Retail media is now the fastest growing ad channel, representing 21% of global digital advertising spend. According to eMarketer, digital ad spend worldwide was expected to hit $601.84Bn in 2023, a figure which is expected to surpass $870Bn by 2027.
In short, Retail Media spend already represents about 1 in 5 of every advertising dollar and will only increase its share by 2027.
According to this McKinsey paper, it’s the high-profit margin of nearly 50 to 70% in a traditionally low-margin industry that makes Retail Media so exciting for retailers as the media owners. Importantly, over 80% of spend on Retail Media Networks is from net new budget sources rather than a reallocation of dollars already going to the retailer.
As a result, both prominent e-commerce players and traditional retailers with a strong online presence have been investing heavily in setting up Retail Media Networks. 91% of Retail Media Networks are anticipated to grow up to 25% over the next three years as they compete for a slice of those lucrative ad dollars.
The Retail Media Network space is getting crowded, competitive, and increasingly fragmented. However, online channels continue to attract budgets because of their ability to segment and target audiences in real time.
In such a competitive environment, can – and should – brick-and-mortar grocery retailers compete with and expect to win a place in the booming Retail Media landscape?
Should Brick-and-Mortar Retailers Invest in Retail Media Networks?
Given the focus on online Retail Media, should brick-and-mortar grocery retailers invest in the competitive Retail Media space?
Yes. Here’s why.
E-commerce retail giants have a lot going for them.
But they lack one truly valuable asset that brick-and-mortar grocery retailers do: in-store shoppers.
With 80% of grocery shoppers expected to remain in-store well into the next decade, a brick-and-mortar retailer’s biggest asset is their in-store shoppers.
Our experience shows that brands that are increasing Retail Media investments, prefer partners that offer reach, access to data and insights, and ease of use across all channels that are a part of the shopper’s journey.
According to Megan Cameron, SVP, Retail Media Practice Lead at Merkle, while investment from brands into Retail Media Networks (RMNs) is spiking exponentially, what’s interesting beyond that is how brands will continue to choose which RMNs they want to work with. “Right now, we’re seeing a boom in the number of RMN options that brands can work with, but the ones that rise to the top will be those who continue to innovate and deliver what brands actually want.”
In effect, Retailers who invest in building unified, omnichannel Retail Media Networks that effectively turn both online and in-store shoppers into addressable audiences will enjoy the biggest competitive advantage.
So, how can retailers leverage in-store shoppers to create this innovation and value?
Online Retail Media technology is already mature enough to offer advertisers addressable audiences.
It’s an area that In-store Retail Media has lagged in, mainly due to gaps in mindset and technology.
But imagine if, as a physical grocery retailer, you could offer advertisers access not just to anonymous shoppers but also to addressable audiences.
By that, we mean the ability to precisely segment and target in-store shoppers in real time, coupled with verifiable campaign performance metrics.
Seen another way, imagine if retailers could bring all the targeting and measurement capabilities of online channels to In-store Retail Media!
Advertisers would be much more likely to invest their marketing budgets in Retail Media, where audience reach is more targeted, accurate, and measured. That is because brands expect a base level of audience insight to execute a successful campaign and scale up budgets with confidence. They would be even more likely to do so with In-store Retail Media Networks that offer this capability both online and in-store.
But there is another, even more powerful, advantage of in-store shoppers.
First-party data.
Merkel’s 2023 State of Retail Media survey revealed that the top two reasons brands work with Retail Media Networks are about their shoppers. Advertisers want to understand their shoppers better, and to engage with them in relevant ways. First-party data lets them do both in privacy-compliant ways.
With the right Retail Media technology, anonymized in-store shopper profiles become a powerful first-party data source.
The value of first-party in-store shopper behavior data for advertisers and its profit potential for retailers cannot be overstated.
Brands are thirsty for retailers’ first-party data so that they can accurately reach their target audience at the right time and place.
Grocery retailers who leverage technology to build actionable first-party data insights combined with real-time audience-based targeting will win big.
This is something that Amazon, Instacart, and other e-commerce platforms, no matter how large and powerful, simply cannot do.
And, it seems that some grocery retailers are beginning to take notice. As early as January 2022, Albertsons, the third-largest grocer in the U.S., and Tesco, the UK’s largest retailer, had already launched their own Retail Media Networks.
As of 2023, the Merkle survey reveals an even more dramatically changed landscape.
Four of the top 5 monetization investment areas for Retail Media Networks fell outside of onsite media. In-store digital Retail Media, at just 9% of investments in 2022, has already risen to 33%, the second largest area of investment.
Will your In-store Retail Media be able to compete with these early adopters?
The time to Grow Revenues From In-store Retail Media Networks is Now
The verdict is clear. As the Retail Media landscape gets more crowded, building a differentiated In-store Retail Media offering and integrating it with the online Retail Media Network has never been more urgent – or possible.
It begins with grocery retailers digitizing and monetizing the 80% of shoppers who prefer shopping in physical stores.
Advertima’s Audience AI technology makes it easy, cost-effective, and convenient to grow in-store media inventory value, show advertisers a clear connection between campaigns and ROAS, and plug into existing omnichannel RMNs that already sell online channels.
Advanced Retail Media technology like Advertima can finally unlock the true revenue potential of in-store shoppers for brick-and-mortar retailers by making it possible to:
- Digitize anonymous in-store shoppers and turn them into addressable audiences
- Deliver verifiable first-party data about in-store shopper behavior to brands and advertisers to optimize campaign ROAS
Build Your Omnichannel Retail Media Network With This Free Step-by-Step Guide
Unlock the full revenue potential of In-store Retail Media and seamlessly integrate it with your online Retail Media Network. Claim your step-by-step guide to transform in-store shoppers into monetizable media audiences now!
