Besides AI, retail media networks are perhaps the hottest topic in the broader media & advertising sector. This upswing bestows a certain amount of energy on the retail sector, following the doldrums and bloodletting of its previous “retailpocalypse.” Suddenly,iIt’s cool to be a retailer again.
To back up for those unfamiliar, retail media involves retailers that become advertising publishers. That primarily involves in-store signage at the high-intent last mile of physical stores, but also an expanding suite of digital ad inventory – everything from websites to newsletters to smart TV interfaces.
While these aren’t new insights – again, it’s a popular topic – the pace of this trend was recently quantified to Localogy Insider. Specifically, Microsoft tells us that media networks now exceed 200 in number. Microsoft’s perspective and credibility on the topic flow from its work to tech-enable retailers.
Microsoft’s Retail Media lead Bill Rosenburg also tells us that it’s all about diversifying revenue – a welcome outcome given the sector’s ongoing challenges. To put it simply, it not only adds ad revenue to the mix but boosts in-store sales: a mutually beneficial outcome for retailers and the brands they carry.
Surface Area
Beyond those high-level and primary benefits are second-order effects. For example, in-store ad inventory broadens supply, says Rosenburg. In other words, premium inventory on retailers’ websites and other digital properties often sells out. In-store display ads provide more optionality and surface area.
Not only does it provide more but better inventory. As noted, we’re talking about the last mile. In some cases, it’s the last few inches considering cash-register proximity. Stores are high-intent commercial zones, which makes retail media a lower-funnel play that can outperform even search marketing.
Another advantage for retailers in sparking all of the above – and actually executing it – is the adjacency to their core business. From an ad sales perspective, it’s like shooting fish in a barrel, given the existing relationships they have with the brands they carry. Ad sales leads don’t get much warmer than that.
Beyond relationship-building is the value proposition itself. Not only can retailers offer exposure to high-intent shoppers but they’re a bridge between brands and shoppers. In the current privacy environment, brands increasingly need that buffer – in the form of a first-party entity – to do the ad targeting for them.
So the implicit message from retailers to brand advertisers is (paraphrasing) “We have all the customer data… just work with us and we’ll get you the targeting and exposure you need.” Much of this comes down to privacy restrictions regarding first-party data versus third-party data. The former is gold.
Vibenomics and Placer.AI Accelerate the Rise of Retail Media
Ripple Effects
Sticking with that last point, this is one of the places where retailers hold all the cards, according to Vericast’s Alex Weinberger. They have ample foot traffic and other first-party data from sources like loyalty programs. CPGs don’t have that info and privacy restrictions prevent them from buying it.
There’s also a trust factor at play. Notice how you don’t really resist sharing your email address or phone number with CVS or Walgreens to unlock deals at the point of sale. This speaks to a certain consumer trust level with (most) retailers which accelerates their ability to continue getting all that customer data.
And according to Weinberger, they’re also the right stewards of that data. While most brands are shameless in their promotional outreach, retailers are mostly careful not to upset the core apple cart – selling products. So they keep the right checks and balances to prevent overzealous brand marketing.
Altogether, privacy – a macro factor outside of its control – has propelled the retail sector. This is a welcome break in a string of otherwise detrimental factors bearing down on it. You could say they had it coming. Meanwhile, the Vericasts and Microsofts of the world benefit from ecosystem ripple effects.
