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Retail Media’s Potential Is Even Bigger Than We Thought PREPARED BY
JAY FRIEDMAN CEO Goodway Group
October 2023
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What the Future Holds for Retail Media I spent a few days last week with top-level decision-makers from 15+ large retailers, 10+ major CPG brands, and most major holding companies, consultancies, and technology providers. Here are my top takeaways.
Retail Media Data Is Still Undervalued Per many surveys, the top reason retail media is a valued channel is for closed-loop attribution. But that’s only half the equation. Apple has removed most personalization capabilities, and cookies are on the way out. Retailer data is the key to better ad targeting in the coming years. As a result...
Upfronts Will Go From a Table for Two to a Table for Four Agencies and content owners have long enjoyed a two-party dance to negotiate hundreds of billions of dollars in upfront commitments. This is about to get significantly more complex.
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With traditional demos no longer viable and brands now accustomed to the precision of retail media data and targeting, I expect brands and retailers to join their agencies and content owners in upfront discussions. It will work like this. Retailers know exactly where a brand’s upside and potential are based on its customer and basket analysis data. They know this down to the user and can include lookalikes that are more precise than ever if desired. Because of this, the smartest brands will negotiate reach and frequency-based buys through clean room analyses, overlaying the data on the most desired consumers with data from the content owners to cherry-pick their audience for each campaign. Because retailers typically won’t get in a room together and brand/retailer relationships are highly joint business planning (JBT)-driven, brands will more often join their agencies at these upfront tables to shepherd the process. Is this a cause for concern? No….
There’s Every Reason To Be Calm and Confident Agencies are nervous because they are moving from gatekeeper to facilitator. Content owners are moving from audience designers and content owners to content owners and audience facilitators. Social media, TV and other large buckets of money get nervous seeing that retail media will be a $100-130B play, “surpassing” their channels. These are oversimplifications, though.
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Smart agencies will lean into conversations with content owners that have retailers and their clients sitting beside them. Agencies worry that brands will then “just do it themselves,” but this overlooks the fact that great agencies have deep knowledge engrained into the fabric of the agency that goes far beyond one account. It’s why we use outside legal counsel. The hourly rate for the attorney we deal with is worth it because their internal network within the larger firm affords them quick access to broad and deep knowledge.
Content owners may feel they’re losing control as well, but arguably, it was control they never had. Major TV networks didn’t know they had a strong 18 – 49 audience. Nielsen told them they did. Now, retailers can tell them who their audience is, but in a much more precise way. Content owners should lean in very heavily to retail and industry data to know their audience user by user, not demo by demo.
Retail media isn’t going to surpass social media or TV. Retail media will be made up of TV, social and all other forms of media.
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Best in Industry > Better Than Most Competitors > Good > Perfect Measurement and standardization (often of measurement) were two of the three to four hottest topics at this event. I was struck by how many people were — for lack of a better word — stuck because perfect measurement isn’t achievable. For any improvement that was suggested, people had a reason why it wasn’t always true. Avoiding anything that’s not perfect is the fastest path to being last in an industry. Not moving forward because there are situations in which a solution isn’t wholly true is what leaves parts of our industry still measuring click-through rate (CTR). Measurement is perhaps the ripest area for retail media innovation and improvement. How many brands and retailers would give themselves a “good” grade? How many would say they’re better than most of their competitors? Few, if any, would say they’re at the top of the industry. I don’t think the top of the industry is above the clouds, though. I think it’s achievable with focus and practicality. I noticed this especially when moving through different parts of the customer journey. I heard three times: “Right, but measuring offsite impact becomes convoluted/challenging/messy once in-store media is introduced.” Not really. Behold the value of A/B testing!
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Conclusion I love it when complexity is introduced into business because it gives the smartest participants an opportunity to differentiate and rise above. Retail media is making things more complex, but not more complicated. Retail media is giving marketers the insight and tools to do what we’ve always wanted to do with more precision and better measurement.
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