Retail media has experienced a surge in popularity recently. It is far from being a flash in the pan; the sector is expected to be worth $2.6bn by 2026 in Australia alone. Media spending on e-commerce platform adverts is set to rival that of TV ads in the next three years.
The growing investment is well placed. Our recent 2023 Online Consumer Behaviour Global Report found two-fifths (37%) of consumers in Australia have clicked a sponsored or promoted product, and nearly a third (28%) have purchased on the back of an ad on Amazon.
Conversion, conversion, conversion
The popularity of retail media is connected to brands' desire for conversion. Retail media allows brands to promote their products directly within an online retailer's platform, such as eBay or Amazon. And its direct approach has been proven to drive conversions when used effectively. This type of advertising can be particularly effective because it targets customers who are already shopping for related products and can often be more cost-effective than traditional advertising methods.
With profitability top of mind for many retailers and brands, retail media's effectiveness is certainly appealing. However, it isn't just about converting sales. By using retail media to reach their target audience, brands can increase visibility and brand recognition. Promoting their products on an online retailer's website or app, brands can reach customers who are already interested in similar products and are ready to make a purchase.
Additionally, retail media can provide valuable insights into customer behaviour and purchasing patterns, allowing brands to optimise their advertising strategies and improve their conversion rates over time.
For online brands, optimising the use of retail media is the key to success in a competitive landscape. Here are some top tips for maximising efficiency of your retail media strategy:
Define your goals
Clearly defining your goals is crucial for success in retail media. Determine what you want to achieve through your campaigns, such as increasing brand awareness, driving online or in-store sales, boosting customer engagement, or launching new products. Establishing specific and measurable goals will help guide your strategy and enable you to assess the effectiveness of your campaigns.
One of the key drivers of the growth of retail media is the focus on measurable return on investment (ROI) for marketing budgets. With regulations and tightening rules around user tracking and third-party cookie usage, understanding how well ad campaigns are performing is becoming harder. First-party data is quickly becoming the new gold, and retailers are sitting on a huge pot of it.
Brands should pay attention to Closed Loop Measurement (CLM) to establish direct links between marketing activities and in-store or online sales. This enables brands to gain deeper insights into the effectiveness of their advertising campaigns and consumer purchase behaviour, in turn supporting strong ROI whilst also helping to drive increased investment.
Artificial intelligence (AI) is disrupting virtually every industry, and retail is no exception. AI allows brands and retailers to enhance their customer targeting, creating detailed customer profiles and helping to deliver more personalised experiences. The capabilities don't end there. AI is also helping to optimise the way retailers interact with brands, allowing them to own and tailor the purchase funnel for each consumer.
By harnessing the power of AI, brands and retailers can optimise their display ad campaigns on retail media platforms, enabling better targeting, enhanced ROI and ROAS, and more efficient allocation of advertising spend.
Understand your target audience
To maximise the impact of your retail media efforts, it's essential to have a deep understanding of your target audience. Conduct market research and leverage customer insights to build audience personas, including their demographics, preferences, shopping behaviours, and pain points. This information will help you tailor your messaging, creatives, and targeting strategies to resonate with your audience and drive engagement.
Collaborate with retailers
Building strong partnerships with retailers is key in retail media. Engage in open and collaborative discussions with retailers to understand their platform capabilities, audience reach, and available advertising options. Work together to leverage their data and insights, which can provide valuable information about consumer behaviour, sales trends, and product performance. This collaboration will enable you to optimise your campaigns based on retailer-specific knowledge.
Centralised e-commerce platform
As retail media continues to grow and new ad formats increasingly cover the full depth of the sales funnel, improving the ad program is a no-brainer for e-commerce success. For every retail media campaign, planning and executing are much more effective from a centralised platform.
This will help streamline the retail media campaign setup, management and tracking — helping deliver sales growth and a higher return on ad spend.
The platform can automate the ad management and help test the effectiveness so brands can innovate and improve performance by reviewing analytics, trying new strategies and making adjustments.
Having a holistic view also allows insights into inventory, both shortages and surpluses. Then, the brand can push the products that they have an excess of and cut back on promoting those that are in short supply.
Leverage data and analytics
Data and analytics play a vital role in optimising your retail media campaigns. Leverage available data sources, including retailer-provided data, to gain insights into campaign performance, customer behaviour, and sales trends. Analyse key metrics such as click-through rates (CTRs), conversion rates, return on ad spend (ROAS), and customer lifetime value (CLTV). Identify patterns, trends, and opportunities for improvement. By leveraging data and analytics, you can make data-driven decisions, refine your targeting strategies, optimise your creatives, and allocate your budget effectively.
First-party data is more important than ever on the back of Google's efforts to phase out third-party cookies. With other browsers already removing third-party cookies, retailers need their own data to make informed decisions.
The rise of retail media presents a significant opportunity for brands to reach and engage with potential customers in a highly targeted and contextually relevant manner. With the increasing shift towards e-commerce and digital shopping experiences, retailers have become valuable advertising platforms, offering brands a direct channel to connect with customers at various touch points along their shopping journey.
As the retail landscape continues to evolve, brands that embrace retail media as an integral part of their marketing strategy will gain a competitive edge. By forging strong partnerships with retailers, harnessing the power of data, and delivering personalised experiences, brands can seize the opportunities presented by retail media. This will enable them to drive growth, build brand loyalty, and create meaningful connections with their customers in the dynamic world of retail.