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Retail media – “young” marketing discipline with great potential
Whether “booming marketing discipline” or “advertisers’ favourite” – in specialist media such as HORIZONT, there is currently no way around retail media. No wonder, because hardly any other topic is currently occupying the marketing industry so much. But why? What opportunities and possibilities does it offer advertisers? And where is the journey heading?
Retail media – what is it anyway?
The BVDW’s Retail Media Circle describes the growing marketing discipline as “the unique opportunity to present brands and products where their relevance, perception and acceptance are high, their path to customers is very short and the context is most natural.” But what does that mean in concrete terms? Thanks to Retail Media, brands can place their adverts on retailer websites, with retailer data on other websites and on digital screens and POS displays in-store – i.e. onsite and offsite. This turns a retailer itself into a media platform that enables brands and manufacturers to target customer groups according to their interests, search and purchasing behaviour directly at the point of sale. And thus at the place where the willingness to buy is particularly high. Retail media can also be used to gain valuable insights into consumer behaviour, intensify customer relationships via loyalty programmes and increase interactions with customers via content.
For endemic brands – i.e. brands that sell their products directly via a marketplace or online portal – the use of retail media within an overarching media strategy can both directly influence sales and maintain customer relationships. However, retail media can also be worthwhile for non-endemic brands, as they can also benefit from retailers’ large first-party data sets to target their customers as part of media campaigns. This is particularly attractive for those who have previously relied on third-party cookies to address their target groups.
Why is retail media booming right now?
The origin of the retail media hype is both the continuing trend towards e-commerce after the pandemic and the success of market leaders such as Amazon and Walmart in the area of advertising. Amazon now generates the majority of its sales via ads and Walmart has been able to book targeted adverts in the supermarket chain’s online retail system since 2021. For German retailers, the success of the industry giants from the USA has made it clear what enormous potential the retail media business harbours. This is also reflected in the significant increase in digital advertising space in German supermarkets: Rewe is currently placing screens in 3,000 of its 3,700 stores, generating 34 million contacts per week. Edeka is introducing 500 DCLP screens with 10 million contacts per week and Kaufland is able to display 350 screens in 150 shops with over 2.25 million visitors per week. At the latest since Google announced the end of third-party cookies in Chrome, many brands are also looking for new ways to target their customers.
Even though Google keeps postponing the abolition of third-party cookies (it is currently said that they will no longer be available from the beginning of 2025), this would mean a restriction of personalised advertising. For many, the solution therefore lies in the retailers’ first-party data: Otto-Advertising, for example, has data from more than 31 million active user accounts and is connected to more than 90 per cent of all AGOF marketers in Germany, which extends the retailer’s reach to numerous other websites and thus further increases the target group approach – such a wealth of data is a strong argument for retail media for many brands.
Where is the retail media journey heading?
Retailers’ customer data provides advertisers with crucial information on the search behaviour and preferences of their target group, which can be used for targeted addressing and thus also to increase advertising impact. Retail media offers media planners even more advantages: a direct presence at the PoS not only leads to greater visibility, but also to an increase in brand awareness. At the same time, sales are boosted as consumers are reached where they are particularly willing to buy and can also purchase the products directly. Another advantage (especially of digital retail measures) is that campaign performance can be measured precisely so that the campaign can be optimised based on data if necessary.
It is therefore not surprising that the FOMA Trend Monitor 2023, the forecast by the specialist group of online media agencies, attributes the most dynamic growth in the digital advertising market to the retail media sector – with an increase in this year’s net investments of 22 per cent. The international study “The Great Defrag: How Commerce Media Will Unite Advertising in 2024” by Criteo confirms this trend. There, 93 per cent of agencies, 88 per cent of brands and 89 per cent of retailers stated that advertising had a strong or positive impact on their bottom line in 2023, and for 79 per cent of advertisers it was also the most effective channel in terms of revenue. In the economic outlook published by the Organisation Werbungtreibende im Markenverband (OWM) last autumn, 90 percent of the OWM members surveyed also expected retail media to become increasingly important in the coming years and 43 percent intend to increase their investments this year. Despite these impressive figures, for many the real potential lies in the use of first-party data along the entire marketing funnel – especially now that the end of third-party cookies is imminent. Because if you want to address target groups in a relevant way, you can also use first-party data outside of shop environments for targeted customer communication.
Nevertheless, there are some concerns regarding transparency, uniform standards and measurability in the fast-growing marketing discipline. In March, the OWM published a Code of Conduct to emphasise its claim in these areas. The reason: large tech platforms such as Google, Meta and TikTok have long since established their own advertising ecosystems – so-called “walled gardens” – which often provide advertisers with little insight to assess the actual advertising impact of their campaigns. This is exactly what should not happen again in the fast-growing retail media industry. It remains to be seen whether advertisers and retailers will create a transparent, standardised ecosystem with first-party data or whether there will be a renewed fragmentation of data in the advertising industry in this area – either way, the retail media business will probably be worthwhile.
