How Retailers Can Prepare for a Second Wave of Retail Media
Retail media has inched its way to the top of all retailers’ agendas — and rightfully so. It’s exploding in growth. In fact, retail media is set to reach $61 billion in the United States alone by 2024, and that figure is only expected to increase as the market grows to $160 billion by 2027.
Faced with lingering pressure from the pandemic, an uncertain economy, and consumers’ ongoing preference toward digital shopping, retail media is pivotal in solving some of the industry’s most relevant challenges — from tight advertising budgets to consumers’ evolving sentiment and spending patterns. But it doesn’t stop there.
The retail industry is preparing for a second wave of retail media — one that incorporates what we’ve learned in wave one — and takes it to the next level in terms of accurately capturing consumer behavior. The key word? Data.
Here’s how retailers can prepare for and take advantage of this second wave of retail media in the years to follow.
The First Wave
Wave one of retail media was all about driving a more effective and targeted e-commerce experience while simultaneously ensuring low funnel sales and increased brand equity. That said, possibly the most impactful part of retail media is the ability to reach consumers when they’re already in the mindset (and the digital location) to shop. This notion of meeting consumers wherever they're making their purchases — combined with the idea of compelling brands to invest in retailers’ digital shelves — is extremely beneficial to retailers and consumers alike. Not only does retail media reach consumers in a wonderfully relevant context, but it also helps both brands and retailers make smarter media buying decisions, as well as better plan marketing campaigns and inventory supply down the road.
The Second Wave
Wave two of retail media is all about capitalizing on wave one’s achievements to gather and leverage consumer insights. Gathering first-party insights from a retailer’s platform is key in helping brands make more informed marketing decisions and, in turn, curating hypertailored ads. In fact, according to recent research, having first-party information is a major reason that CPG brands report choosing to work with retail media networks in the first place.
Yet, there are many more advancements to be made. In wave two, retailers can unlock extensions of value for themselves and their trading partners by reimaging the use of consumer insights from shopper data. This new element of consumer insight can extend retail media well beyond a retailer’s own properties. We're seeing the early stages of this with the fusion of retail shopper data and media publisher audiences to build off-site, personalized advertisements. Other use cases, such as personalized shopping experiences and targeted creative content, can also be fueled by wave two. This is a new opportunity for retailers because it gives them the opportunity to better understand exactly how to satisfy consumer needs in a world that's omni-shopping.
It’s also important to note that while wave two leverages shopper data, it’s different from retail data monetization. However, both drive topline sales by improving the consumer experience online and in stores, offering targeted search results, relevant product information, promotions, retargeting and improved assortments. Both also drive profit pools due to the high margins in advertising and data.
As we come into anticipated quarters of cost cutting, retailers would be wise to implement retail media into their strategies to bolster customer insights and reach consumers in a more cost-effective, targeted manner.
The views reflected in this article are the views of the author(s) and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.
Jay Dennis leads EY's Commercial and Marketing Transformation practice. John Dubois is EY's Consumer Data and Analytics leader.
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Jay Dennis leads EY's Marketing Transformation practice focused on helping clients drive growth by transforming Marketing, Sales, and Service functions. Specializing in Consumer, Retail, Media, Tech, and Telecom sectors.
John serves as the EY Consumer Data & Analytics Leader; EY Americas Customer & Growth Co-leader. In these roles, he supports clients’ move toward consumer centricity by providing strategic guidance and outside-the-box thinking around the applicability of the ever-growing voice of consumer with the goal of creating value across all the channels that make up the brand experience.
Prior to joining EY, John had been in the startup world for 25 years. Most recently, he had founded an award-winning SaaS platform that invented AI techniques to generate consumer demand insights for agencies, consultancies, consumer packaged goods and retailers to help them solve consumer-facing sales, merchandizing, marketing and innovation challenges.
Before that venture, John founded several software services firms where he built large, custom, e-commerce, analytics, IoT and mobile solutions for many Fortune 500 companies.
John has a BS in Mechanical Engineering from The University of Texas at Austin.