“If manufacturers don’t have that shopping list of what it is that they want in return for their investment, they’re effectively giving money [away for] free.”
— Gregor Murray, Vice President of Strategy, Digital Commerce Global
The retail media business is booming, with ad spend in the category expected to grow to nearly $130 billion by 2028 — more than double the almost $55 billion brands spent this year, per eMarketer.
While retailers are generating massive revenue from this channel, brands need to be more prudent about how much they invest in retail media and understand what they’re actually getting in return, says Gregor Murray, vice president of strategy at Digital Commerce Global (DCG), a leading digital commerce advisory firm.
“Manufacturers are effectively being asked to give money away for free or to give money away based on ‘trust us that this will grow your sales,'” he says. “‘Trust us that this will drive awareness.’ ‘Trust us that if you put a sponsored ad or a display ad or build a brand page that’s going to drive sales, that’s going to drive conversion.’ It’s almost being done on trust, and that just isn’t good enough.”
DCG has published a Retail Media Benchmark report that outlines several key considerations for brands as they develop and execute their retail media investment strategy. Murray joined a recent episode of the “Unpacking the Digital Shelf” podcast, “No Data, No Dollars: Lessons from DCG’s Retail Media Benchmark Report,” to share major learnings from the firm’s research and advice for how brands can get more out of their retail media strategy.
Retail Media Has a Persistent Data Challenge
Brands continue to struggle with getting accurate retail media measurement and performance data — or any data at all — from retailers.
Murray says manufacturers aren’t getting consistent quality data that could help them make better retail media investments. He adds that retailers are making anywhere from a 60–65% margin on retail media, but brands need to adopt a “no data, no dollars” approach as they engage with retailers on this new channel.
One manufacturer in the U.K. has already done this, telling all its retail media partners that they would stop investing in their networks and instead spend with Amazon since Amazon actually provides retail media measurement data.
The tactic worked according to Murray, and all the retailers began providing the data.
Murray adds that these conversations must take place at the senior levels of both organizations, with an understanding that the brand isn’t trying to claw back its investment. It just wants a benchmark or starting point for how to improve performance and how to work more collaboratively with the retailer.
“There’s a lot to be gained from that, but it is a really brave thing to do,” Murray says of the “no data, no dollars” approach.
Retail Media Funding Varies by Organization
Brands are funding their retail media investments in several ways, DCG’s research found.
In some organizations, the money may come from the marketing budget. In others, it’s the trade or shopper marketing budget, or even new budget. DCG found that about 18% of retail media investments come from a new, dedicated budget.
“That is both really exciting for manufacturers, but it’s also a massive challenge for manufacturers because new budget isn’t sustainable at all,” Murray says.
The research also found investment in retail media is increasing 60–65% year-over-year, while the remainder of brands’ marketing budgets have remained flat. The implication here is that brands are making significant investments in a channel when they don’t yet know how to accurately measure their return on investment (ROI).
Murray argues this has to quickly change. Engaged leadership is critical to making this happen.
Engaged Leadership Can Drive More Value From Retail Media
Engaged leadership can position an organization to make better retail media investment decisions. However, DCG’s benchmark report indicates many senior leaders don’t have the requisite knowledge about retail media to effectively guide their organization’s strategy.
“There are some staggering differences between the manufacturers whose senior leadership team do get digital retail media and the ones that don’t,” Murray says.
In the report, only 30% of respondents said their senior leadership team genuinely understood the opportunities and the challenges of digital, which means 70% of organizations believe their senior leaders lack this knowledge. Organizations with more digitally-engaged leaders are growing their market share by 13.8%, compared to 8.1% growth for those that aren’t.
Why Engaged Leaders Matter
Engaged leaders are critical because they’re likely more effective in the following areas:
- Negotiating discounts with retailers in return for media discounts;
- Determining the right level of investment in retail media based on the organization’s strategic goals; and
- Getting retailers to provide comprehensive retail media measurement data.
“For that 30% where the respondents say their leadership team understands digital commerce, 56% believe they have access to adequate data from retailers,” Murray says. “In the 70% that don’t, that figure is just 13%. So, there’s a direct correlation there that says if your senior team understands what it is they’re asking for, you can get it.”
Brands Are Too Focused on Incrementality
Murray says brands need to worry less about incrementality with retail media and more about whether they are satisfying their customers on this channel.
