They say if you stick around in any industry long enough, you see trends come full circle. To many seasoned observers, there’s a lot about the red-hot retail media trend that will strike them as familiar.
After all, the notion of brands cutting deals to use retailer space for their own marketing ends is nothing new. Just head down to your nearest supermarket and look at all the supplier-funded promotions for evidence of how retailers continue to leverage space to secure additional income.
Retail media takes this concept and digitises it. As an ecommerce trend, there’s no surprise that it was pioneered by Amazon, which a decade or so ago realised it could further monetise its vast online presence by launching its own advertising network.
It has proven to be a shrewd and lucrative move from a company renowned for its shrewd and lucrative moves. Between 2019 and 2022, Amazon saw its ad revenues increase by 163%, and the low overheads involved have seen retail media become one of the most profitable parts of its entire business.
No wonder other online retailers are falling over themselves to follow suit. A recent survey of 250 UK-based retail leaders found that 98% believe retail media will shape the future of retail, and 89% are turning to retail media strategies to enhance profit margins. Overall, retail media spend is forecast to hit $160bn by 2027.
That’s still a way behind the $225bn Google rakes in as the world’s largest digital advertising network. But there are many analysts who believe that retail media will eventually overtake paid search and also social media advertising to become the dominant force in paid-for digital marketing.
Digital marketing, in store
Why? For one, retailers have access to vast swathes of customer data which, with the demise of third-party web tracking, has enormous value to brands. Retailers can use their customer data not only to target advertising, but to make personalised product recommendations and placements – and charge brands for doing so.
Two, retail media offers brands the chance to run promotions right at the end of the sales journey, not at the start as is the case with search and social advertising. It means you can run ads literally right up to checkout, influencing those all-important final purchase decisions.
And three, following on from this – retail media is the perfect advertising strategy for aligning online with off. For it’s not just digital space that retailers can monetise with targeted promotions right up to checkout. They can do exactly the same in their physical spaces, too.
And so we come full circle. What started out as brands bidding for prime promotional space on aisles, shelves and window displays has now been digitally transformed into brands paying to run ads and promotions on electronic displays. And retailers are well aware of the potential. The same survey of leading UK retail figures referenced above found that 91% have seen an increase in revenues after investing in digital signage to extend their retail media strategies in store.
Your POS generates just as much valuable data as your ecommerce channels. With digital displays, kiosks and other interactive media, you already have the infrastructure to run store-wide promotions, both general and personalised. And by creating a retail media product that brands can benefit from online and in store, you double the reach, double the chance of making an impact on customers, and double the appeal.
That can only push the value of your offer up, making retail media an even more lucrative way of monetising existing assets.