media

The rise and rise of retail media: how brands can leverage its power

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Retail media first started to see signs of significant growth in 2016, and it only took five years to 2021 for the market to grow from $1bn to $30bn – less than half the time of social media and a third of the time of search to reach the same figures.

What drove this meteoric growth? There are four key factors that Econsultancy suggests created this opportunity for retail media:

  • Retailers facing mounting pressure to unearth new income streams and boost profit margins.
  • Brand leaders struggling to drive growth in fiercely competitive markets.
  • Brands needing to pivot their targeting approach with the crumbling of third-party cookies.
  • The evolution of online consumer behaviour impacting customer journeys and purchasing decisions.

Of course, retail media providers have benefited hugely from this revenue stream. However, it also provides opportunities for brands and agencies to effectively reach new and existing customers.

In this quick guide, we’ll cover what retail media is, its unique value proposition, best practices that brands and agencies can use to take advantage of this massive advertising channel, and examples of brands succeeding with retail media.

What is retail media?

Retail media is the ad space ecommerce retailers sell on their websites or apps to brands who want to influence buying decisions at the point of purchase. However, this can also apply to advertisements retailers place inside their physical stores.

According to Criteo, retail media “enables brands to boost their visibility on the digital shelf”, similar to an endcap or special in-aisle feature in a physical store.”

To manage this channel, retailers have created Retail Media Networks (RMNs), where they can manage their owned media promotional placements and third-party brand advertisements.

Although similar to PPC and Paid Search, the main difference with RMNs is where the ads appear (i.e. on a retailer’s site/app versus Google search results).

A unique value proposition for brands

According to the Skai State of Retail Media 2023, “96% of surveyed individuals confirmed that their retail media programs achieved desired brand impact.”

The primary benefit RMNs provide is access to the retailer’s first-party data for relevant and accurate targeting capabilities, which has gained significant importance with the coming demise of third-party cookies.

Another benefit is providing a brand-safe environment, giving brands the confidence that their ads won’t appear alongside misinformation, hate speech or other types of content they don’t want to associate with (a common downside of advertising in social walled gardens).

For agencies, retail media platforms create a streamlined media buying process to help track and manage campaigns across multiple retailers.

Key players in retail media

It’s no surprise that Amazon is currently dominating the market share of retail media globally, and in Europe specifically, it’s almost 640% ahead of its closest competitor, eBay.

In the US, Amazon is still at the top of the leader board as the most important RMN to marketers, but Walmart and Target are in close pursuit, with others such as Instacart, Kroger, Meijer, and Best Buy trailing behind.

In the UK, dominant RMNs include Tesco, which launched its RMN towards the end of 2021 and continually evolves its offering thanks to 21m Clubcard holders; and Sainsbury’s (powered by Nectar360), which boasts the UK’s largest coalition loyalty programme with over 20m members.

Retail media best practices for brands and agencies

While the benefits of including retail media in the marketing mix are clear, how can brands  leverage its power? 

Foster collaboration, not silos: Investing in retail media isn’t a one-department decision. It affects marketing, ecommerce, trade marketing, finance, and multiple key decision-makers within the business, particularly those developing brand strategies. To avoid missing critical information and conflicting interests, it’s best to create internal collaboration opportunities and data-sharing rather than operating in silos.

Invest in building expertise: Even if outsourcing advertising to agencies, it’s still best practice to develop internal expertise on retail media to provide overall strategy and better understand the impact of campaigns. Having internal data analysts and experience in performance marketing are great foundations for transitioning into a retail media strategy.

Be selective with RMN partners: Rather than relying on ‘spray and pray’, a better approach is to evaluate potential partners according to your most important criteria using a joint business planning strategy:

  • Does the retailer’s positioning and objectives align with the brand?
  • What are their strengths and weaknesses, and their short vs long-term goals?

Answering these questions can help narrow down potential RMN partners that would provide the best collaboration opportunities for the brand.

Identify the right metrics: Finally, when building a retail media strategy, it’s crucial to consider which KPIs should be tracked according to the brand’s goals. For example, if the goal of the campaign is to increase customer acquisition, brands can use the RMN to track product sales, sometimes even at the SKU level. However, if the goal is to increase brand awareness, the RMN should be able to report on the number of impressions the ads achieve.

If partnering with multiple RMNs, it’s important to understand there is no industry standard – each network will be working to its own methodology in terms of campaign execution and reporting. 

