The six pillars of retail media success

Welcome back to dunnhumby's?The Science of Shopping?newsletter where we look at the trends shaping the future of retail, and share the top insights that matter most to retailers and CPGs. In this edition, Julie Jeancolas explores how grocery retailers can make more money out of retail media. Here are the six critical issues that they need to focus on.

1. C-Level buy-in

One thing we’ve seen time and time again is just how important it is for the C-Suite to be 100% behind an organisation’s retail media ambitions. Ultimately, this should come down to the CEO setting the media programme’s culture, as well as revenue, profit, and average revenue per customer targets – all of which should be tracked by the CFO on an ongoing basis and shared widely within the organisation.

While a retail media unit will typically report into either the Chief Customer or Chief Marketing Officer, that unit will need support from other divisions too. The Chief Commercial Officer and team can help build relationships with CPG partners, while the Chief Technology Officer can provide the resources required to deliver on product roadmaps.

Finally, there’s the crucial issue of legal compliance to consider, particularly in terms of propositions like digital offsite. Retail media really does need an “all-in” approach from your executive team.

2. A multichannel media portfolio

In recent years, I’ve seen a definite tendency towards viewing retail media as a solely digital opportunity. That’s frustrating, because the physical store still plays a vital role. When it comes down to it, store media is about reach. With the industry focusing heavily on personalisation, it can be easy to forget that CPGs also want scale. Store media can offer that in abundance, with some channels capable of reaching hundreds of millions of customers each month.

This isn’t about choosing between physical?or?digital, either. Multi-channel propositions not only deliver better results for CPGs, they can also supercharge a retailer’s core business; customers exposed to multiple channels tend to spend more with a retailer than others – indeed, research shows that customers who are exposed to four different channels convert 3.8x more compared to those who are exposed to just one channel.

3. Full funnel media solutions

Retail media taps into many budgets – shopper, brand, and performance to name but a few. The challenge with this is that those different budget holders have different objectives and KPIs too. Shopper marketers might be invested primarily in store traffic, for instance, while a brand team or media agency will be more concerned by incremental reach and ROAS.

It's for that reason that, when building out their media portfolio, retailers need to be sure that they cover a diverse range of objectives. Digital screens, for instance, can help advertisers meet a very different set of goals to something like sponsored product recommendations.

Almost as important as the building of that portfolio is the selling of it. Packaging up your propositions into a single business plan will show CPGs the full value of working with you.

4. Using personalisation and measurement for growth

It’s no secret that grocery retailers are sitting on a store of incredibly valuable data. The question is how they activate that and use it to maximise their revenues. To my mind, there are two ways.

• Personalisation:?In trials with one retail client, personalised sponsored search generated a 23% uplift in basket adds and a 32% ROAS increase. With marketers under constant pressure to improve the effectiveness of their activities, personalisation holds the key – making it a valuable tool for retailers.
• Measurement:?As mentioned above, CPGs don’t just measure ROAS. Today, retailers need to offer measurement across the marketing funnel, split between basic KPIs like ROAS and sales, and enhanced KPIs like the percentage of customers that are new to a brand, its products, and the category.

5. Frictionless access to your inventory

In the US and the bigger European markets, CPGs have plenty of choice when it comes to retail media networks. At the same time, they don’t typically have the resources to buy from all of them, so you need to make it easy to buy from you.

In practice, that comes back to the technology you choose, and four key principles:

1. Create a single, self-serve access point for your main channels, making simplifying booking and planning.
2. Streamline your technology strategy, protecting your advertisers from complexity.
3. Bake in the right API connections, allowing CPGs to connect to the rest of their advertising ecosystem.
4. Futureproof your platform. You may be monetising media today, but what about insight, promotions, and coupons tomorrow?

6. Measure what really matters

In the first point above, I talked about the need for the CEO to set targets like media revenue, media profit, and average revenue per customer. While that’s true, those targets are influenced by a wide range of interlinking factors.

Take revenue per customer, for instance. That can depend on how much inventory you make available, how well you’re monetising your assets, how much media you’re selling, and even whether products are well-stocked. Everything is connected, and that makes measurement complex.

As a result, retailers must build a framework that can help them monitor these factors – consistently, using relevant KPIs, and on an ongoing basis.