Retail media networks (RMNs) are expanding rapidly, and retailers of all sizes are joining the race, offering ad placements on an ever-widening variety of channels. The opportunity here is enormous, as these ads are shown to people who are already looking to make purchases — which isn’t necessarily the case when compared to ads on TV, print, Google or Facebook, where buyer intent is speculative at best.
Retailers appreciate the boost that the extra revenue stream gives to their notoriously slim profit margins, especially given their worries about the impact of inflation and consecutive years of supply chain disruption on retail profitability.
At the same time, brands appreciate that RMN ads can have a much bigger impact than other types of paid media placements. Retail media allows them to deliver more relevant ads that are personalized using first-party data and served at the point of purchase. Against this backdrop, experts predict that the retail media market will yield $45 billion in revenue this year, and will grow by another $10 billion in 2024.
In-store retail media is a growing facet of this phenomenon. While it still lags behind fully digital RMNs, in-store ads are catching up rapidly. Pure brick-and-mortar retailers are even more concerned about profits than their e-commerce counterparts, given their extra overheads and labor shortages, so they’re embracing RMNs at speed.
Brands, meanwhile, are aware that post-COVID, consumers have returned to physical stores with a vengeance. Over 85 percent of all retail sales in the U.S. still take place in the physical world, offering more opportunities for in-store influence.
Meanwhile, consumers have grown accustomed to omnichannel shopping experiences. Therefore, it resonates when people see in-store digital ads for products on the shelves next to them.
“Over the past couple of years, we’ve seen increased trends that are linking the digital experience and in-store shopping closer together, such as buy online, pick up in-store,” says Romney Allen, senior product owner, onsite advertising at Best Buy Ads. “Ads within a store environment connect those brands directly to the customer while they shop.”
As a result, we’re seeing many brick-and-mortar retailers move to develop their own in-store RMN or join an existing one. Done right, in-store retail media can deliver a richer shopping experience for consumers, greater understanding of customer preferences and behaviors for retailers and brands, and enhanced profits.
Here are a few key issues that retailers need to be aware of in order to succeed as they implement an in-store RMN:
1. The bar is high for digital media experiences.
Consumers are media savvy, and they’ll only pay attention to in-store media that delivers the same level of engaging content that they enjoy elsewhere. Digital signage enables a higher level of storytelling and interactive, meaningful content that static signs could never deliver.
We’re seeing increasing adoption of networked screens that support impactful video ads at point-of-sale display endcaps, on self-checkout screens, and smart cart digital screens. Consumers can scan QR codes to view demo videos for electronics, DIY tools, and other items that they can’t easily try out in-store, or even for recipe suggestions relating to food items.
Meeting high expectations for media ads likely calls for installing new hardware and systems, but this upfront cost can deliver better ads that drive more conversions. These delivery methods are also more environmentally sustainable than paper flyers and posters. Furthermore, new retail media experiences can dovetail nicely with in-store events like tastings and demonstrations.
2. In-store retail media requires new talent and tech.
Retailers experimenting for the first time with in-store ads could face a steep learning curve and heavy competition from retailers of all sizes, from Amazon.com and Walmart to Kroger and Tesco, as well as the medium-sized retailer round the corner, which have all already started monetizing RMNs. It doesn’t make things easier for newcomers that the retail media landscape continues to develop rapidly.
If you’re introducing a new or newly integration-friendly RMN, you’ll need to quickly acquire the talent and tech to keep abreast of the market. You need employees who are digitally savvy and understand ad servers as well as brand partnerships and cross-channel marketing methods. In most cases, this means you’ll need to upskill existing employees or recruit new talent.
Retailers don’t have to reinvent the wheel, however. There are already platforms designed for in-store retail media, with tools to track cross-channel purchase journeys, measure key performance indicators, and manage attribution. Such platforms also ease the burden by acting as the intermediary to serve up ads from the retailer to the advertiser.
3. Shopper trust is the key to success.
If your in-store ads are going to be impactful, then you need to avoid falling into the trap of overselling. Consumers have become fed up with the proliferation of paid media, such as Amazon’s sponsored search results, which often appear to be genuine recommendations, but are actually ads.
Retailers need to hold onto the high ground and maintain customer trust by being transparent and by serving only relevant, informative ads — especially when personalization comes into play. For example, you can use location data to inform someone meandering through the cheese aisle that there’s a special offer on camembert today. Offering rich content like nutritional details and allergy warnings as part of promotional units further strengthens the customer relationship.
At the same time, it’s vital to avoid the “creepiness” factor, overtargeting people to the point where they become wary that they’re being stalked. You’ll also need to make sure to comply with data privacy regulations like GDPR and CCPA. Make sure the customer knows about your data privacy and security policies by communicating them clearly and loudly.
4. Only connected channels can deliver full visibility.
One of the reasons why brands appreciate RMNs is that they can deliver valuable first-party data. Since the demise of the third-party cookie, first-party data has become all the more important to brand advertisers.
Retailers can only meet these expectations by connecting data across touchpoints. These might include repeat purchase signals from loyalty programs, browsing behavior data from e-commerce presences, social media engagement, and even shoppers’ paths through physical stores.
All this adds up to a complete view of the customer journey, both online and offline, so advertisers can fully understand their audiences. The extent to which you can help them connect these dots could make or break your retail media success.
5. Attribution is the final step that brings it all together.
Data is the foundation of any successful retail media implementation, but the capstone is thorough attribution.
To demonstrate success, retailers need to put their data to good use by setting KPIs that measure the impact of advertising and prove return on investment on brand campaigns. With the right tools, you can track the full path to purchase, from research online to buying in-store, and serve a relevant ad at the best moment in the right channel, including billboards, in-store screens and push notifications.
But even simply showing that people redeemed discounted sales offers after seeing them on ad screens can be an effective way to track conversions and attribute them to that “last touch” media placement.
In-store retail media offers a number of advantages for retailers looking to enhance their profit margins and strengthen their relationships with brands, however, it’s not a simple undertaking. Only retailers that go into their retail media pilot experiments with a full understanding of the efforts involved will be positioned to succeed.
Yaron Toren is the chief marketing officer of Shopic, the maker of a computer vision-powered clip-on device that turns standard shopping carts into smart carts.
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