Why retail media is about more than just the sale

Awareness. Consideration. Conversion. Loyalty. Call it the marketing funnel, sales funnel, or something else entirely, the goal remains the same: guide and nurture prospects on their way to becoming customers.

Over the past few years, a growing number of brands have turned to retail media to help them do just that; according to Bain & Company, the retail media market will grow by around 12% annually over the next few years, reaching a total value of around $140bn by 2026¹.

While that’s undoubtedly good news for the industry, there is something of a sting in the tail. In another – slightly older – study, 70% of the brands planning to grow their retail media spend said they were doing so because it helped them sell more products². Unfortunately, that helps to further the misconception that retail media is a lower-funnel pursuit – great for conversion, less so for awareness and consideration.

That’s not the case, of course. Last year, for instance, we interviewed more than 300 marketing professionals³ on their approach to retail media. We learned a lot from what they had to say, particularly when it came to the subject of measurement. Asked which key performance indicators (KPIs) they used when evaluating retail media campaigns, for instance, we found that:

• 48% used return on ad spend (ROAS) as a metric
• 44% were monitoring conversion to sales
• 43% were tracking reach
• And 37% were doing the same of awareness

So, while ROAS might still be the main way for brands to weigh up whether a campaign has been a success, other factors are clearly at play. Reach and awareness – key upper-funnel concerns that speak to issues like customer lifetime value and purchase intent – are all part of the conversation too.

To me, that is proof that perceptions about retail media are beginning to change. Can it help brands to win customers and drive sales? Absolutely. But, as many brands agree, it can be so much more as well.

Before we look at why that’s the case, let’s take a moment to think about what brands need to succeed at the upper end of the funnel.

• From an awareness perspective, it’s difficult to look beyond the reach issue. If brands want to build an appetite for their product, they need to reach as many potential customers as they can
• Moving on to consideration, the priority shifts towards inspiration and education. Advertisers need to start zeroing in on the people who are most likely to buy their products and give them a reason to do so

Retail media meets those requirements through a combination of two things – channels and insights – and I think it’s worth looking at each in turn.

Channels

As a term, “retail media” is something of a catchall, with channels varying dramatically from retailer to retailer. In recent years, for example, much of the focus has been on the digital side of the equation, with the likes of sponsored ads and homepage banners drawing plenty of attention. That’s not necessarily wrong, either; in some cases, those are the only kinds of opportunities that retailers can offer.

From our perspective, though, retail media is a much bigger proposition. As well as key digital channels like the Tesco homepage and sponsored product recommendations, we can also give advertisers the ability to reach customers in a variety of different ways across our store network. Thanks to our partnerships with the likes of ITVX, Channel 4, Meta, and Pinterest, that opportunity even extends to the worlds of Connected TV and social.

The key thing here is that – with the right approach – retail media can provide advertisers with everything they need to drive awareness at scale. Whether they want to engage millions of customers as they shop each week in-store or communicate to them across a range of high-traffic digital channels, retail media gives them a way to do so.

Insights

As brands seek to turn awareness into consideration, they also need to become more specific in their focus. Typically, that means learning more about their most “relevant” audiences and how they can drive those people towards a purchase. This is where insights come in.

One of the most powerful things about retail media is that it is powered by first-party data. This data can be used to help brands understand more about who their customers are, and then personalise their communications around shopper needs. Naturally, that can also help them to understand which shoppers are most likely to be interested in their products, and what might prompt those people to decide in their favour.

That capability – combined with the ability to reach shoppers from sofa to store – is what makes retail media just as well suited to the upper end of the funnel as it is to the lower.

¹ No More Easy Money on the Side: Retail Media Enters the Performance Era – Bain & Company, 13th December 2023

² Commerce media: The new force transforming advertising – McKinsey, 5th July 2022

³ Retail media: the buyer’s view – dunnhumby, April 2023