Retail Media Maturity: Growth stages

I’m Tayab Hasan and I’ve seen the retail media business of eight large global grocery retailers. Some at the forefront of what we would call best-in-class and some in the early days of their retail media journey.?

I’ve labelled retail media maturity into five stages and set out the revenue potential for each stage: Nascent, Aware, Emerging, Progressive and Best-in-class. What I’m also giving away is the magic number range for each stage. In other words, the percentage of e-com revenue the retailer can expect to be making according to the maturity stage they are in.?

The first thing I would do with any retailer is conduct an audit of the status quo to understand what we’re dealing with and what the path forwards looks like. This is different for every retailer.

Once a retail media audit is complete, a retailer's retail media business will fall into one of these five stages of growth. The next step would be to define the path that takes the retailer from here to the next stage. This is where you look at the retail media business wholistically; the product and tech, the go-to-market, the partnerships etc.?

Nascent - Media sales are negotiated Ad-hoc throughout the year and this is closely linked to commercial trading. Media is booked and served on a fixed-tenancy basis. Data around performance i.e. customer, impression, click through isn’t captured. There’s no dedicated effort to secure media revenue beyond the merchandising team’s commercial negotiations.?

Revenue capture ability: between 0-0.5% of e-com revenue

Aware - Media is sold separately to commercial trading and is sold in annual bundles. Typically this would be fixed tenancy display assets. Some data will be captured at a basic level and there will be limited targeting abilities (limited to demographics). No ability to analyse or segment any of the data or audiences.

Revenue capture ability: between 0.5-1% of e-com revenue

Emerging - Some media is sold by dedicated media sales team and with a clear rate card. Media sales are disconnected from annual commercial negotiations. Customer data is captured and customer insights are used to plan campaigns. Multichannel reporting solutions often delivered by data delivery solutions like Tableu. Clear process and governance with some level of automation.

Revenue capture ability: between 1-2% of e-com revenue

Progressive - Dedicated media business unit handles all media with a product roadmap to keep advertisers engaged in ever-increasing annual spend. Dedicated teams sell, plan and execute planned guaranteed media and provide strategic support media for adi types. All media pricing is aligned with consistent pricing models that link to a tiered rate card. Balance of fixed CPM & CPC propositions for both planned and ad hoc media. Enhanced targeting using offline and online data.

Revenue capture ability: between 2-3.5% of e-com revenue

Best in class - On-site and Off-site advertising campaigns. Media is planned and booked via self serve solutions. Self serve insights and post campaign reporting. Media planning revolves around relevant audience targeting. In-flight campaigns are continuously optimised for performance. Private auctions and demand based flexible pricing based on yield/inventory management. Significant revenue comes from enterprise platforms and agencies for performance and brand activations. Extended team to support multichannel activation that includes dedicated developers and product team. Media proposition roadmap aligned to marketing and customer strategy roadmap.?

Revenue capture ability: between 4-6+% of e-com revenue

What next?

Depending on where your retail media business sits and your current capabilities, you can determine your path forward to the next stage.?This is where the fun begins.

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