2023 is the year retail media networks take off, writes Lindell Bennett, chief revenue officer at Cooler Screens, a retail media technology partner for Kroger, Walgreens and others.
As 2022 drew to a close, the conversation in retail media centered around opportunities for growth and evolution, especially in digital. As 2023 dawns, traders need to take a step back and assess their long-term growth. To do this effectively, retailers must identify the most efficient and relevant paths to sustainable growth and find practical solutions to their specific challenges, both online and offline.
As retailers assess their current position and determine the resources needed to succeed in 2023, these points can serve as a guide for the process:
1. Retail media must evolve to support growth
Investment in retail media is expected to increase as brands aim to reach consumers at the point of purchase and demonstrate the value of their media purchases through return on ad spend and subsequent uplift. For this space to continue growing in the coming year, it will need to diversify its inventory sources.
With the exception of giants like Amazon, a retail store’s on-site inventory will be limited and off-site inventory will be challenged by the loss of third-party cookies. Retailers and their advertiser partners will need to move their investments to where customers are and into 2023 – online and in-store simultaneously.
In-store media, for its part, offers retailers and brands opportunities to reach the bulk of their consumers by extending digital learnings and tactics into the in-store environment in tangible ways – and many have only just begun to explore what is possible.
2. Yet Retail Media Must Evolve Naturally
Retailers must find new avenues that add value to the customer experience and increase engagement, guided by the ultimate goal of making shoppers’ lives easier, better, and more informed.
For example, for grocers, recipes and cooking shows, or for pharmacies, wellness-focused content and apps are experiences that are intuitive and aligned with retailer and consumer goals.
Retail businesses need to balance their media ambitions with what’s best for the customer experience. Those gaining traction in retail media in 2023 will focus their evolution on experiences that enhance shoppers’ lives in ways that feel natural to the way they shop.
3. Retailers and their partners need more integration with physical stores
Following the industry’s focus on digital in 2022, it’s time for retailers to address the underdeveloped elements of physical retail. Here are four areas to consider:
In-store digital signage needs to be smarter to be truly effective and add value. This requires ensuring that the right signals are being used to maximize messaging relevance and appeal and getting the right messages to the right places, without overwhelming the buyer and degrading their experience.
The shopper data loop used by marketers to inform online media and measurement does not currently exist for in-store signage.
Individual personalization becomes nearly impossible without the implementation of personally invasive technologies, such as facial recognition. This forces marketers to consider contextual cues – such as weather, time of day, seasonality, or in-store location – and trade area data, propensity scores, and data. consumer demographics.
For a truly omnichannel strategy, retailers will need to learn how to use their loyalty programs to improve the overall shopping experience, by informing customers and empowering them to opt in with greater confidence. Buyer perks and incentives will help build the credibility needed for buyers to voluntarily share their behavior.
4. Privacy and data security come to a head
With this year comes the inevitability of new data privacy regulations in more jurisdictions around the world aimed at further limiting highly targeted media. Meanwhile, companies need to have plans in place in the event of a very realistic event of a data breach. Regulators and consumers are demanding accountability, transparency and, when necessary, action from retailers and brands.
In 2023, retailers must prioritize consumer privacy in all data-driven processes and look to publishers and ad tech companies for privacy precedents. We are already seeing some retail media networks adopt cookieless credentials to personalize experiences.
Similarly, contextual relevance becomes increasingly important as the methods of tracking and behavioral targeting of a buyer diminish. Showing ads when customers are in the context of a purchase or purchase in a category is becoming paramount for retailers. Privacy-conscious initiatives like this will increase as retail media becomes more sophisticated through 2023.
5. Retail media needs attribution standards and independent measurement
While the need is clear, consensus is currently lacking among retailers on key factors such as attribution standards and measurement definitions. Each retail media network has set its own standards for attribution and measurement and this fragmentation hampers consensus at this early stage, much like mobile video and streaming did in their early days.
As retail media networks continue to attract more ad spend through 2023, action will be needed to address issues such as viewability and ad fraud. But advertisers won’t want to see retailers grading their own homework. As such, measurement by an independent third party will be best suited to distinguish retailers’ true impact on an end purchase, which is unclear today.
6. Retail needs more unified omnichannel data and insights
Major retailers and advertisers are heavily focused on digital strategy – but let’s not forget that 90% of consumer packaged goods are still purchased in-store. Obviously, holistic omnichannel measurement must include offline events. Combining online and offline signals is a complicated task, given the fragmentation of reliable in-store sources of information.
Retailers like to tout their omnichannel or multimodal audiences, when in reality they have a limited ability to measure across that audience. As shoppers switch between online and offline purchases more frequently on their purchase journey, retailers will need to reflect this capability in their technology not just across point of sale and delivery as they do today, but also on media and measurement. This year, we’ll see new investments in retail media solutions that deliver more offline insights, which businesses must consider crucial to informing the integrated customer journey.
Retailers and their partners should keep these points to remember when developing strategies for 2023 and beyond. With all the shifts we’ve seen in consumer behavior and the retail media industry, success will depend on a company’s ability to understand this hot new channel and the bigger picture.
Lindell Bennett is Chief Revenue Officer at Cooler Screens.