Over the past few years, we’ve seen a dramatic shift in ad spend, with advertisers shifting from advertising above the line to directly targeting the right customer with the right ad, at the right time.
Yet very few retailers have this channel in their premium revenue mix today. With the impending demise of third-party cookies, retail media represents a multi-billion pound opportunity for retailers with rich first-party data.
But are they listening?
The top four ways retailers can monetize their retail media assets include:
- Create anonymized consumer profiles that can be targeted for direct advertising;
- Devote strategic niches to digital ads on websites and apps;
- To provide data services on the viewing and purchasing behavior of consumer advertisements; and
- Provide managed services to target specific audiences through combined campaigns (i.e. on their website as well as other sites).
Programmatic advertising takes center stage
The cornerstone of retail media is programmatic advertising, where buyers (i.e. brands and agencies) automatically bid for advertising space on retailers‘ websites.
“Programmatic advertising is a win-win solution for retailers and brands”
Unlike the traditional method of buying advertising space which included a human element, the programmatic model leverages technology, data and analytics to buy real-time display space through an automated real-time auction. .
Programmatic advertising is a win-win solution for retailers and brands. While the former can derive revenue from media spend and increase basket size, as well as improve customer experience, the latter can improve the ROI of media spend by targeting consumers directly.
Statista predicts that 87% of everything digital ad revenue will come from this channel by 2026.
Strategic partnerships become essential
To be successful in retail media, retailers must strike the right balance between customer experience (CX), sales, and ad revenue.
This requires a well-defined strategy and operating model integrating people, processes, innovative technologies and key functions such as marketing, finance, compliance and IT.
Those who succeed will improve CX and overall margin performance, as retail media margins are typically between 70-80%. For one of the UK’s largest retailers, over 17% of its total profits come from retail media.
The impact on the bottom line is huge. However, to ensure success, retailers must forge strategic alliances with experts who can provide a holistic and coordinated strategy to capitalize on this huge growth opportunity.
To learn more about how to build a profitable retail media business, Click here.
Brian Burchfield is Senior Vice President of Sales at WNS