Notes for Procurement - In-store retail media

in layman's terms, without the hype.

Technology is a funny business. I’ve been in the sector for over 30 years in various guises since I graduated university. It’s interesting, constantly evolving and competitive, but it’s also an area subject to an inordinate amount of hype, which is exciting in year 1 but not so much after 30 or more!

Things always follow the same pattern, release of a new technology or paradigm followed by huge interest, hundreds of news items, conferences and exhibitions that make it seem like the answer to all problems. A couple of years later, if the core concept has real underlying value, we see it embedded into the way we work, but rarely does it resemble the promise exacted by that early activity.

‘Retail media’ is the latest in a long line of paradigms to feature in my list and I thought I would give some space to discuss what this is and, probably more importantly, what it isn’t, to try and cut through the noise you’ll more typically read online. 

OK, so what is retail media? Put simply, its retailers leveraging their audience of footfall and traffic, across all their touch points, both online and in-store to create media space which can be sold to both trade (the brands they stock) and non-endemic (those that they don’t stock) clients. It’s become the focus of a lot of discussion since the advent of increased online privacy regulations, which significantly reduce the price performance ratio of online advertising. Before this, online was the epitome of effective advertising due to the ability to gather so much data and therefore effectively target the consumer.

What retailers have, in theory at least, is huge amounts of customer data, referred to as 1^st party data, typically gathered through the clever use of the various branded loyalty cards you’ll be familiar with. Even without a loyalty scheme, retailers know about their traffic and transactions, what products sell when, where and in what volumes, together with the sorts of activity that may be a pre-cursor to or a trigger for a sale. This information is highly valuable, as it can be used to determine the best channel, position, place and time to serve a digital advert to a consumer, to gain commercial benefit through a product sale.  This data means that advertising can be placed more effectively, and generate direct sales uplift, which buyers of media love. Compared to more traditional DOOH (Digital Out of Home), where a campaign can create awareness but is generally sited on poster-sites a significant distance away from the all-important ‘point of decision’ – the place where a consumer makes their product choice. 

So that’s the good stuff. In theory retail media creates a new channel of inventory that media buyers can use to target potential customers much more effectively and granularly, with a direct impact on sales uplifts. Does it justify all the current hype? Partially would be my view. I think the biggest issue with the current furore around the industry is that people have equated screens with retail media, assuming that you can install any old screen into a store and it suddenly means you have a hugely valuable retail media network. This is most definitely not the case. 

Retail media is more than digital screens in store environments. As previously mentioned, it spans all of the touch points that a retailer has with their end-customers. Our focus is on screens because they’re what we specialise in, but also, they’re typically the ‘new’ advertising inventory that gets added to a retailers’ estate. 

What’s important to understand is that a screen in a retail media setting only has value if it forms part of a wider network. Whilst media buyers and brands like to micro-target audiences, they need national coverage to do this effectively, so while being able to target one screen at lunchtime in Greenwich is fantastic, the value of the space only becomes apparent when that screen is part of a campaign that touches hundreds, if not thousands of other points in space and time. 

The difference with a screen-based retail media network is that the first party data can be used to decide when that ad gets shown in Greenwich, based on the propensity of customers to be influenced by the content at that specific window in time. 

Sounds easy? It’s not. 

Common mistakes that we’re seeing in the market include too many screens being installed (media buyers only have so much budget, so adding screens past a certain point doesn’t add additional income), screens being placed in poor positions (too high, in dead zones, in areas with poor viewing zones etc.) and CMS/signage software selection that doesn’t allow for commercial contract compliance. Retail media is not like digital signage where playlists aren’t limited in length – it has to deliver guaranteed levels of impressions or play outs, which means constantly adapting the content playback schedules on a screen-by-screen basis to ensure they’re met.

This is much more complex from a software perspective, as content play out schedules need to be constantly adapted to ensure the targets are met. The system also needs to ‘know’ how much unsold space there is on every single asset at any point in time to allow for new campaigns to be planned in. 

There’s also programmatic advertising and how that fits into the retail media landscape, but we’ll talk about that in another blog.