After ad spending in e-commerce channels grew almost 50% in 2020, advertisers will increase those allocations by another 27.8% this year, according to eMarketer. Changes in consumer behavior have led brands to spend one in eight digital ad dollars on e-commerce properties. Furthermore, Boston Consulting Group stated in a recent report that "big retailers are already racing toward a $100 billion high-margin annual revenue prize in retail media." Retailers are seeing the proof that retail media networks (RMNs) are arguably the next big thing to happen to advertising since open exchanges, offering major opportunities for personalization and high-margin revenue. If you're thinking about building your own media operation, there are three things you need to consider first.
- Define your success
What are your company's strategic priorities for developing a retail media business? The best first step is to consider building your media services, products, and go-to-market strategy based on what is most important to your business. Consider whether your organization wants to drive customer visits or overall product sales. If your company's focus is expanding relationships with brands, you can use a RMN to secure an advertiser's current investments and grow your share of their marketing wallet. Another goal may be to deepen relationships with strategic suppliers to influence category management and product development, or make improvements in the supply chain. Other common priorities include increasing customer retention, driving incremental shopping carts and trips, increasing acquisition, growing loyalty programs, and, of course, boosting margins.
- Start small and invest strategically
Success will not happen overnight, but retailers can start monetizing one channel or one media placement at a time. In many cases, monetization of placements like end caps and in-store signage is happening already. With the rise in spending across digital channels, retailers have new opportunities to leverage first-party data in partnership with their suppliers to deliver more relevant ads to shopper segments. Closed-loop measurement, something retailers are in a unique position to provide, is a new requirement to capture dollars and show the value of the supplier's media investment.
Marketers cannot do it alone. Retail companies will need to identify all the required skill sets and determine if you already have the right expertise within your organization—sales, operations, technology, media, creative, and analytics—-or if these skill sets need to be hired. The size of your team will likely be directly related to the demand for your first-party data. The larger the demand, the more resources needed to get the initiative off the ground successfully. Building the infrastructure for a RMN is a significant investment. Years one and two will likely be more about investment than return. However, your team is building an infrastructure that will deliver consistent revenue year-over-year, further engage shoppers, and improve your competitive advantage.
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Perform a data and technical audit
The lifecycle of building a retail media business, no matter the size and scale of the company, is fairly consistent. This next step requires true objectivity about your organization's current assets and capabilities.
Marketers are sitting on great data assets, but they may not be valuable and actionable out of the gate. Does your company have enough transactional data identified, and is it ready for a potential partner to leverage for one or more campaigns? If not, your company may need to collect more first-party data through a loyalty program, for example, and resolve it through identity resolution strategies to more accurately connect it to the right consumer. Great data is needed when building a retail media business, but the data must be scalable and actionable.
When building an advertising business and performing a technical audit, find technology partners who aren't redundant and can navigate the intricacies of consumer data. They should be partners who not only understand that privacy is not one-size-fits-all, but are also innovating and pushing the industry forward. At a foundational level, any partner should be able to engage with your IT, information security, and legal teams to explain how their technology protects consumer privacy while preserving data utility, and allows for configurable privacy controls so you can tailor data access based on trust.
Finally, it's essential to think strategically for the long term and be able to answer:
- Where does your team expect to generate revenue?
- How will your team serve ads on your website?
- What technology will your team need, from media to operations to data, and will you buy or build?
- Will your team focus only on owned and operated digital properties, off-platform, or both?
Successful RMNs take time to cultivate, but there's no reason to be intimidated by the complexity. Retailers are already using this flywheel to improve profitability and customer engagement as well as to diversify their revenue streams. RMNs allow for collaboration across partners and the advertising ecosystem. Retailers are well-positioned to expand their sphere of influence, drive higher loyalty and overall spend, and ultimately transform their ability to reach new and valuable audiences.
Learn more about how LiveRamp can help your organization develop a retail media network without compromising control or data utility.
via https://www.aiupnow.com
Maureen Noonan, Head of Industry, Retail/CPG at LiveRamp, Khareem Sudlow
