This week, we had the pleasure of hosting an insightful webinar focused on launching and scaling retail media, in partnership with Retail Gazette.

Our speakers, Has Dosanjh and Arjen Heida, both have a wealth of retail media experience. They shared their valuable insider insights on navigating the retail media landscape and their key lessons learnt over the years. 

In this blog, we summarise some of the main takeaways and delve into the challenges and opportunities associated with retail media. If you're more of an auditory learner, you'll find a recording of the webinar at the end of this post.

Why consider retail media?

“Retail media is the digital version of traditional shopper marketing.” It’s more efficient and cost-effective, and it allows retailers to gather a wealth of associated data in one place. Many call it the third wave of marketing, and retailers are already benefiting from the space exponentially. 

• Retail media is estimated to be a $122bn business in 2023
• Online now accounts for 25% of total UK retail sales, and there’s an ongoing digitisation of stores
• Amazon advertising has reached circa $40bn in just one year 
• Walmart’s US retail ad sales are set to surpass $3.5bn

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Why is retail media booming?

Maturity 

The increasing maturity of both e-commerce and brick-and-mortar stores makes now a fertile time for retail media. Interestingly, retailers emerged from the pandemic far more educated on the intelligence they can gain and understand from online sales, making it a great time to move forward with a retail media strategy.

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Post-cookie world

Additionally, the depreciation of online cookies has presented a broader opportunity to try something new. As Ben Sillitoe, webinar moderator and journalist, put it, “Retail media is an attractive vehicle for brands in a post-cookie world.”

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Revenue margins

Budgets are tighter across the industry right now, and discretionary funds are harder to come by: retailers are looking for an additional revenue stream, and retail media provides just that. 

Has mentioned, “Retail media is high margin because it reveals it’s not as difficult as everyone thinks.” Arjen added, “Retail media helps you become more accountable, and offers you the ability to tell advertisers and shareholders exactly where and how the money is being spent effectively.”

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Who is leading the way?

A few global and local names were mentioned here. 

1. Amazon – “Amazon is always worth mentioning – they have advantages that many of us don’t have, and they went to the effort to build everything in-house.”
2. Woolworths – “They set up a separate company to manage their media, but their merchandising and media teams are well integrated, which has been key to their success.”
3. Loblaws – “They treat their advertisers as customers, and the relationships they build are supplier/customer but the other way around. This is a big challenge they’ve overcome – you can’t always get the same buyers to start selling.”
4. Carrefour – “Carrefour has made a big splash in retail media. They’ve put in a lot of effort publicly and made it a company-wide initiative to get everyone on board, instead of just leaving it to a few people or external agencies.”

What key components are needed to make retail media work?

Set a “big hairy audacious goal”

As Arjen put it, “Setting a big hairy audacious goal grabs everyone’s attention”. It shows the value that can be gained from launching, then puts some pressure on you to then prove yourselves. Even the board may not believe it at first, so then you go about proving yourselves.

Has elaborated on his own experience with this, “At Ahold Delhaize, we announced a billion-dollar target within three years. With a company like that, you can’t just announce a random big number: you have to prove it – what’s going to get us to a number like that? – and then justify it to your auditors and stakeholders.”

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Get the right alignment 

To build a strong retail media business, you need a strong foundation. You should align with the people who organise your supply and secure them for longer terms. Then, on the demand side, you need to organise yourself a buying or purchasing department. Incentivising the teams to work together is crucial for the success of your retail media opportunity. 

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Stay agile

“You can’t launch off and assume you’ve got it all right from day one,” Has explained. “You’ll get going on one assumption then realise you have 30 different avenues for your retail media, and maybe it’s all different on your website, and all of this needs coordinating… it can all be built over time. You need to stay agile.”

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How do you pick and build the right tech stack?

There are hundreds of vendors to choose from, who can build integrations for you or even create all of your tech from scratch. It’s a specialist space and a major decision to make, so you’ll need to have the right people asking the right questions.

When buying and integrating tools, you need to consider the long-term plan and knock-on effects behind the decision. For example, if you adopt an Adobe tool, you’re likely to need more of the Adobe suite in future. 

One of the biggest recommendations Arjen made was to ensure you’ll be the owner of your data and not your tech vendor. If you intend to build sophisticated reports with your data, you need to have full visibility and control over that data otherwise you’ll find you’re gathering data with no ability to use it. 

Has stressed the importance of staying modular and flexible in your strategy. “Retailers tend to try and build for the long term, but that’s just not how technology is meant to work. You should be able to stay innovative and adapt to whatever you need.”

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What role does hyper-personalisation and AI play?

Put simply, hyper-personalisation is what attracts people to retail media. First-party data and profiling are the defining factors of success: if you know your data as well as you claim to, you’ll use that data to create valuable experiences.

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Ensuring hyper-personalisation by evaluating in real time 

At present, it takes roughly 0.153 milliseconds to render an ad – this involves identifying the company, deciding what they should see, and getting the graphic out there. This is an incredibly short period of time, but believe it or not, there are opportunities to further improve on that time, and this is just where AI starts to come into play.

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Making data-informed assumptions

You don’t always have a complete set of information. You may have a completely new user on the website. You might get a cookie, you might not. An AI model can help bridge that gap with the right data-informed assumptions.

For example, someone choosing between five or six items can be evaluated based on those items using the existing associated data you already have on users who shop similarly. Then, you can serve the right ads or graphics without needing historical data on that specific shopper. The only way to do this, and at speed, is to have a machine learning (ML) engine working alongside your data. 

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Analysing influence and spend

As we know, an impression is close to a sale. Using an ML engine can help you evaluate quite a bit, for example…

• If I spend money on this impression, will it lead to a sale or not?
• Should we keep spending here or not?
• Are customers moved overall with their brand?
• Is advertising actually increasing brand loyalty or just awareness?

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Crucial lessons learnt in launching and scaling retail media

With Has and Arjen both living and breathing retail media for a number of years, they kindly distilled their experience into five key takeaways. 

1. Determine the achievable size of the price – the first step should be to break even on the setup cost
2. Build a retail-media-centric organisation – align inventory with marketing and differentiate funding with buyers
3. Think deep but execute fast on tech – and don’t hesitate to bring in external expertise
4. Always keep the shopper front of mind – no matter what, don’t compromise on the shopper experience
5. Invest heavily in data analytics and own your data – this drives value for both your advertisers and yourself

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Contact us to learn more

Are you interested in the content discussed here, or do you have more questions about launching or scaling your retail media business? Contact Arjen Heida at arjen.h@explore.ai.

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If you have any questions about the topics discussed, would like to learn more about retail media, or are interested in attending our upcoming events, please reach out to Arjen Heida, Retail Media Consultant, at arjen.h@explore.ai.

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Watch the recording

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