Retail media: the time is now
FIELDS OF GOLDEN DATA
In the mid-20th century, French sociologist Pierre Bourdieu sought to explain human behaviour through the observation and interpretation of social contexts. The formulation of the so-called Field Theory conceptualizes a symbolic space in which society is organized by groups, or fields of people who have common tastes, traditions and meanings. Individuals mark their territory with similar symbols. To that extent, they have the ability to share, impose and establish their own rules, in a process of creating “cultural capital” between dominant camps and other smaller camps and sub-camps.
Just as Bourdieu’s theory illuminate the complexities of human choices, today’s retailers have in their hands a new, yet demanding challenge of driving growth based on consumer behaviour, leveraging on “fields” of data and decision-making and targeting bigger, smaller or one-of-a-kind camps. Retail media strategies are reshaping the way brands engage with consumers, create meaningful connections, and ultimately drive purchasing decisions.
RETAIL MEDIA: MORE THAN MEETS THE EYE
Retail media has emerged from a transformative force in advertising, harnessing extensive consumer data collected by retailers to create targeted marketing opportunities. The acceleration of e-commerce—fueled by the pandemic—has prompted retailers to recognize the value of their platforms, not just for sales, but as prime advertising spaces. This shift signifies a fundamental change in how brands engage with consumers, moving from traditional advertising channels to the very environments where purchasing decisions are made.
At the heart of this transformation are Retail Media Networks (RMNs), which, in simple terms, allow brands to purchase ad placements directly from retailers. These networks leverage first-party data to ensure that ads reach the right consumers at the right time. Companies like Amazon, Walmart, and Target have developed sophisticated platforms that function as both marketplaces and advertising ecosystems, in some cases integrating online ads and in-store promotional campaigns.
In 2023, Amazon’s advertising arm had generated over 31 billion dollars in revenue, which represents more than five percent of its total annual revenue. This may sound little, but it is the equivalent of more than 75% of all retail media advertising market in the United States. These networks offer various formats, including sponsored products, display ads, and video content.
By tapping into insights derived from shopper behaviour, retailers can provide brands with highly targeted and effective advertising solutions, often resulting in significantly higher conversion rates compared to traditional media, an opportunity only a few business sectors can achieve. With TV or Radio ads, for instance, it is difficult to determine whether the conversion was directly influenced by the ad consumption, as its purpose tend to always contain an awareness goal as well. Studies suggest that the average conversion rate for TV and Radio ads is around 0.1% to 0.3%, depending on ad placement, targeting, and product category. These figures pale in comparison to digital channels, such as Google, Facebook or Instagram, where average conversion rates can balance between 0.5 and 5%, depending on the goals, targets, type of ads and platforms used.
By benefiting from a highly motivated audience, in which consumers are often closer to the point of purchase, in-store Retail Media Networks can achieve a 10% conversion rate, with some e-commerce platforms achieving even higher rates in certain categories or with highly targeted campaigns.
The allure of retail media lies in its data-driven approach. Whether from traditional loyalty cards or more robust AI-based systems that detect actions via in-store cameras and sensors, retailers possess extensive first-party insights into consumer behaviour, preferences, and purchasing patterns. This information empowers advertisers to tailor their campaigns with unprecedented precision. Retail media provides a context for brands to deliver tailored content that resonates with consumers’ social identities. Bringing Bourdieu back to the conversation, this personalization goes beyond mere product recommendations, involving a narrative that connects the consumer identity, its fields of presence and the brand ethos.
SOCIAL MEDIA RELEVANCE
For consumers expecting convenience and speed, food brands are capitalizing on mobile-first strategies, utilizing shoppable ads on platforms like Instagram and TikTok to showcase recipes and cooking tutorials that encourage impulse purchases. In this sense, Bourdieu’s concept of habitus also serves as a way of showing that behaviour is influenced by broader social trends and technological shifts. Influencer marketing is another critical aspect of this evolution. Brands partner with influencers to create authentic content that resonates with their target audience.
Retail media networks can facilitate these collaborations, providing data insights that enhance campaign effectiveness and drive conversions. Brands that effectively measure and respond to these dynamics will be better positioned to connect with consumers on a meaningful level.
BEHIND THE CURTAIN
Finding the right balance between personalization and privacy remains a challenge. As regulations around data privacy tighten, brands must navigate these complexities while still delivering meaningful experiences. In Europe, for example, tracking a customer’s movements within a store or their purchasing behaviour through mobile apps demands compliance with EU regulations, which, depending on how retailers operate, may limit how much personal data can be gathered and how it can be used for advertising.
THE MEDIUM AND THE MESSAGE
Driven by technological advancements and shifting societal values, consumer behaviour has been influenced by the rise of mobile commerce, social media, and influencer marketing. Retail media sits at the intersection of these trends, offering a platform that aligns with modern consumer habits. This idea of integration poses as a tremendous challenge for legacy retailers, which may have been incorporating and executing some of the strategies that retail media proposes, but in a separate and linear way, missing therefore business opportunities.
Experimentation has been crucial for both retailers and brands. When more retail companies enter the space individually, there is a risk of having the overall value proposition of the solution is diluted, also creating complexities for selling space, and leaving brands with numerous questions as to where marketing money should be channelled. Cooperation between marketing, data analytics and commercial and sourcing teams is pivotal for the implementation of strong Retail Media Networks. Partnerships with other market players are also another natural step.
CONSUMER JOURNEY IN A STORE THROUGH THE LENS OF A RETAIL MEDIA NETWORK
It is expected that retail media networks become more and more directly incorporated in the design of the store experience across multiple touchpoints and moments. Here are some examples.
- Awareness
In-store displays, digital signage and promotional materials catch the attention of shoppers as they enter or are about to enter the store. - Consideration
Product information on labels and interactive kiosks or corners will provide additional insights to help evaluate options. Stimuli such as app notifications using beacons can help retailers send location-based notifications to customers’ smartphones. - Purchase
Checkout displays and mobile payment options enhance the transaction experience, ensuring convenience at the point of sale. Data collected at this stage is precious for the strategic definition of the next retail media campaigns. - Loyalty
Post-purchase follow-ups via emails, in-store surveys, but also targeted campaigns will increase the chances of retaining customers. - Advocacy
Engaging customers through loyalty programmes and social media sharing invites customers to advocate for the brand.
