In this week's member guest blog post, we hear from Maurits Priem, VP Monetisation Europe & Indonesia at Ahold Delhaize as he reflects on Cannes Lions and shares his 7 key takeaways on Retail Media. Is Retail Media here to stay? Find out below.
Last month, the Cannes Lions Festival brought the global media industry together in the South of France. One of the trending topics at the event was Retail Media, as it is revolutionising the way brands can reach customers. This article discusses the key takeaways on Retail Media, coming directly from Cannes Lions 2024.
CMOs incorporate Retail Media in their omnichannel marketing and retailers grow and mature their Retail Media networks (RMNs). Both at a remarkable pace, dubbed ‘The Third Wave’ of digital advertising. This year, Retail Media will already make up one-fifth of worldwide digital ad spend.
At the Cannes Lions Festival, retailers, advertisers, agencies, ad-tech and industry bodies met to learn more about this dynamic development, as well as to professionalise, network, and negotiate. This year, we counted over three times more events, panels and talks on Retail Media compared to last year. We estimated a similar increase in retailer’s attendance, which led to the rather unique opportunity to discuss Retail Media in person with players from both sides of the Atlantic. Clearly, Retail Media is in Cannes to stay.
Retail Media is projected to grow beyond this year’s $140B globally at a continued pace of 20% annually. In essence, advertising is about reach, data (targeting & measurement), technology (enabling & convenience) and creativity. Retail Media’s growth will be driven by scaling the first three axis. Building significant scale in terms of reach, data and tech demands for vast resources in terms of talent and budget. Most likely, only large omnichannel retailers are equipped to qualify for that game. At the same time, advertiser’s demand will look for efficiency and work with just one or two RMNs to meet sufficient reach in a given geography and then move on to the next region. Therefore, growth will probably go hand in hand with consolidation and aggregation. Winners will take all.
Nevertheless, smaller RMNs may still maintain their business based on the joint business plans (JBPs) in trade relations with their suppliers/advertisers. For an advertiser this fragmentation leads to inefficiencies, consistency challenges, and reluctance to spend media budgets, all probably hindering growth at the speed of the large omnichannel RMNs.
Retail Media is very different from retail. Depending on the country, the number one selling grocery item may well be a banana. However, selling a banana is very different from selling a banana ad campaign. The supplier-buyer relation flips 180 degrees; the focus is on technology and scalability rather than food and logistics. It is a high margin instead of a low margin game. Thus, in order to create the anticipated growth, to be able to surf the ‘Third Wave’, there is much to learn, for retailers as well as for advertisers.
Retailers need to be committed to build this new capability, and advertisers need to be committed to work full funnel and omnichannel. Today, budgets, KPIs, data and expertise are still way too siloed. There is a change management challenge at both sides of the table and in order to cross this chasm, retailers and advertisers should collaborate. It’s time to take joint surfing lessons.
Targeting of key audiences becomes more and more sophisticated with retailer customer data platform (CDP) adoption and integration into self-service platforms. Multiple RMNs announced self-service and programmatic solutions at Cannes, bringing convenience to advertisers and their agencies, soon to become a hygiene factor.
RMNs in the United States seem to have discovered physical stores as the next frontier. In their rush for gold they realise that many European RMNs are rooted in their stores, therefore they are looking for European learnings and connected store developments. The challenge is to unlock the truly unique value that physical stores can add to online and vice versa. Omnichannel connections and integration demand for cross-silo collaboration; instore budgets, KPIs, data and expertise are often sitting in silos, like retailer store development, advertiser’s field force and shopper marketing. The European and American IABs hosted a first of its kind transatlantic workshop on in-store industry standards, recognising the advertisers need to avoid a patchwork of walled RMN gardens, each having their own metrics, formats and definitions.
In other RM topics (except for privacy) the USA Retail Media industry is clearly ahead of Europe, just like Asian Retail Media in turn is most mature globally.
Offsite advertising, in which Retail Media leverages its unique customer insights, continues to take shape, providing an opportunity to advertise through large publishers and social media networks. Amid crumbling cookies, retailers hold large sources of consented first-party data. Data on audiences that can be tested, confirmed and augmented against each purchase at a SKU level. During the festival, multiple RMNs announced offsite products, driving reach for their advertisers.
Like any booming industry, Retail Media attracts new entrants joining the party. As predicted some years ago, other commerce, like airlines and fitness companies, stand up their own RMNs, some of them present in Cannes. Given their small endemic supplier base, these new RMNs serve near-endemic and non-endemic advertisers mainly.
We see a growing appetite from these non-endemic brands to advertise through RMNs. Both offsite as well as onsite. These non endemic advertisers are attracted by RMN’s additional and unique reach and its first-party audiences (not just search and likes, but actual buying behaviour) to mitigate looming cookie depreciation. In addition advertisers are attracted by its brand safe context, the possibility to reach consumers in buying mode (higher attention, more open to ads and longer dwell times) and last but not least the opportunity to stand out as a non-endemic brand in a retail context (Seth Godin’s ‘purple cow’).
Huh, No AI?!
Of course, AI was a topic as well. But less hyped than last year. With numerous Retail Media AI initiatives being launched at Cannes, the short-term effects might easily be overestimated, as with many innovations. The long-term effects, however, are deemed to be huge. AI’s game-changing potential is to be found in use cases such as media planning, campaign workflows, creative versioning, performance optimisation and next-level targeting.
Conspicuously Absent Retail Media Topics
We may have missed it, but there was little to no talk on the consumer perspective, in the Retail Media business bubble. Whilst there is abundant opportunity for RMNs to improve consumer experience. For users, a good experience means fewer irrelevant ads, fewer third parties recklessly tracking and sharing personal data, and less redundant clickbait.
Finally, we missed ambitions on the role of Retail Media in Environmental Social Governance (ESG). We see ample opportunity to raise the bar in advertising in terms of relevance (for consumers and advertisers), carbon emissions, privacy, and amplifying good products and messages.
Surf’s up!
Retail Media is in Cannes to stay. We hope to see you there next year. Till then, let’s continue to take joint surfing lessons, learning to ride ‘The Third Wave’.
