Have you often wondered why retail media is being promoted everywhere, from media plans to LinkedIn, and how it’s evolving?
The US has been the driving force in building out what we know today as ‘retail media’, ‘cleanrooms’, ‘Amazon Marketplace’, and many more new media terms across the marketing landscape. Retail media networks own technical inventory, such as technology to power ‘sponsored products’ that we see on ecommerce websites and creative banners on our favourite sites’ homepages.
Retail media enables precise targeting of specific customer segments. So, how do we attract the customers who frequently purchase your products, those who did so a year ago, those you want to win back, and your leading competitor’s customers?
What is retail media?
Let’s take it back to basics. Retail media leverages both digital and physical assets to reach customers in powerful and contextually relevant ways. Covering both online and in-store advertising, retail media allows brands to connect with high-intent shoppers using first-party data.
Encompassing a variety of formats and placements, including sponsored product ads, onsite display ads, offsite ads and in-store digital screens, retail media helps businesses to capitalise on the convergence of advertising and commerce to drive growth and foster stronger relationships with consumers.
Getting access to the right people at the right time
Supermarkets are busy places, and one of the best locations to target customers who are ready to buy. However, they are also full of distractions and often people just want to get in and out. Therefore, creating cut-through that will provoke an immediate response is the key to driving purchasing behaviour.
The beauty of in-store retail media is the flexibility available. Whether it’s digital screens at the entrance to store, signage within the in-store environment or large-format screen walls, there are a multitude of opportunities to communicate with shoppers.
Heineken’s ‘Amplify Your Summer’ campaign serves as an excellent example of this; alongside a wider marketing push, they used goalpost screens in-store and printed assets to create mini festival stages inside Tesco stores. Delivering localised and contextually relevant content to shoppers, the beer company saw a 1.1% increase in market share during the campaign period.
The growth: Why retail media is outperforming linear TV
The retail media landscape is ever-growing, set to reach 31 billion euros by 2028, with 52% of UK media buyers shifting budgets from linear TV. The IAB’s (2024) retail media revolution report follows that in Europe, retail media advertising grew by 22% vs the overall ad market of 6% in 2023.
This progression is seen in-house, with brands learning the value of their customer traffic, CPMs/CPCs, and the ability they now have to monetise not only their site but also their stores across radio and with customers who watch the next instalment of their favourite TV show on ITVX, Netflix, or another favourite streaming service.
So, how are UK supermarkets tapping into the space? In January of this year, Co-Op launched the UK’s first convenience retail media network, allowing advertisers to reach ready-to-use audiences, enabling “seamless activation across several touch points”.
However, it’s Tesco that’s stated retail media will be “bigger than TV’ by the end of 2025. For the supermarket giant, retail media is not just a revenue channel but a strategic pillar. Through the Tesco Media & Insight platform, over 450 brands have partnered with the supermarket chain across multichannel campaigns, using Clubcard data to deliver highly targeted, personalised campaigns - bridging digital and in-store shopper experiences.
The roadblocks: How do we solve them?
As one of the leading global agencies, we use the best technology and toolkits to ensure clients are being highlighted in the key performing areas of their media plan. Retail media has shown the growth of players, especially within the grocery market: Tesco – Dunnhumby, Sainsbury’s – Nectar and SMG owning the majority of the other grocer retail media networks: Morrisons, Co-op, ASDA, and Ocado being the first digital-only grocer in the UK.
For brands and agencies to invest consistently and confidently in this fast-growing area of media, they’re introducing new informative ways for agencies and brands to drive long-term investment and growth. Ocado Ads and LiveRamp have just launched their own off-site retail media solution, Audience+, this February.
How can we make the most of the growing market?
IAB and leading marketing publishers voice the market's current growing pains. The market has a wealth of 1PD, especially supermarkets, which enable clients to target the specific subset of customers they want, e.g., a repeat purchaser of skincare (if they’re an accelerator brand wishing to gain market share), a lapser of skincare, etc.
However, advancements utilising data cleanrooms (an area in which brand customer data enters – is anonymised and pseudonymised) are to be made incognito and available to be used to scale and expand the reach of a singular customer base.
This opportunity enables agencies to drive scale and run these via self-serve (beneficial to our dentsu teams), who are able to use their strategic decision-making to improve media optimisation and planning to measure performance and personalised customer experiences accurately. Technical advancements such as these highlight the positive scale retail media is offering grocers with their wealth of 1PD data to access and utilise.
Grocer identified that retailer margin ROAS on retail media sales is around £6.60 on average versus non-retail media led sales at £3.80. This clear revenue-led approach is a driving factor in why we’re shown YoY retail media market growth: higher investment, greater revenue and a multitude of technical advancements.
How can data cleanrooms power tools for scale?
Tesco Clubcard and Dunnhumby hold over 23 million Clubcard users’ data – their online and offline shopping habits and how often they purchase or lapse certain product brands or categories entirely based on the time of year. This understanding enables a far stronger ROI and scale for marketing spend.
SSPs (supply-side platforms) enable the mediation of ad content on publishing spaces (for example, digital, out-of-home, and on-site on retailer sites) and will benefit greatly from advancements in scale technology like the Ocado Audience + x LiveRamp collaboration.
This example also highlights the movement in the industry to a higher level of agency-led self-service activations, benefitting commercially but also ensuring the painpoints we have historically seen should reduce as more partners move to utilisations of cleanroom technology.
Cleanroom technology: the benefits for brands
Over the past few years, clean rooms have helped to address privacy legislation issues in Europe and the US. However, whilst initially pitched as a technology to allow first-party customer data to be shared in a privacy-safe way, marketers are beginning to see the technology having a positive impact on sales.
InfoSum published a case study of a campaign run by Channel 4 and Nectar360, an agency that manages loyalty data for UK supermarket chain, Sainsbury’s. The partnership allowed brands stocked in Sainsbury’s to gain second-party data shopper segments to buy against, providing the scale and granularity to deliver effective experiences. The second-party retail segments generated up to 122% sales uplift for CPGs, with an average of 29% uplift across all partners and 56% uplift for product-focused creatives.
Last year, international food giant Kellanova utilised clean room technology to drive sales. Driving a 1-2% improvement in media effectiveness and efficiency, the use of cleanroom data drove significant improvements to their commercial bottom line, as having that granularity whilst also respecting people’s privacy allowed Kellanova to better connect with their customers.
Final thoughts
With the movement for more accessible and partnership-led cleanroom technology growth, this will open up more client-based work on an almost contractless collaborative effort, opening up tests and POCs more than in historical instances in retail media.
Activations such as this should offer a greater opportunity for clients to invest and agencies to manage. At iProspect, we'll remain at the forefront of this growth with strategic alignments across retailers and cleanroom providers for maximum client success.
