Retail media is new, exciting and potentially highly lucrative for all participants. It is beyond proof of concept and delivering brilliant results in the retail sector.
The benefits for the wholesale industry could be sky high, writes David Gilroy.
Murray Walker is arguably the most famous Formula One racing commentator ever. Sadly, deceased in 2021, Murray started commentating in 1976. But what you may not know about him is that prior to this he enjoyed a highly successful career in advertising. In the late 1960s as a copywriter, he was challenged to come up with slogans for the Trill bird seed account. This was a tall order as Trill dominated the market with over a 90% share, leaving very little headroom for growth. He came up with the slogan “An only budgie is a lonely budgie.” Thus, effectively doubling the size of the market at a stroke. He is also credited with classics such as “A Mars a day helps you work rest and play” and “Opal Fruits, made to make your mouth water.” The 1960s is widely viewed as the creative revolution in advertising with campaigns geared towards witty, creative and memorable events harnessing the rise of television. Based in London, the advertising agency Collett, Dickinson and Pearce (CDP) were viewed as global creative leaders and most influential for many years. Alumni include David Putnam, Charles Saatchi and Sir Ridley Scott.
Media advertising has undergone significant innovations since the Second World War. These milestones offer great insights into social changes and popular culture. Prior to the war it was all about radio and print media. The golden age of television started in the 1950s and reigned supreme for decades. By the 1980s the personal computer revolution had begun, leading to the early stages of digital advertising. In 1984 Apple’s “1984” commercial aired during the Super Bowl, showcasing the power of event-based marketing and high-production value advertising. The internet era started in the 1990s with the launch of major web portals such as Yahoo! and the introduction of pay-per-click models by search engines like Google. The rise of social media and mobile advertising started around 2003 and then surged with the introduction of the iPhone and subsequent rise in smartphones. Programmatic advertiser advertising and influencer marketing kicked off from around 2010 while Facebook and Google dominated the digital ad market with sophisticated targeting, algorithms and analytics. The rise of artificial intelligence (AI) and machine learning enhances personalisation and predictive analytics in harness with AI-driven content creation and chatbots becoming integral to digital marketing strategies. Throughout these decades, media advertising has continually evolved, adapting to new technologies, consumer behaviours and regulatory environments, while consistently aiming to deliver more targeted, engaging and effective ad experiences.
Now we have a new advertising innovation which could offer profound opportunities for wholesale. That of retail media. Retail media is the practice of leveraging digital and physical retail assets to sell advertising opportunities to brands. It has become a significant trend in the North American retail industry. As e-commerce and digital interactions become increasingly integral to consumer behaviour, retailers are exploring new ways to monetise their platforms. This trend has gained momentum with major players like Amazon, Walmart and Target leading the way. The advantages of retail media are substantial. It provides retailers with a valuable new revenue stream. For example, Amazon Advertising generated over $31 bn in revenue in 2022. Retail media platforms enable retailers to gather and analyse extensive customer data leading to better insights into customer behaviour and preferences. Kroger’s Precision Marketing platform utilises shopper data to help brands target their advertising more effectively. The customer experience is enhanced through the higher level of personalisation which can help them discover products that match their interests and needs. The relationship with brands is strengthened. Walmart Connect, Walmart’s advertising platform collaborates with brands to deliver targeted ads across Walmart’s digital properties.
As you would expect Tesco is leading the charge in this country. Tesco has urged suppliers to invest in the massive upscaling of its retail media network claiming that digital growth will make the medium bigger than television by the end of 2025. Tesco has announced that it is planning a rapid expansion into new revenue streams, with the number of digital screens in stores more than trebling to 6,000 by the end of this year. Tesco recently “wrapped” its Wembley Extra store with a 46-metre-wide and 10-metre-high ad for PepsiCo in the run up to the Champions League final in June. The true value of retail media is enormous with the spend globally poised to grow 10% exceeding the high point in 2023 of $128 bn.
For retailers, selling ads on the channels they own – covering both online and in store margins of 70% to 90% can be achieved, according to research by Boston Consulting Group. The first party data supermarkets hold on customers is increasingly valuable. It gives them the ability to target granular demographics based on their buying habits – particularly valuable to brands wanting to optimise return on investment (ROI) from their marketing spend. And like few other media channels, the advertising can be at the precise point customers are choosing which products to select. For consumers it means more personalised offers and targeted marketing. The talk in the industry is all about the “triple win” for retailers, consumers and brands.
There is no playbook for this new medium. All the participants are testing, trying and learning what works best as they go. This is one of the reasons it so exciting. It is truly pioneering. And of course there are challenges. The buyer/supplier relationship becomes more nuanced and complex with the retailer taking on the role of the salesperson and the supplier the role of the buyer. The efficacy of customer data, privacy and security is critically important. Retail media means competing with established digital giants like Google, Facebook and Amazon for advertising revenues. And brands will require clear evidence of ROI to justify spending on retail media. This in turn will require openness and transparency on performance metrics and analytics.
Retail media is an exciting innovation with loads of mileage for wholesalers. They have all the componentry and expertise to be highly effective in this arena. And they paint on a big canvas when it comes to big box trading activation. The thought of retail media execution in our industry is beyond mouthwatering.
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