Brands doing it right: examples of retail media campaigns

There are a number of brands seeing overwhelming success with retail media. Here are just a few we’ve handpicked from Amazon case studies:

Solo Fresh Coffee

The Japanese coffee brand Solo Fresh Coffee saw a noticeable decline in product page visits, and their sales had seemingly peaked, so they reevaluated their strategy to focus on brand awareness. They hired Barriz, an Amazon Ads advanced partner, and using Amazon’s media planning suite and Amazon’s DSP, achieved their goals:

  • They increased the volume of the audience browsing Solo Fresh Coffee’s product detail pages by 209% YoY in January to March 2023.
  • Compared with sales goals, actual sales increased by 14.4%, while YoY sales went up 35%.

Jameson

The best-selling Irish whiskey in the world, Jameson wanted to drive awareness of its Black Barrel product and credentials during a key, yet fiercely competitive selling period in the alcoholic beverage industry: Christmas. 

Jameson developed full-funnel activation with Amazon Ads with an omnichannel measurement strategy (which included an offline sales study with Circana Lift). The results of their campaign were impressive:

  • Streaming TV ads delivered a 98% completion rate, exceeding the Amazon Ads internal benchmark.
  • The campaign also drove a strong ROI across offline and online sales, with a 31% uplift vs Circana benchmarks, while offline sales specifically saw an 81% uplift vs Circana benchmarks.

Milk-Bone

For dog lovers worldwide, Milk-Bone is a household brand of dog treats that cater to every dog’s age, dietary needs, and palate. What’s particularly interesting about this case study was the use of Alexa interactive audio ads to create a branded audio experience.

The success Milk-Bone found in this case study shows great promise for voice-activated devices and advertisements:

  • Amazon’s first-party insights showed a new-to-brand rate of 31% among customers who asked Alexa to add Milk-Bone products to their basket, outperforming the category benchmark rate by 1.4X.
  • The results from a campaign-specific brand lift from a third-party measurement vendor, Kantar, showed a 1.7X consideration lift due to the exposure from branded experiences with Alexa.
  • Over 11K users engaged with the More Dog branded experience, with almost 86% of sessions lasting more than 30 seconds.

Now is the time to diversify with retail media

Data shows the growth of retail media will not slow down anytime soon, especially in a world where brands must reevaluate their approach to reaching their target audience without third-party cookies. Adding a retail media strategy to the marketing mix can help this obstacle into an opportunity while reaching brand new audiences.
If you need help articulating your thoughts on retail media or digital marketing, we can help. Chat with us todayto learn more.

Welcome to the data party

Where’s the data party right now?

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The difference between zero-, first-, second-, and third-party data

Data is incredibly valuable to marketers, agencies, and publishers, since it is used to power advertising models and generate revenue. And the amount of data we produce is accelerating. The global volume of data reached 64.2 zettabytes in 2020, and this is predicted to double by 2025.

However, privacy regulations, such as GDPR and CCPA, have made data an increasingly difficult resource to tap. In response, the online advertising industry has developed different classifications of data to help with the handling process. So, what do the terms zero-, first-, second-, and third-party data mean?

Four-party state

The ad tech industry uses four different classifications of data, depending on the degree of separation from the source of information.

Zero-party data

This relatively new term describes data which is willingly shared directly with the recipient, e.g., a customer who bought a sneaker submitting a survey to the brand. Arguably, this is a type of first-party data, the distinction being that it’s intentionally handed over rather than automatically collected.

Zero-party data also refers to edge computing ad solutions, where data is processed on-device rather than transmitted elsewhere online. This protects user privacy by minimising the data collected, while still allowing behavioural targeting and personalised ads, thereby circumventing legal restrictions on the amount of data allowed to be sent to the bidstream.

First-party data

Data which is gathered directly, for instance from customers, visitors, or social media followers. This includes information from email interactions and behaviours on a website or app. First-party data differs from second- or third-party data in that there is no intermediary between the supplier and the recipient of the information.

First-party data includes first-party cookies and advertising IDs which identify individual visitors, such as GAID, IDFA, and UID. Identity solutions use these IDs to track user behaviour while they interact with a website or app, in order to serve behavioural and contextual ads. However, targeted ads relying on first-party data alone can be sub-optimal, since their reach is limited to information from a single platform or site.

Second-party data

This refers to data collected from a partner who has in turn gathered it directly from visitors or customers. Although the data is supplied by another agent, the distinction made from its close third-party relative is that second-party data is sourced from a trusted partner, with whom there is a direct agreement on how the information is to be exchanged and used. The transaction takes place in a closed environment, such as a data cooperative, or a data “clean room” which provides the utmost security and privacy. Second-party data is usually used to periodically enrich first-party data to gain insights.

As with zero-party, there is some contention over the term ‘second-party data’, and the disagreement makes its definition a little woolly. In fact, when the Winterberry Group asked industry experts for the definition, responses ranged from “someone else’s first-party data”, to “there is no such thing”. After pinning down some specifics, the researchers proposed that any commercialisation or licensing of second-party data transforms its state into third-party. But this is by no means a hard-and-fast rule.

