Interactive Advertising Bureau
15 May 2024

A Q&A with IAB Europe's Retail Media Committee - The Value of Retail Media to Brands and Evolving Use Cases

Retail Media is transforming the digital advertising ecosystem. With this transformation comes a shift in how brands align their media investment to their marketing objectives. In this blog, experts from our Retail Media Committee explore how budgets in retail media are shifting on the buy-side, what is driving brands to consider retail media as part of their holistic marketing efforts and the challenges that need to be overcome. 

A big thank you to the following contributors for sharing their thoughts:

Esme Robinson, Director Platform Solutions, EU Enterprise Products at Epsilon

Jason Westcott, Chair of IAB Europe’s Retail Media Committee and Global Head of Commerce Solutions at GroupM

James Allison, Director of Market Development (Europe) at Advertima

Q. Retail Media has been an integral part of trade marketing budgets for some time. What is compelling brands to invest further, i.e. beyond trade marketing, in retail media?

Jason - "First, it is important to understand the following dynamics. A brand’s trade marketing focuses on influencing trade intermediaries (retailers, wholesalers) to promote and sell their products more effectively. Brand spend or Advertising & Promotion (A&P) targets the end consumer to generate demand. Digital retail media evolved from e-commerce site tenancy rooted in trade marketing, to addressable advertising more akin to A&P. So, the evolution to the behavioural targeting of individual consumers has naturally attracted A&P spend. The ability to attribute sales to this media is an upside to marketers and budget controllers seeking proof of ROI for their budgets. This is endemic to more modern retail media and has helped fuel industry growth."  

James -"Jason's point about growth extending beyond trade marketing is key. The ability to measure media's impact on sales across the entire marketing funnel, thanks to the rich data now available, is driving this expansion. Retail media isn't just about influencing purchase decisions anymore. Brands can leverage connected online, offline, and in-store media channels to measure and optimise for upper funnel awareness as well. Standardising measurement and integrating retail media with broader digital advertising across all channels are crucial for continued growth."

Esme - "Brands are in a position they've never been in before: from the efficacy of targeting - being able to not just reach buyers of their brand, but accurately suppress those to reach net new prospects, to the way in which those campaigns can be attributed to real people, across a host of new and existing channels. Brands can meet shoppers where they are at more stages of their shopper journey than ever before. And the work that IAB Europe and others are doing to create standards gives brands confidence in the rigour and efficacy of retail media networks and their vendors." 

Q. What should retailers be doing to attract brand budgets to their media offering? 

Jason - "Brand marketers want addressability at scale, to be able to deliver the exact creative message they want within the brand-safe environments they have approved, plus delivery/impact measurement that aligns with their broader digital investment framework. A simple concept but challenging to deliver. With a one or two exceptions, on-site is less appealing to Brand, being mostly lower funnel. Off-site propositions that offer cross-channel flexibility for the buy side will be more attractive to brand marketers and agencies. Shiny new formats will always attract brand marketers’ attention, but if they do not align to the tenets above, they will lack longevity."  

James - "Traditionally, retailers focus on proving sales results (ROI/ROAS) to brands, pitching their ad space primarily as a conversion tool (with the exception of certain activations). This caters to shopper and trade marketers seeking direct sales impact from media buys. However, retail environments are also prime spots for building brand awareness. Consider frequency, crucial for brand recognition: European grocery shoppers spend an average of 41 minutes per visit, providing a lot of exposure to in-store media and therefore driving brand recognition. 

As mentioned earlier, consistent measurement and long-lasting, plannable formats (both digital and in-store) are vital. By showcasing the power of brand building alongside clear measurement standards, retailers can attract brand budgets."

Esme – "It is important that retailers understand how e brand budgets work, especially within agencies. Brands or Brand agencies expect consistent, transparent person-based performance reporting – in fact 75% of Brands rated ‘transparency on up-to-date campaign performance reports’ as the most important capability of a retail media network (Epsilon RMN Survey Report: The state of retail media in 2023) as well as wanting customer insights to complement measurement. To attract brand budgets, retailers need to demonstrate how these results and insights can inform media planning compared to just being the provider of an audience to buy." 