“Manufacturers have been unduly focused on incrementality when it comes to digital retail media. They want to believe that it’s going to be truly incremental. The truth is, it doesn’t matter because customers don’t care. Customers just want to buy products that are going to satisfy their needs, their missions, and their journeys.”
— Gregor Murray, Vice President of Strategy, Digital Commerce Global
Right now, retailers are losing money on digital commerce, and customers are being bombarded with marketing messages, rendering them less effective, Murray says.
Some brand manufacturers are even paying more in terms of cost per click (CPC) for a retail media ad versus the sales value of their product.
This is because increased competition for media space is driving up the price of media, but brands aren’t seeing exponential customer growth to offset this higher spend.
Murray adds that brands can’t think of retail media in the same way as they view in-store media, because “digital commerce is not an impulsive media. It’s an intent-based platform. It’s [an] intent-based purchase.”
Instead, brands considering making a significant investment in retail media need to understand their overall objective.
6 Reasons To Do Retail Media
To help you understand and finetune your overall object, here are six reasons to do retail media according to Murray’s GRADES model:
- Grow your existing basket size
- Retain your existing customers
- Acquire new customers
- Drive trials
- Engage lapsed customers
- Satisfy new customers
“Those, for me, are the reasons why you would want to do digital retail media for your brands,” he says. “And at that point, you start thinking differently about the way that you want to invest.”
Refining Your Retail Media Strategy
To drive more value from retail media, brands need to have engaged leaders, clear objectives, and robust retail media measurement data to guide their decision-making.
They then need to take this data and regularly review their performance, test and learn through various campaign activations, and use all these insights to improve performance on this channel.
However, Murray says better retail media performance ultimately starts and ends with better data. Whether it’s a “no data, no dollars” approach or forging a more collaborative partnership with retailers, brands are entitled to know what they’re getting in return for their investment.
“If there’s one thing that listeners take from this podcast from me, it’s that retailers want more investment, but that doesn’t mean you’ve got to give it,” Murray says. “It’s your money.”
To hear more of Murray’s retail media insights, listen to the full episode.
[[{“value”:”
“If manufacturers don’t have that shopping list of what it is that they want in return for their investment, they’re effectively giving money [away for] free.” — Gregor Murray, Vice President of Strategy, Digital Commerce Global
The retail media business is booming, with ad spend in the category expected to grow to nearly $130 billion by 2028 — more than double the almost $55 billion brands spent this year, per eMarketer.
While retailers are generating massive revenue from this channel, brands need to be more prudent about how much they invest in retail media and understand what they’re actually getting in return, says Gregor Murray, vice president of strategy at Digital Commerce Global (DCG), a leading digital commerce advisory firm.
“Manufacturers are effectively being asked to give money away for free or to give money away based on ‘trust us that this will grow your sales,'” he says. “‘Trust us that this will drive awareness.’ ‘Trust us that if you put a sponsored ad or a display ad or build a brand page that’s going to drive sales, that’s going to drive conversion.’ It’s almost being done on trust, and that just isn’t good enough.”
DCG has published a Retail Media Benchmark report that outlines several key considerations for brands as they develop and execute their retail media investment strategy. Murray joined a recent episode of the “Unpacking the Digital Shelf” podcast, “No Data, No Dollars: Lessons from DCG’s Retail Media Benchmark Report,” to share major learnings from the firm’s research and advice for how brands can get more out of their retail media strategy.
Retail Media Has a Persistent Data Challenge
Brands continue to struggle with getting accurate retail media measurement and performance data — or any data at all — from retailers.
Murray says manufacturers aren’t getting consistent quality data that could help them make better retail media investments. He adds that retailers are making anywhere from a 60–65% margin on retail media, but brands need to adopt a “no data, no dollars” approach as they engage with retailers on this new channel.
One manufacturer in the U.K. has already done this, telling all its retail media partners that they would stop investing in their networks and instead spend with Amazon since Amazon actually provides retail media measurement data.
The tactic worked according to Murray, and all the retailers began providing the data.
Murray adds that these conversations must take place at the senior levels of both organizations, with an understanding that the brand isn’t trying to claw back its investment. It just wants a benchmark or starting point for how to improve performance and how to work more collaboratively with the retailer.
