Retail Media Networks – The Future Of Shopper Marketing Or A Retail Revenue Play?

Retail media is nothing new. Retailers have advertised to their shoppers forever: and have been charging suppliers to advertise their brands in front of shoppers for a very long time. With the advent of online shopping, and the muscle of online giants such as Amazon, however, the growth of retail media and the rise of retail media networks is supercharging the retail media game. As the trend grows globally suppliers will need to make some big decisions. Are retail media networks an amazing opportunity to engage with shoppers as well as to build closer relationships with retailers? Or are they another cynical money-grab by retailers under pressure? Whatever you think about retail media networks, you will need to decide. Whether to invest is probably not an option. But when and how - that is the critical question facing every brand across the globe.

Retail media networks - the inevitable

The creation of retail media networks has been on the cards for a very long time. Retailers have long recognised that their shoppers represent a double opportunity. Firstly, as a customer to sell something to. And secondly, as an audience that has value to suppliers, and can therefore be monetised. Retailers have sold slots in mailers and point of sale material; space on gondolas, floor displays and space on shelves. Eyeballs, especially at the point of purchase, are valuable to brands.

Retail media networks - triggered into hyperdrive

The growth of e-commerce (spurred in part by the pandemic) has seen the explosion of retail media opportunities beyond the store. Recognition that the fees that retailers can get from advertising can add a huge amount to the bottom line has made retailers realize the sheer scale of the opportunity from selling advertising to suppliers. In some markets (notably the UK) this has triggered a reappraisal of in-store media. Opportunities for brands to communicate in-store were once scarce and rationed: now they are open (to the highest bidder). Retailers have truly 'crossed the Rubicon' - moving from a focus on selling products, to a focus on selling shoppers as an audience.

Retail Media Networks - is the retailer a customer or a media provider?

Retailers are hungry for marketing dollars. Retail margins are thin, and under pressure. Store operations are under pressure in most parts of the world. Total floor space is growing faster than sales (as channels such as convenience stores and discounters continue to lay down new stores), Operating costs (energy, salaries) are growing. Suppliers are pushing price increases yet there is a perceived need to stay fiercely price competitive. And of course online shopping adds a new competitor set, and new investment requirements for retail operators. It is little wonder that retail media in general and retail media networks specifically, are so attractive.

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In many markets, such as the US, Retail Media Networks are already taking a sizeable chunk of brand marketing spend. As this trend spreads globally and retail media networks grow and grow, its important for brands to assess if, how and when they should invest in retail media networks. Are retail media networks a brilliant opportunity to connect with shoppers as well as build closer partnerships with retailers? Or are they another revenue grab from retailers who are seeing their margins pressured on multiple fronts?

Retail Media Networks – Shopper Marketing Breakthrough Or Retail Money Pit?

There was a time when retail media services were basically printing and placing a piece of cardboard in the store. Since then they have evolved. We’ve had brand placement in retail ads, and of course in-store screens giving brands the opportunity to connect with shoppers in a different way. Today, we see the big retailers eyeing a bigger prize. Retail giants are offering complete media packages and insight offerings. The promise is a ‘closed loop’ of omnichannel media opportunities and tracking across all of the retailers platforms to enable suppliers to understand shoppers, engage more effectively, and get better return on their media investment.

Retail Media Networks Offer Huge Opportunities For Suppliers

It sounds great doesn’t it? An opportunity to get closer to shoppers. And of course to get closer to our big retail partners. More effective measurement? What is not to like?

And let’s be honest – there is a lot to like. Decent measuring would be great. The ability to get influence with shoppers close to the point of purchase is also desirable – it is the long standing promise of shopper marketing after all. And these retailers are amassing an impressive range of media touchpoints across which brands can potentially engage with shoppers. These networks offer significant opportunities for brands to sharpen their shopper marketing efforts, and crucially, build more effective return on investment measurement into the system too.

Before You Dive In And Invest Heavily In Retail Media Networks

Suppliers are likely to come under increasing pressure to participate in retail media networks. In some retailers, listing a product now requires the purchase of a media package in addition to the traditional listing fees. And while these offer potentially huge upsides, we need to keep them in perspective, and weigh up the value and the cost. There are dangers that need to be understood before diving in to investing in retail media networks. So how should suppliers evaluate the opportunities that retail media networks offer?

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Retail Media Networks Are NOT Omnichannel. Period.

First we need to be clear what retail media networks are, and what they are not. Tesco use the phrase ‘closed loop’. So does WalMart. The suggestion is that they can connect the entire shopper journey, closing the loop between insight and media placement so that we can completely understand the impact of what we do on a shopper’s journey. And while there is plenty of truth in there, and a lot of power too, it misses the biggest simplest flaw in any retailer-led shopper marketing solution.

There is no such thing as a “Tesco Shopper”.

Just as there is no such thing as a “WalMart Shopper”.

Shoppers shop across retailers and channels. Shoppers see all sorts of media, and have myriad other touchpoints. A shopper might well visit Tesco.com and then go to a Tesco store, but their destination store could just as easily be any other store selling groceries. And vice versa too. A purchase in a Tesco store could be influenced by an ad on Amazon. Any suggestion that a combination of data and media from one retailer alone gives you a complete picture of a shopper is clearly wrong. Data sourced from Tesco only sees the activity that happens on Tesco’s turf – not at other retailers.?

