Retail Media is a big thing in the consumer goods industry, and for good reason. It is a huge opportunity for brands. First, an enhanced opportunity to reach shoppers all the way to the point where they make a purchase decision (and beyond of course). Secondly, the promise of meaningful attribution of sales against marketing spend. That is powerful stuff! But that isn’t the whole story. Arguably it’s not even half the story! We’ve been working with clients all around the world, helping them prepare for the Retail Media Revolution – to make the most of the opportunities, and avoid the major pitfalls. Across two articles I’m going to explain why this is happening, why you need to pay attention, even if Retail Media is tiny in your part of the world, and what you need to do to make it work for you – the Four Keys to Retail Media Success. If you are in sales, marketing, or retail – read on. Even if Retail Media isn’t big in your market yet – it will be very soon. It is inevitable!
The Retail Media Revolution Is Real
The Retail Media Revolution has been well-documented (including by me 😊). Retailers opening up their digital channels and stores to media investment opportunities in ways that simply weren’t available before. In some markets historically, stores were almost clean, with no branded activities allowed. Those same stores are now crazy media-cluttered environments. The transformation in some cases is staggering.
Why the Rush into Retail Media
There are many reasons for this sudden rush. And it is sudden. Retail Media spend is growing faster than Search advertising, faster than Social Media advertising. Why? The reason is simple. Retailers are under pressure. Margins in most markets around the world are falling. Store capacity is maximised. E-com sites still don’t make money for many of them. What to do? Media. Retail Media. Amazon delivered US$56 billion in advertising revenue. That’s a big number. Walmart delivered US$4 billion in the same period. And Retail Media carries staggeringly high margins, compared to retailing. No-one knows exactly the margin Amazon makes on its media, but most experts agree that it is between 50%-70%. If we take a conservative number (50%), that means that Amazon made at least US$27 billion in profit from advertising. Big number, but big numbers are meaningless without context. So, here’s some context. Walmart’s annual pre-tax profit for the same period was US$26 billion. Amazon made more money out of advertising than Walmart made out of everything they do – including advertising. Put it another way. To level the playing field with Amazon, Walmart would need to double their retail business to deliver the same profit. I can’t see that happening quickly! So competitive pressures are turning Retail Media from an opportunity to an imperative.
Retail Media – A Ready-Made Market
There is of course another reason why Retail Media has grown faster than other media waves. And that, simply, is about market forces. Before Social Media companies could sell advertising, they had to create the social network and create an audience hundreds of millions. Then they had to create a system for selling that audience to potential advertisers. But for Retail Media, the situation is different. Retailers already have an audience: the shoppers in their stores are already there, week after week. All that is required is a shift from selling stuff to shoppers, to selling the shoppers themselves as an audience. And as for a market to sell that audience to? Retailers already have one. Their suppliers. A ready-made market for their new media offer. A market that, let’s face it, will find it hard to say ‘no’ to their biggest customers.
Rapid Growth Is Inevitable
It’s a perfect recipe for rapid growth – Audience already in place. Revenue stream virtually guaranteed. And yes, there is more to it than that, of course. But the two most challenging parts of any media start up were basically in place before anyone had ever coined the phrase Retail Media. So that is why it is growing fast. That is why, even if Retail Media is relatively small in your market now, you need to start thinking about it. Because every large retailer on the planet is already thinking about it. Because its high margin. Because they already have the audience. Because they already have the revenue streams guaranteed. And because in the near future, they will need Retail Media to survive. Effective Retail Media will become an existential issue for retailers very soon
What Comes Next
In the next article, I’m going to share my Four Keys to Retail Media success. If you don’t want to miss it, make sure you subscribe to this blog now. And if you want to speak about your individual Retail Media situation or would like me to engage with your team on these challenges, let me know. We’ve got all the stats, all the strategies, and the case studies and tools to make sure you make the best of this opportunity/challenge. Get in touch now and let’s see how we can help.
