What is the role of retail media?

With some media formats, it’s easy to understand the role that they play. If you’re looking to raise awareness – and aren’t too concerned about being able to track the exact impact on sales – then out-of-home or cinema advertising might be a suitable choice. If you’re more invested in sales conversions on the other hand, then display ads will probably feature fairly prominently in your strategy.

With retail media, any attempt to pin down the exact role that it plays can be significantly more difficult. Vitally, that’s not because there’s some fundamental flaw in the proposition, or any kind of fuzziness around what it can do, either. Instead, it’s because retail media can cover so much ground that there’s no easy way to package it up without missing something out.

Part of the problem here is that retail media works across the whole of the marketing funnel. Would you like to engage with millions of prospective customers when they go online to browse a digital store? Retail media can help you do that. Would you like to send a tailored discount code to the 5,000 people who viewed your product but didn’t add it to their basket? Retail media can help you do that too.

None of that means that retail media can’t be defined of course, and from our perspective here at Tesco Media and Insight Platform, we believe that it plays a role in three important areas:

• Retail media gives brands the ability to inspire and drive cut-through with customers
• It can be used to sharpen up media plans, with precise audience targeting
• And it can also be used to convert key customers, driving growth in the process

Let’s take a look at each of those three in detail, and how they help to explain more about the role that retail media plays today.

1. Inspire

Inspiration is critical to consumer brands, particularly right now. Sleep shopping – where people buy the same products and labels week in, week out – is commonplace. Consumer finances are under pressure, and the temptation to opt for cheaper alternatives is always there. In this kind of environment, the ability to stand out and capture people’s imagination is essential.

Retail media provides brands with the creative canvas they need to do just that. It could be sponsored media on an e-commerce site. It could be personalised coupons printed off at the checkout. Or it could be a network of connected screens displaying animated content. Across a variety of formats, retail media offers a way to break through the routine and prompt shoppers to take action.

2. Sharpen

Advertising dog food to cat owners. Promoting dishwasher tablets to people who don’t own a dishwasher. Selling a new beer to shoppers who don’t drink. When ads are targeted at the wrong audiences, they’re little more than money wasted – and that’s a problem that no brand can afford. To prevent that from happening, media plans need to be sharp and precise, reaching more of the “right” audiences.

One of the key advantages offered by retail media is that it provides access to first-party retailer data – data that can then be used to reach very specific groups of customers. That can be as simple as using identifiers like demographics, but advanced data science can also enable behavioural and predictive targeting, providing opportunities to engage based on past and (likely) future behaviours.

3. Convert

To grow, brands need to persuade prospective customers to buy their products and convince lapsed customers to return. For performance marketing to be truly effective, though, it requires a combination of scale, pinpoint targeting, and reliable measurement – and that’s something that an increasingly small number of formats are able to offer.

Retail media is one of them. Many retailers now offer a range of performance marketing products, display and sponsorship formats working in tandem with  branded ads and digital coupons. In combination with the targeting approaches outlined above, that makes it easier than ever for brands to engage with customers based on their specific actions and needs.

As useful at driving sales as it is for driving awareness, and inherently precise and measurable at the same time, perhaps there’s a better way to think about retail media than asking what role it performs. Instead, ask what it is that you want to achieve; chances are, retail media can help you do it.