Q. Can you give an example of some evolving use cases for retail media and brand budgets?

Jason - "Brand marketers can leverage digital retail media's audience targeting to achieve specific brand objectives. For instance, they can boost customer lifetime value by using retailers' customer profile data to offer brand-exclusive subscriptions via their owned domains. To regenerate demand from lapsed buyers, targeted video content is effective to help consumers reengage with the brand - optimising for video completions rather than immediate sales here is the best approach. Video can also be used to drive awareness among relevant audiences, leveraging shopper profiles based on real shopping behaviours, such as tech enthusiasts or pet lovers, especially during new product launches, offering reasonable scale with less wastage." 

James - "Building on the concept of audience-based marketing, a powerful new use case is emerging: real-time, seller-defined in-store audience targeting. This reduces ad waste by allowing brands to deliver targeted messages directly to relevant shoppers at scale.

Imagine a drink brand with four flavours, each popular with distinct demographics. With audience AI, they could promote the entire range using mid-funnel tactics like mobile ads and digital out-of-home displays near stores to attract "all adults." Then, in-store, the technology personalises content for each SKU based on real-time shopper data. This hyper-relevance drives lower-funnel conversions by reaching the right person with the right message at the point of purchase. This strategic combination of mid-funnel awareness and targeted in-store promotion creates a powerful tool for brands."

Esme - "Beyond the channel and data points mentioned above, an evolution we’re seeing is that brand budgets aren’t just being spent with retailers they have an endemic relationship with. There’s a definite rise of non-endemic retail media, which is born from the expansion of the types of retailers and brands that are entering the retail media space. Non-endemic retail media gives brands from all verticals the opportunity to target hyper-relevant potential shoppers and opens up a new revenue stream for retailers, which they can then funnel back into their overall marketing budgets."

Q. Can you share two top best practices for brands? 

Jason - "Retail media client strategies I have designed consistently emphasise the advertiser's business objectives throughout. Successful approaches weight performance across a retailer's media offerings, aiming for genuine business impact rather than chasing superficial sales metrics. Key practices include valuing targets appropriately, such as being prepared to flip competitor’s customers even at a negative campaign ROAS, and maintaining clear campaign segmentation with a single KPI per objective to avoid conflating multiple goals across line items. This ensures campaigns remain focused and effective in driving growth and achieving genuine business outcomes."

Esme – "Brands should embrace a strategic channel mix to maximise opportunities to connect with shoppers – but always maintain overarching strategy and goal to prevent disparate conversations or unnecessary duplication. Brands will need to know exactly what they want to achieve (trusting their convictions) and will ideally be able to tie back messaging from any channel to a real outcome from a real person. This relies on good identity resolution and people-based targeting and attribution – with this assessment of capabilities being a necessary best practice for brands when considering where to spend budgets." 

Q. How do agencies and advertisers view retail media now versus 5 years ago?

Jason - "Five years ago, digital retail media operated independently from core digital channels, often in isolation with limited alignment and accountability. Today, there is a shift towards integrating retail media into core media frameworks and processes across marketing organisations. More retailers have become media owners or expanded their offerings, often through technology provider integrations and new media partnerships (i.e. CTV via established broadcasters). It is overstated, but the growth acceleration of e-commerce through the pandemic was a boon for retail media. As Europe and Central Asia’s fastest growing channel (+15%) with 6.9% channel share (according to GroupM), it is firmly in the industry spotlight and will be exposed to growing pressure for greater digital channel conformity as it continues to scale."

Esme – "the most significant change has been the knowledge and experience within Retail Media Networks, Brands, Vendors and Agencies. The expectations from brands have (rightly so) grown significantly with more demands for meaningful performance, transparent reporting, more channels and greater expertise and support from Retail Media Networks. The industry is rapidly increasing its ability to meet those demands but with such a vast array of approaches, technologies, and partners to choose from, there are still key challenges that need to be addressed to ensure those brand demands are met and not obscured with the latest shiny development." 

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