Advertisement
06/06/2022

The Future of Retail Media Networks

Publicis Group's Jason Goldberg discusses retail media measurement, budgeting and the not-so-endless shelf. 
Cyndi Loza
Managing Editor, Member Content, P2PI
Cyndi Loza profile picture
Image
Jason Goldberg holding a sign

As new retailer media networks and offerings continue to pop up, so do questions surrounding measurement, budgeting and how brands can best leverage the platforms. 

Jason Goldberg, chief commerce strategy officer, Publicis Group, is one of the most followed e-commerce subject-matter experts on the web. Known on Twitter as the @RetailGeek, Goldberg recently chatted the Path to Purchase Institute on the current state of retailer media networks. He will deliver a keynote on "The Future of Retail Media Networks" on June 29 at the Retail Media Summit in Chicago.

P2PIQ: Retailers today seem to be either doubling down on their media network offerings or creating new networks altogether. Besides an alternative revenue stream, what are the benefits of launching a retailer media network for a retailer? What are the challenges?

Goldberg: Retail media networks (RMNs) are an important revenue stream for retailers. Typically less than 2 out of 100 visitors to a retail website make a purchase in any given session, so a RMN is a way to monetize the traffic that does not convert. Further, the revenue from these networks is much higher margin (as much as 75% gross margin) versus typical wholesale math that might have 20% gross margins. That extra revenue is especially important to off-set some of the extra costs in digital commerce versus traditional in-store commerce. 

But, RMNs are more than just a new revenue stream for retailers. While digital commerce has made “buying” much easier, it has made “shopping” and especially “discovery” much harder. Well executed retail media spots are an important tool to expose customers to new and unfamiliar products and drive unplanned purchases.

The big challenge with retail media networks is balancing ad experience with the mission the shopper came to complete. Putting too many sponsored ads in search results for example can create friction in the customer experience and erode customer satisfaction. Another challenge for RMNs is offering the scale, tools and data that traditional digital advertising networks like Google and Facebook have offered and that digital advertisers are used to.

P2PIQ: What are some of the benefits for brands to partner with retailer media networks? What are some of the challenges?

Goldberg: While people like to talk about the digital shelf being “endless” the amount of SKUs on the digital shelf that actually get seen by shoppers is far less than in a brick-and-mortar store. Brands need digital media placements to help achieve visibility for their SKUs. Also, [considering] retailers’ first-party data, and privacy changes on platforms like facebook, retail media networks can often target better audiences for a brand than other media vehicles. The challenge is that few retailer media networks can deliver the size of an audience that a network like Facebook offers in a single buy. So, brands need to be able to aggregate more smaller impressions. It can also be hard for brands to properly allocate budgets for RMNs since they are used to exclusively using trade dollars with retailers.

P2PIQ: What can a brand confidently measure with a retailer media campaign? How do they know if a campaign was successful?

Goldberg: The best retail media networks have very good closed loop marketing. You can generate the usual media metrics like cost per mille, reach, return on ad spend, brand recall, etc. … But, you can also measure conversion, revenue, gross margin contribution, and even customer lifetime value ad formats with a direct call to action. The key is to match up the right metric to the right placement. Many brands mistakenly try to use conversion metrics to measure awareness ads, for example.

P2PIQ: How should brands leverage retail media?

Goldberg: Brands need to be thinking about RMNs as a media opportunity (not trade advertising) and they should be thinking about full-funnel applications of those media opportunities. As the RMNs are evolving rapidly, there are lots of emerging new ad formats, and historically there are higher ROIs to be had by being an early mover on new formats. It may be higher to get a high ROI on a mature format like sponsored search, but being an early mover on an in-store placement, or off-site DSP buy may be an especially good value. It’s also important for brands to treat each SKU as a separate business and manage their RMN strategy separately. Top of mind incumbent SKUs should have the same RMN strategy as new SKUs or challenger brands. SKUs that have recently been out of stock, may need a RMN boost to get their previous search visibility, for example.

P2PIQ: In our latest Trends Survey, nearly a third (30%) of respondents said network buys are being funded by national media budgets, up from 24% in last year’s Trends survey and 18.2% in 2020. Do you see this figure continuing to grow? What do you think this means for retailer media networks?

Goldberg: Yes, as we’ve discussed, increasingly RMNs are going to play an expanded role beyond traditional trade activities, and that is going to require a different approach to budgeting. In the long run, expect more brand budgets to get consolidated as the lines blur between all these opportunities and players.

    Advertisement
    Advertisement