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And of course, those shoppers get to see a whole load of other marketing and media touchpoints too. Shoppers don’t only exist on retail real estate, be it virtual or offline!

Put The Shopper And The Consumer Ahead Of The Retailer

Retail media networks are not a separate thing. They are merely additional tools and media opportunities to help us win with consumers and shoppers. Therefore we need to be consumer and shopper-centric about this. Retail media networks should be seen as an investment in shopper marketing ahead of an investment in a retailer.

We need to understand who are target shoppers are, detail our shopper strategies and objectives, and then understand all of the potential touchpoints where we might be able to influence them. Retail media networks are legitimate touchpoints for sure, but they need to be evaluated within the context of our strategy and all the other media and touchpoint options to achieve these goals. If, and only if, the retail media network wins, should we invest there.

Make Investment Decisions Strategically

The implication of this for the way brand owners make investment decisions is quite profound. For many manufacturers, they see ‘marketing spend’ and ‘trade spend’ as two separate pots. So what do we do about retail media networks? Is this retail investment spend or is it marketing spend? Will we just fudge the issue and call it shopper marketing? Perhaps. But surely the right answer is to look at a Total Marketing Investment approach. This is something that we have advocated for a long time: an approach that recognizes that for a brand to be successful it needs to win with three customers. We need to win with consumers, with shoppers, and with retailers. Any initiative or opportunity cannot be understood or evaluated without looking at the entire picture. No matter what Tesco says, the return on investment in their ‘closed loop’ would be lower without all of the other brand building activity that takes place outside that ‘closed loop’ (including in other retailers). If nothing else, the evolution of retail media networks and their increasing scale makes the idea of managing customer investment away from brand investment even more anachronistic.

Retail Media Networks should force the hand of integrated brand investment

But in the same way that we mustn’t allow our media strategy to be driven by a retailer’s demands, nor should our brand teams ignore this clear opportunity to connect and influence purchase. An integrated approach is required, that considers all of the touchpoints across the consumer and shopper spectrum in the light of the brand’s objectives.?

Build Capability ?To Handle Retail Media Networks Within The Overall Media And Marketing Landscape

And of course all of this means that one retail network isn’t going to give you ‘the answer’. No matter what WalMart or Tesco say: the brand owners will need to do the work themselves. Access the data, blend it with other sources. Blend data with insight. Blend consumer marketing with shopper marketing. Make smart investment decisions. And that will require new skills and potentially new headcount.

And this raises one of the more dangerous side-effects of retail media networks. They can subsume the shopper marketing team. I’ve seen shopper marketing teams who effectively cease to be strategic, cease to be shopper-centric, and spend the majority of their time managing and booking media with retailers. Brands won’t get value from any shopper marketing, and that includes retail media networks, unless they are given the time and the resource and the skills to develop a clear strategy first.

Prepare For New Negotiating Challenges Triggered By Retail Media Network Growth

And of course all of this puts pressure on the retail front line: our customer managers. Buyers will be targeted to sell these services, so the pressure will be on. I am sure that many customer managers will be told that any listing or activity is contingent on buying a media package – regardless of whether that media package actually fits with or helps the brand deliver its strategy.

And as this practice becomes bigger and more widespread, where does the money come from? Can we afford to invest in all our customers as well as all the other important brand building activities? Smart brand managers know that they need to balance the funds across long-term equity building and shorter term activation. How to keep this balance when the demand for short term media is the price you have to pay to get listed?

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Key Account Managers and sales leaders need to be empowered to make smart decisions. That means the business needs to honestly evaluate the opportunities that retail media networks offer, be able to make investments where they make sense, but to also be able to firmly say ‘No’ when these opportunities don’t make sense. That takes skills and strategy and very different ways of working. Are you ready?

Retail Media Networks Signal The Death Of An Old Way Of Working For Consumer Goods Companies

The old ways of managing spend were anachronistic a long time ago. The old ways of managing brands and customers, likewise, have challenges and issues that have been around for a long time. But retail media networks up the ante on all of this. They will trigger a media power grab that will be hard for brands to resist, yet too many consumer goods companies are simply not equipped to make strategic decisions about Total Marketing Decisions.

How best to evaluate retail media investment – indeed all trade investment? How to better target consumers and shoppers across an increasingly complex purchase journey? Retail media networks can undoubtedly help, but their emergence will also make life very tricky for brands. Which retail media networks should I invest in? How, when and where should I invest? And how do I square these increasing demands with all of the other marketing we deem essential?

There is a way. If you’d like to know more about how our Shopper Marketing strategy, insight and capability solutions can help you make better investments across all media choices, and to get the balance right between consumer, shopper and retail investment, get in touch now.

We are running two workshops in January helping you get the best out of the new shopper activation opportunities that now exist with retailers. You can check out the details at the links below. Check them out now for some amazing bonuses and discounts!

United Kingdom and LIVE STREAM - January 2024

Belgium - January 2024