The Retail Media Boom is Only the Beginning
by News
on 16th Jul 2024 in![The Retail Media Boom is Only the Beginning](https://cdn.exchangewire.com/wp-content/uploads/2024/07/retail-media-boom-620x350.jpg)
The Mars Agency's Katrina Smart takes a look at how travel media networks could be the next evolution of retail.
The last few years have truly cemented the fact that retail media is here to stay, and it’s hard to envisage anything imminent that will slow its momentum.
Ever since the uptick in and adoption of e-commerce during the pandemic, especially in the context of grocery and fast-moving consumer goods (FMCG) brands, customers simply don’t shop and consume media in the same way that they used to pre-Covid.
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Retailers also sat up and took notice when Amazon and Walmart announced their ad revenue businesses, which have really squeezed retailers’ margins. Retail media, as a result, is now a key profit centre and a core arm of said retailers’ businesses.
Though UK grocers already had those retail media arms as part of their businesses, margins weren’t that eye-watering when it was primarily dependent on in-store point-of-sale. When digital really started coming into play however, it changed the retail-media game. This development turned it into the high-profit and high-margin business it is today.
So where can we expect this vertical media trend to take us next?
Retailers are increasingly switching from traditional retailers to media owners and publishers – it’s an entirely new opportunity for them to build revenue. This part of the industry is where we’ve seen the biggest boom. Previously, advertisers couldn’t access this level of granular retail data, let alone to operationalise, and intelligently activate around it to enhance shopper engagements in a way that drives sales. But now, advertisers have been presented with a whole new opportunity to reach, engage, and impact customers with robust first-party data and the promise of closed-loop attribution.
Consequently, a huge number of retailers and other verticals are attempting to build retail media networks, most notably, outside grocery and FMCG. Everyone wants a piece of the pie and most recently, we have seen the launch of Co-op Media Network, which is approaching the space from a different angle, and is very much focused on their instore proposition right now. This is due to the scale of their stores and their convenience factor, which gives them a point of difference versus the grocers.
FMCG and grocery may be leading the way, but tech has also entered the fray with the launch of Currys Connected Media last year and other verticals have more recently been in the spotlight with Chase Bank’s announcements of late, and most recently United Airlines launching their own media network, Kinective Media, which uses travel behaviour to target airline customers with personalised ads.
The craze is growing. Any brands with an audience, loyalty programme, scale, and reach could potentially be positioned to deliver retail media networks that, with the right proposition and media capabilities could drive bottom line results.
With the opportunity now prominent in the industry, inside the next two years we can expect to see an increasing number of verticals launched. Travel and hospitality feel like the logical next step to continue to grow. Not only do they have extremely engaged audiences, but they also hold a huge amount of first party data. Most already have loyalty programmes and can provide a level of personalisation based on the data they hold.
Think of all the corresponding purchases you make after you book your holiday, not to forget the direct engagement of being sat on a seat for a flight with a screen
The opportunity is huge, especially when coupled with data to target these audiences when they’re browsing or actively shopping. Think of all the corresponding purchases you make after you book your holiday, not to forget the direct engagement of being sat on a seat for a flight with a screen. Or think of all the digital touchpoints and branding opportunities in a hotel, from the lobby, check in screens, and till screens, to the lifts, and TV screens in each room. Brands could have access to this data and start targeting relevant customers right from when they search for their family holiday destination.
As we see more verticals launch retail media offerings, it is becoming more difficult for brands to navigate and to understand where to invest. They have natural agreements, like trade agreements, with retailers themselves, which is why retail media networks in grocery and FMCG work so well – the relationships already exist. However, it will be harder for brands to navigate outside that into other verticals and it makes media buys difficult to scale if retail media networks are not available through a self-serve platform. We are also seeing a blurring between retail media and commerce media, with retail media networks increasingly launching outside the retailer environment.
Consolidation is the next logical step. It requires a great deal of talent, resources, technology, and investment to start a retail media network, not to mention the number of ad tech capabilities and partners that you need to drive a successful proposition. Retailers and organisations may think that it’s an easy way to generate the most revenue and capture that ad revenue from brands, but retail media also comes at a premium, which means a lot is expected of it. Unless they have enough scale, targeting precision, and can directly prove the impact of their media through their measurement capabilities, this approach isn’t going to succeed.
BrandsCommerce MediaRetail MediaVertical
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