“There’s a lot to be gained from that, but it is a really brave thing to do,” Murray says of the “no data, no dollars” approach.
Retail Media Funding Varies by Organization
Brands are funding their retail media investments in several ways, DCG’s research found.
In some organizations, the money may come from the marketing budget. In others, it’s the trade or shopper marketing budget, or even new budget. DCG found that about 18% of retail media investments come from a new, dedicated budget.
“That is both really exciting for manufacturers, but it’s also a massive challenge for manufacturers because new budget isn’t sustainable at all,” Murray says.
The research also found investment in retail media is increasing 60–65% year-over-year, while the remainder of brands’ marketing budgets have remained flat. The implication here is that brands are making significant investments in a channel when they don’t yet know how to accurately measure their return on investment (ROI).
Murray argues this has to quickly change. Engaged leadership is critical to making this happen.
Engaged Leadership Can Drive More Value From Retail Media
Engaged leadership can position an organization to make better retail media investment decisions. However, DCG’s benchmark report indicates many senior leaders don’t have the requisite knowledge about retail media to effectively guide their organization’s strategy.
“There are some staggering differences between the manufacturers whose senior leadership team do get digital retail media and the ones that don’t,” Murray says.
In the report, only 30% of respondents said their senior leadership team genuinely understood the opportunities and the challenges of digital, which means 70% of organizations believe their senior leaders lack this knowledge. Organizations with more digitally-engaged leaders are growing their market share by 13.8%, compared to 8.1% growth for those that aren’t.
Why Engaged Leaders Matter
Engaged leaders are critical because they’re likely more effective in the following areas:
- Negotiating discounts with retailers in return for media discounts;
- Determining the right level of investment in retail media based on the organization’s strategic goals; and
- Getting retailers to provide comprehensive retail media measurement data.
“For that 30% where the respondents say their leadership team understands digital commerce, 56% believe they have access to adequate data from retailers,” Murray says. “In the 70% that don’t, that figure is just 13%. So, there’s a direct correlation there that says if your senior team understands what it is they’re asking for, you can get it.”
Brands Are Too Focused on Incrementality
Murray says brands need to worry less about incrementality with retail media and more about whether they are satisfying their customers on this channel.
“Manufacturers have been unduly focused on incrementality when it comes to digital retail media. They want to believe that it’s going to be truly incremental. The truth is, it doesn’t matter because customers don’t care. Customers just want to buy products that are going to satisfy their needs, their missions, and their journeys.” — Gregor Murray, Vice President of Strategy, Digital Commerce Global
Right now, retailers are losing money on digital commerce, and customers are being bombarded with marketing messages, rendering them less effective, Murray says. Some brand manufacturers are even paying more in terms of cost per click (CPC) for a retail media ad versus the sales value of their product.
This is because increased competition for media space is driving up the price of media, but brands aren’t seeing exponential customer growth to offset this higher spend.
Murray adds that brands can’t think of retail media in the same way as they view in-store media, because “digital commerce is not an impulsive media. It’s an intent-based platform. It’s [an] intent-based purchase.”
Instead, brands considering making a significant investment in retail media need to understand their overall objective.
6 Reasons To Do Retail Media
To help you understand and finetune your overall object, here are six reasons to do retail media according to Murray’s GRADES model:
- Grow your existing basket size
- Retain your existing customers
- Acquire new customers
- Drive trials
- Engage lapsed customers
- Satisfy new customers
“Those, for me, are the reasons why you would want to do digital retail media for your brands,” he says. “And at that point, you start thinking differently about the way that you want to invest.”
Refining Your Retail Media Strategy
To drive more value from retail media, brands need to have engaged leaders, clear objectives, and robust retail media measurement data to guide their decision-making.
They then need to take this data and regularly review their performance, test and learn through various campaign activations, and use all these insights to improve performance on this channel.
However, Murray says better retail media performance ultimately starts and ends with better data. Whether it’s a “no data, no dollars” approach or forging a more collaborative partnership with retailers, brands are entitled to know what they’re getting in return for their investment.
“If there’s one thing that listeners take from this podcast from me, it’s that retailers want more investment, but that doesn’t mean you’ve got to give it,” Murray says. “It’s your money.”
To hear more of Murray’s retail media insights, listen to the full episode.
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