2022 threw a lot at us. From the invasion of Ukraine by Russian forces, the death of Her Majesty the Queen, three successive British Prime ministers and countless governments, World Cup heartbreak, rapid growth in inflation, energy bills through the roof, Cop27, Elon Musk buying Twitter, a winter of industrial disputes, the birth of the eight-billionth person and so much more. Conceivably, Billy Joel could have set the lyrics of “We Didn’t Start The Fire” to 2022 alone.
Some of these events have had a significant effect on the retail market both home and abroad. Most notably, the ‘Cost of Living Crisis’ and rising inflation have put pressure on all areas of consumer spending and although it has been reported inflation is beginning to slow, the pressure will continue to rise into 2023 for many households. But 2022 was significant for retailers and brands for another reason; the arrival of audience-led retail media products for suppliers.
What are these new products?
Fundamentally, retailers hold a significant relationship with their customers and one that few brands can match independently. This is a powerful relationship that can influence consumer behaviour where it matters most. Brands and retailers have worked for decades on instore, and more recently online, marketing opportunities to influence customers at the POS. However, a retailer's understanding of their customer carries greater potential than was previously being leveraged.
Retailers, through both established loyalty schemes and the other means of data collection, have amassed a significant body of PII and non-PII data, which they have been using for their own insights and business intelligence research. Until 2022, it has been a very protected source of valuable insights, understandably to safeguard the customer’s privacy and retailers relationship with the customer. However, new technology in the form of clean rooms and measurement methodology has enabled retailers and their retail media arms, or agencies, to offer a new advanced offering for supplier brands. This involves using 1st party data, owned by the retailer and gathered from transaction and marketing channels, to allow suppliers to speak to customers in a more personalised and meaningful way.
Using a combination of tailored managed services and protective technology, retailers can define the customers most relevant for suppliers to engage with and then manage communications through a range of owned and paid for channels.
Haven’t we been doing this before?
Yes and no. Yes, retailers have been offering personalised messaging, such as targeted branded emails or coupons delivered based on previous behaviours. However, it has been prescriptive and tightly controlled. These new digital opportunities are significantly improved products, allowing brands a higher degree of control over audience and channel selection and measurement objectives.
Fundamentally they approach supplier funded activity through a holistic marketing lens, encompassing the entire digital advertising ecosystem into their own inventory offering and drawing on the power of multiple channels to drive incremental sales and revenue to the market.
What are we calling them?
This market is evolving at such a rapid pace, we haven’t yet formed a coherent language around these products or offering. In short, they are audience-first retail media products and tools, but the language will continue to evolve in sophistication.
Who is leading the market?
A selection of retailers have launched their offering in this space in 2022. In the US these products have been around for a few years with Walmart, Walgreens and Target all launching a self and managed service offering to reach customers across a range of channels. However, in the UK, the leading products have been Boots Media Group’s (BMG) ‘Audience 360’, Dunnhumby's ‘Tesco Media & Insight Platform’ and Sainsbury’s 'Nectar360' Platform. These range in sophistication, with BMG Audience 360 providing the most advanced managed service offering and Tesco’s platform giving a viable self-service offering across social channels.
BMG recently announced results from their Beta launch campaigns, proving encouraging results of +7% brand sales lift and +13% instore product sales lift across skincare brands.
There are two big milestones ahead. Firstly, is the integration of more channels across these products. 2023 will see more traditionally recognised upper-funnel channels connected to these products. BMG and Tesco have already announced an ITV partnership for 2023 and we expect to see more connections across video, outdoor and audio media.
The second is proving addressability with cookie-less ID solutions. With Google deprecating the third-party cookie in 2025, it is important these products test and prove cookie-less solutions ready for the coming total market change. The benefit is these products are traded on the back of first-party data, something which will only increase in value as finding deterministic identifiers across the open web becomes increasingly more challenging.
Fundamentally, these products are part of what is set to become a $100bn retail media industry by 2027*. Bigger than TV. To reach these lofty predictions, these products are going to have to pass these milestones and beyond.
* BCG, How to compete in retail media
Interested to know more about how your business can benefit from Retail Media Networks in 2023 and beyond? Get in touch via the link below and we'll be in touch in the new year to discuss more.