Navigating the Retail Media Journey:
From Establishment to Maturity
In the ever-evolving landscape of digital advertising, retail media has emerged as a potent force. But what exactly is retail media, and why is it attracting so much attention? Retail media involves retailers monetizing their digital shelf space by offering advertising opportunities to brands and advertisers. It’s a symbiotic relationship that benefits both parties, allowing retailers to boost revenue while giving brands access to a highly targeted audience.
Retail media is on a rapid growth trajectory, and according to eMarketer’s latest data, its ascent shows no signs of slowing down. In fact, eMarketer predicts that retail media ad spend in the United States will reach $35.68 billion in 2023, representing a 28.7% increase from the previous year. This robust growth is driven by retailers’ recognition of the value their data and customer insights hold, as well as brands’ growing interest in reaching consumers at the point of purchase.
As retailers venture into the world of retail media, they go through distinct stages of growth, which V2 classifies as Establishing, Growing, and Maturing. Let’s explore each of these stages and what activities and challenges retailers may face during each phase.
- Establishing Phase
In the early stages of establishing a retail media network, retailers are essentially laying the foundation for future growth. Here’s what this stage might look like:
- Data Assessment & Aggregation: Teams focus on assessing the state of their customer data, and beginning to gather and organize that data, including transaction history, loyalty information, and online behavior. This data is essential for creating valuable advertising opportunities.
- Ad Tech Infrastructure: Retailers build or acquire the necessary technology to properly monetize the digital shelf space, such as ad trafficking systems and niche retail media platforms like CitrusAd, Criteo, and PromoteIQ. At this stage, managing ad placements, tracking campaign performance, and providing analytics is crucial.
- Partner Identification: Retailers start identifying potential advertising partners, typically focusing on their biggest, or “Tier 1” vendors, who may be interested in taking advantage of advertising opportunities.
- Tactic Creation: Defining and developing tactics and ad formats, and selling templates that align with the retailer’s brand is foundational. Typically, at this stage, retailers focus on on-site tactics such as basic display ads and sponsored search results, as well as opening up existing B2C Marketing Channels, such as email newsletters, for advertising.
- Thinking through the initial go-to-market strategy and how to differentiate from other category competitors can often unnecessarily stall the standup of a retail media network.
- Determining the initial set of solutions as part of the offering and defining the scope of vendors that will be targeted for the network can prove challenging for new retail media networks that are looking to drive tight alignment between advertisers and available inventory.
- Nurturing a new dynamic with existing vendors and establishing the initial set of tools to manage the B2B sales relationship is a top challenge. Retailers can struggle to determine new standard operating procedures for vendor relationship management for vendors participating in the retail media network.
- Establishing a team to manage the network, defining levels of ownership, and determining how the team will interface with other critical departments, such as Marketing, IT, and Finance, can be a major hurdle for retailers
- Establishing foundational systems to “execute,” such as ad tracking platforms, as well as baseline systems to “manage” all of the people and processes involved behind the scenes, can be daunting.
- Growing Phase
As the retail media network gains momentum, the focus shifts to expansion and optimization:
- Audience Segmentation: Retail Media teams try to wrangle their customer data to refine audience segments, offering advertisers more precise targeting options.
- Establishing Departments: As Retail Media Networks grow, they work to establish dedicated sales teams, ad operations teams, and other departments to create clear processes and hand-offs as advertisers move through the prospect-to-cash flow.
- Inventory Management & Optimization: Retailers look to optimize ad placements, pricing, and availability to maximize revenue.
- Campaign Optimization: Continuous monitoring and adjustment of ad campaigns to deliver better results become a standard practice.
- Data Monetization: Exploring new ways to monetize data, such as offering insights or audience analytics to advertisers, becomes important.
- Breaking down silos between various departments, including the established Retail Media Network, Marketing Teams, and Commercial Teams, is highly challenging. Legacy operating procedures and team dynamics can lead to revenue cannibalization, especially when negotiating commercial trade deals with vendors and determining where media partnerships may fit in.
- Meeting advertiser expectations as the network grows rapidly becomes an increasingly challenging environment to navigate. Retail Media Networks will want to maintain strong relationships with existing vendor partners, while investing energy to expand the pool of advertisers–retail media networks often struggle to determine if they need to invest more in people, process refinement, technology, or some combination of the three, to maintain and exceed those expectations.
- Diversifying tactics can prove challenging, from a strategy and execution perspective. Defining new tactics, establishing bundles, strategizing around tent-pole events, and upskilling the sales team around products all pose hurdles for growing retail media networks to overcome.
- By this point, retail media networks fall prey to purchasing various niche solutions to plug gaps and oftentimes end up with several spreadsheets, standalone CRM solutions, multiple systems for media planning, multiple ad delivery systems, and disjointed billing systems, leading to inefficiencies in the process, overworked ad sales and ad operations teams, errors as the result of manual data entry between systems–all which create cascading issues that may impact revenue and the advertiser experience.
- Maturing Phase
At the maturing stage, the retail media network has established itself as a reliable revenue stream. Teams now aim for sustainability and innovation:
- Strategic Partnerships: Retailers seek long-term partnerships with key advertisers, offering exclusive benefits and collaboration opportunities.
- Advanced Analytics: The focus shifts to predictive analytics and machine learning to better understand customer behavior and improve ad targeting to maximize campaign performance.
- Product Diversification: Retailers look to expand beyond traditional on-site and in-store advertising, into areas like sponsored content, influencer collaborations, and data-driven solutions.
- Compliance and Privacy: As data regulations evolve, teams ensure they comply with data protection laws.
- Global Expansion: Exploring opportunities to expand the retail media network to other regions or markets.
- Ensuring efficiencies when it comes to collaboration with advertisers throughout the prospect-to-cash flow is a top challenge. Retailers look for ways to streamline proposal sharing, order creation, asset submission and collaboration, and communication around campaign performance working with advertisers, and retailers often need help to streamline heavier self-serve models for Tier 2 and Tier 3 vendors.
- Optimizing inventory management and reservations across all channels, including on-site and in-store, can be insurmountable. There are limited solutions for inventory management available, and oftentimes, retailers need to leverage many different systems, which creates swivel-chair efforts for ad sales teams and media planners who need to perform manual checks and reservations between systems.
- Automating workflows between systems and teams is crucial for mature retail media networks. While some systems have been streamlined by this point, creating proper integrations for upstream and downstream systems, such as CRM, Middle Office and Order Management Systems, Fulfillment and Ad Trafficking systems, Billing, and Analytics, is top of mind.
Whether you’re just starting your retail media journey or you’ve been in the game for a while, understanding where you are in this growth cycle can help you focus your efforts and resources effectively. As retail media continues transforming the advertising landscape, staying agile and adaptive is key to maintaining a competitive edge in this dynamic industry.
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