a literal treasure trove of first party data, retailers are likely using less than 3% of it.
1) Retail media is a viable income stream for pressured retailers.
The industry is grappling with rocketing prices, heightening consumer expectations and straining supply chains. On top of this, Google has promised to phase out third party cookies by the end of 2024.
Retail media is an opportunity for retailers to innovate and diversify their income stream.
2) It targets consumers at the point of conversion.
Advertising is changing – always. The cost of digital media is increasing, so retailers are having to work harder than ever to improve their return on ad spend.
Retail media is a great alternative. It appears on a retailer’s digital properties – think sponsored ads and side bars. The beauty of it? Retail media combines advertising and customer data to target consumers in a shopping mindset – when they’re more likely to convert.
3) Retailers already have the data they need.
We’ve already said it, but first party data is the secret behind effective retail media. The good news is retailers are already collecting REAMS of customer data. They just need to activate it so they can show the right products, to the right customers, at the right time.
4) Data science and AI are the silver bullet for retail media success.
For great retail media campaigns, retailers need a good understanding of customer behaviour. For example, what products do customers buy? Where do they buy them? How regularly do they buy them? Which products are complementary or substitutes?
Data science and AI creates this insight and helps retailers set prices, forecast demand and, crucially for retail media, optimise marketing and media campaigns.
5) It’s getting easier to collaborate.
Retail media’s an opportunity for retailers to strengthen their relationships with partners and suppliers – via data clean rooms.
A data clean room allows two or more parties to identify any audience overlaps, without sharing personally identifiable information (PII). It’s a safe and secure way of collaborating which complies with GDPR. The result? Each party expands their reach.
6) Retail media margins are out of this world.
Traditionally, retailers have operated on slim margins – less than 10% (or around 3% in the case of food and grocery). Retail media’s 70-90% margins are an enticing proposition.
7) We’re already hearing a wealth of success stories.
Retailers like Amazon, Walmart and eBay are reporting prodigious commercial results from retail media. In 2021 alone, Amazon reported over $30 billion in advertising revenue.
Meanwhile, brands like Coca-Cola are also benefitting from retail media. The drinks giant reported a major increase in ROAS and incremental reach after partnering with over 25 US-based retail media networks.
8) Retail media is still growing.
It’s expected to become the fourth digital wave – and we know how big search, social and programmatic continue to be. There’s still time for retailers to innovate and differentiate in a busy market.
Now’s the time for retailers to take control of their first party data and understand how their customers shop.