Retail media has really grown up. An eMarketer report showed that ecommerce site advertising grew 38% YOY in 2020—totaling more than $17 billion. Retail media is a true win-win opportunity for smart retailers looking for a high-growth revenue stream and a path for brands to access their first-party audiences.
But retailers need new strategies if they want their fair share of this market. A 2020 Forrester report predicted that U.S. retailers with more than 50 million monthly site visitors would launch their own retail media networks. In contrast, Amazon has an estimated 200 million monthly site visitors. In contrast, a typical ecommerce site only sees about a third of its actual brick-and-mortar customer base. With significantly less website traffic, sites like these can’t just use the same strategies as Amazon and expect the same outcome.
Guide: 3 strategies for a successful retail media network
Tomorrow’s retail media networks are being launched by fundamentally different retailers than the ones that built the category. They have to consider new ways of building a retail media network that works for them, not copy what worked for others.
The real value of retail media extends beyond owned properties
Today’s concept of a retail media network often focuses on on-site search and display as the primary advertising opportunity. This makes sense for early retail media network players because the most valuable information lives within their site—i.e., users searching for products.
But for brick-and-mortar retailers, their customers aren’t necessarily regular visitors to their ecommerce sites. Epsilon did an analysis for a retail media client and found that of the 53 million consumers in its file, 88% were only reachable off-site because those people simply didn’t visit the retailer’s site. That’s 46 million people the retailer can’t reach by only using on-site advertising.
The average non-Amazon retailer doesn’t have the reach to maximize its revenue potential, unless the retailer wants to turn its website into Times Square with ads all over the place. And even if the retailer does, it’s still limited to only reaching site visitors (which, even for bigger retail brands, is a quarter of Amazon’s monthly site traffic).
Retailers need off-site advertising to deliver the reach and scale with current and prospective customers. However, building a solution that connects the reach and efficiency of off-site ads to the on-site experience is easier said than done.
3 key capabilities to look for in a retail media partner
When it comes to building an effective retail media network—one that connects retailers’ first-party data to individuals across on-site and off-site advertising—not all partners are created equal. Here are the KPIs to look for when searching for the right retail media partner:
1. Recognize consumers on-site, off-site and offline: Recognition is the name of the game in digital media, and retailers need to screen for true reach in their conversations with partners. And, with third-party identifiers going away, reach is plummeting across the ad-tech ecosystem as many don’t have a true, scalable cookieless solution. At Epsilon, we have two- to three-times more reach than other media networks, allowing retailers’ brand partners to connect with more in-market shoppers wherever they are in the digital space.
The reach conversation also extends to solution measurement. Because Epsilon’s measurement is based on transactions, we’ll know exactly who was messaged and who purchased—so brand partners know their budget was spent wisely. We’re also the only partner that measures online and offline transactions at scale for retail media campaigns.
2. Proactively drive transactions on your site at the individual level: When done right, an off-site plus on-site solution acts as a transaction generation strategy, bringing customers to your site to buy a specific product. For example, if someone is health-conscious, they’re probably reading health-related articles on their favorite news sites, following relevant blogs about holistic nutrition and purchasing organic, natural products when shopping. A retailer like Walgreens, with its new Walgreens Advertising Network, could reach this person with messages about vitamins and supplements that complement their diet, encouraging them to purchase on Walgreens.com. Holistically connected identity pinpoints those unique reach opportunities, building demand for the product before the person visits the site.
And this strategy works really well: For one Epsilon retail media network client, 42% of messaged visitors from off-site programmatic had never visited the site before. And for another client, we saw that 11% of all Q2 2020 site traffic was messaged by off-site programmatic first, and 30% of messaged visitors from off-site programmatic had never visited the site before.
3. Optimize brand partners’ spend for real outcomes: Retailers are excited about building a new revenue stream, but they also have a fiduciary responsibility to the brands trusting them with their ad dollars. Yes, brands want access to a retailer’s brand experience and audience data, but they also need a measured outcome. It’s key to trust a partner that can deliver measured transactions at the product level—at scale.
The opportunity is now. Retailers are sitting on a huge asset with their first-party data. And they need the right partner—that knows first-party data, brands, retailers and measurement—to build the next generation of retail media.
**This article was originally published on Adweek, March 2021.