The Covid-19 pandemic brought a new normal to many industries, and marketing was no exception. A drastic shift in shopping trends occurred as more customers moved to online platforms for their retail needs. This catapulted the retail media space in record time as brands witnessed the increased need and pushed to make their digital mark.
Retail media is essentially the digital version of shopper marketing. It consists of advertising sold within digital properties where products or services are also sold, such as retailer websites and apps, or online marketplaces. It can display close to the point of sale when a customer is actively searching or shopping, creating a customized target approach.
The retail media boom
According to Forbes, retail media is expected to grow 5 times in five years, with a $48 billion increase in spend from 2019 to 2024. In addition, Amazon Advertising reports that nearly 74% of Amazon shoppers discover new products and brands while browsing their site, overtaking Google as the go-to for product research. It’s an exciting, emerging space that holds many opportunities for brand managers and marketers if they understand the potential challenges and how to best solve them.
The seismic shift in CPG shopping trends over the past few years has invariably highlighted these opportunities and challenges. Brands must now think about digital structures and how they will interact because—percentage wise—it constitutes a lot of their spend. In fact, according to Loyal Guru, retail media growth accelerated 42% year over year (YoY) in Q2 2022 and is expected to continue on that trajectory in Q3 and Q4.
This marks a change in the customer journey. Ultimately, retail media platforms can offer a more efficient, cost-effective model than traditional ones because they can perform brand advertising and trade marketing in a single environment. This enables marketers to more closely target customers who are at certain points in their purchasing journey, which is attractive to brand advertisers.
Challenges in the retail media space
One of the main challenges with the rapid growth of retail media is that it is forcing brands into these spaces before they know how to create and build the proper infrastructures to help facilitate the shift. For companies that do not have a specific role created for it, utilising existing structures can leave gaps in understanding and make it difficult to visualise the interaction effects between retail media and other channels.
For example, Brand X might think they need to advertise at all the .com giants, but each account is managed by a different individual—and these individuals are not talking to each other. This, in turn, creates a lack of visibility on how your dollars are working together, which makes it more difficult to accurately plan your marketing budget.
With the emergence of retail media, not only are the tools, targeting, and capabilities within the retail space enhancing, but you also have the digital shelf requiring brands to think about how they build differently—and the scope of management is changing.
Rather than employing the old method of thinking, where they have shopper people who do this and maybe a separate digital team or a digital agency who does that, brands need to focus on ensuring that they employ a holistic approach so they can better support the customer journey change.
The value of an omni-channel marketing tool
While most companies invest in a multi-channel or omni-channel experience, not all marketing mix solutions allow for visibility into the interaction effects across all channels. Adopting an omni-channel approach in your marketing and sales strategies has several advantages, including greater reach, increased profits, and boosted customer satisfaction.
Every dollar spent on one channel has an impact on every dollar spent on another. As you evaluate channel and timing options, a system that can quickly account for how your marketing decisions contribute to or distract from your targeted financial outcomes is essential.
Marketers need to be able to look at their plan from a holistic perspective to understand the impacts of certain media spend on the business. From there, it is possible to decide if it is better to take dollars away from a traditional media campaign and put them into retail media or not—and have the data to justify the decision.
Having an omni-channel approach means you need marketers that understand sales, marketers well-versed in the digital shelf, and then you also need shopper marketers to understand media. It’s critical to ensure anyone who has touch points with the customer, shopper, and the consumer ultimately understands these fundamentals at all levels.
Stay ahead of the competition
New opportunities for brands and retailers continue to emerge and mature in the retail media landscape. However, according to a recent report by Merkle, while 76% of brands use sophisticated marketing mix modelling to evaluate their retail media network (RMN) investments, 37% are not measuring across them, which creates limitations when it comes to validating media spend.
An omni-channel approach provides the best way to prove value, both short- and long-term. To have a holistic view of your marketing mix across different channels, you must be more agile and more sophisticated from a measurement perspective. You also need the tools that will help support your business growth goals based on where you’re going to be putting your dollars and where those dollars will be working the hardest.
Visibility into how your investment and retail media is impacting offline spend offers marketers a high vantage point that allows them to pivot spend based on their goals. Essentially, creating a holistic investment strategy is the path to outpacing market expectations and your competition in the retail media space. It allows you to know more, spend better, and identify new opportunities that drive more revenue for a lower overall investment.
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