Third-party data

This pertains to any data received indirectly, via an intermediary agent who is not the original source. In ad tech, this data is usually gathered, aggregated, and packaged to be sold to companies to build advertising strategies.

Third-party data has historically been the most sought after in personalised advertising, allowing one-to-one retargeting of an online user. This can be achieved via cross-tracking cookies, where a user’s profile follows them online and is appended with data from each site they visit. Knowing so much about a user enables hyper-targeted ads to be served to them. However, third-party data now sees the most legal scrutiny due to the privacy implications of tracking users so closely across different sites, hence the phasing-out of third-party cookies.

So… where’s the party?

If all this has left you confused about the classification of data, you’re not alone. The rise of zero-party data, and the explosion of second-party data, are a result of initiatives by the industry to avoid falling foul of privacy regulations while retaining access to sources of data which make advertising models effective. In the age of big data, just make sure you know the legal requirements when handling it, so you can avoid having your party busted.

Image courtesy of Joshua Sortino

Life beyond the cookie

The third-party cookie is crumbling: what’s next for publishers?

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The third-party cookie has enabled marketers to serve targeted online ads for the last two decades, allowing websites to remain free, while ensuring content publishers are paid for their work.

But now, in response to privacy concerns and new regulations, web browsers are quickly deprecating these snippets of code. Apple blocked third-party cookies by default in Safari, while in January, Google announced a complete replacement in Chrome by 2022.

Despite this, the majority of digital advertising still relies on them. In response, we recently spoke to leading industry experts about the future of the ad tech ecosystem. We asked: how smaller publishers in particular can adapt.

Here’s what we found:

Dare to diversify

There isn’t yet a predominant replacement for third-party cookies, so we don’t know where (or when) the industry will settle. In the meantime, there’ll be a fracturing of ad tech. The key strategy for publishers during this transition phase will be to sell ad inventory in multiple different ways.

The most promising solutions avoid falling foul of both data laws and privacy-conscious tech developments:

Subscriptions. While this may be supplemental to ad revenue for smaller publishers, it’s crucial to renew focus on building a first-party subscription base. The advice from industry leaders is to offer a value exchange and make users feel like an exclusive member of a club.

Contextual intelligence. Contextual targeting serves ads based on the content of the webpage (e.g., training shoes on a fitness forum), whereas behavioural targeting uses individuals’ browsing activity. Although behavioural targeting has come to dominate the web, there’s little evidence that it improves revenues. Meanwhile, AI and machine learning have drastically improved contextual methodology, earning it the moniker ‘contextual intelligence’. Many industry leaders think it’s worth betting on this supercharged comeback.

Data clean rooms. These are a legally compliant and accurate way for publishers to continue using behavioural targeting. They can compare their first-party visitor data with those in ‘walled gardens’, e.g., Google and Facebook, to optimise ad matching. However, clean rooms can be expensive and therefore not necessarily viable for publishers with smaller datasets.

Edge Computing. Marking the age of “zero party” data, this data-conservative approach is becoming a popular way for publishers to sell remaining inventory.

Data is collected and analysed directly on the user’s device, rather than on a server, which allows publishers to serve behavioural ads while completely respecting the user’s privacy.

Test and test again

With so many options available, validating their effectiveness will be just as important. Chris Hogg, EMEA Managing Director at data management platform, Lotame, stresses that now is the time to start testing.

“Test solutions and strategies while third-party cookies are still around to compare against. Ask for proofs of concept around Safari and Firefox inventory. The fact we don’t have cookies in some of the other browsers presents a good opportunity for publishers to test out solutions and tactics today rather than later.”

Consequently, publishers will need to be far more involved when it comes to their audience data. Mattia Fosci, Founder and CEO of edge computing solution, ID Ward, urges smaller content providers to approach data analysis with both partnerships and off-the-shelf technology.

“While it may not be viable to hire a full-time data analyst, don’t underestimate the importance of analysis on your bottom line. Publishers should have more control of their audience data, but they do not need to build their own in-house solutions… Instead, publishers should work with partners that protect and enhance their relationship with their own audiences.”

Turn obstacles into opportunity

While ad tech’s brave new world is an uncertain place, one thing’s for sure – it puts publishers in a much stronger position than before. As David Reischer, Head of Product at edge computing solution, Permutive, explains, “The death of the cookie is a huge opportunity for publishers to course correct on what has happened, with their data being aggregated at scale, repacked and sold as audiences or models.”

Now, publishers can use their first-party data to bring brands even closer to audiences. By being prepared, respecting privacy, and fostering user loyalty, the entire industry stands to benefit from the change.

Head over to What’s New in Publishing to download the full report.

Image courtesy of Pezibear

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