Retailers as Media companies

A quick look at data monetisation with Retail Media Networks

The realisation around the importance of harnessing the power of your first party data has set in. As brands look for better insights and new ways of targeting their customers, retailers have a unique opportunity to get a lion share of these marketing spends by building their own media platforms powered by the insights generated by their first party data.

But what is this magic pill which can help retailers drive a high margin incremental revenue in addition to delivering a positive shopping experience? Simply put, RMN (retail media network) is an ad-tech platform on retailers' websites which allows brands to buy ads (media) across the retailers properties along with a closed loop measurement of their campaigns. These platforms enable brands to show relevant ads & communication based on what their consumers are looking for. This relevance is in turn powered by the insights that retailers are now able to generate using their first party data ( shopper information and transactions) and having a better understanding of their shopper needs, preferences and buying behavior.

RMN is not new but now, technology has democratized the playing field. Now, if a retailer has a robust commerce platform coupled with a strong intent, they can successfully build a media business giving them an opportunity to foster a deeper collaboration with brands, get an incremental revenue stream and of course improve their shoppers experience by targeted & a more personalized approach. But how can a retailer get started? Is it that simple to implement?

One size doesn't fit all

Every retailer is at a different stage of digital maturity with a specific set of priorities, constraints and in-house capability. Retailers can either go for pre-packaged solutions which may be quicker and easier to implement but could potentially be limited in scope and flexibility. Or build a custom solution using a combination of third party building blocks to implement a solution which is unique and in line with their aspirations/ business requirements.

An wonderful example of custom built solution by integrating a set of third party building blocks is given here in this Google’s ebook which covers how a retailers can weave in an integrated media platform by using Googles building blocks like Google Ad Manager, Display & Video 360, Search Ads 360, Campaign Manager 360 and Analytics 360

On the pre-packaged side, there are players like OnlineSales , Moloco, Criteo etc which are helping retailers fast track this move by making it easier to implement and execute on their media strategies.

Taking the decision on Buy vs Build has to be done with a scalable strategy in mind. It ultimately depends on the retailer's strategy and business priority. Irrespective of the path you chose, it is always a good strategy to partner with an ad tech partner who can help integrate the various building blocks within and outside your technology stack to help build an efficient media platform.

Retailers are racing to build their media capabilities.

The concept of retail media was first pioneered by Amazon which has been posting record advertising revenues on their platform prompting some to say that it is actually a retail media company that also sells products. Interesting point of view which may actually be correct!

While we see many instances of retailers in the US building their inhouse retail media platforms, the trend is fast catching up in Asia as well. Let me give you a few examples in both these geographies. In the US, Amazon offcourse is the big daddy of the retail media business with a lion share of ad spends. However, other players like Walmart, Best Buy, Target, Home Depot etc are coming up fast as well. Best Buy is a great example where the company built their media platform along with Google’s advertising & Marketing technologies resulting in a 45% improvement in the conversion rates among shoppers and a 10x return on ad-spends (ROAS). This is just phenomenal. Closer to home, we see ecommerce marketplaces like Zepto, Shopee, FlipKart, Tokopedia, Lazada, Sendo etc. moving in quickly to set up their ad platforms, building new capabilities with each passing day.

As this gains momentum, the competition amongst retailers to be unique and to get their fair share of marketing spends is hotting up. In addition, the rise of super apps in Asia is also building their mini ecosystems wherein these mega platforms are able to drive engagement with their target segment and clearly identify attributable conversions- a key ingredient for a successful media platform.

The road to media stardom is not easy

Building a scalable, custom, secure media platform with automated tools and data privacy measures is not easy. Finding in-house talent and relevant skill sets for executing such an endeavor is a problem here as well. In addition, you need to ensure low latency and a great interface to be able to provide a relevant and smooth experience. A pre-packaged solution is faster & easier to implement but comes with its own limitations. However, the foundational building block is the capability to analyze and build insights from your customer data ( 1st Party Data) which in turn comes from setting up a unified customer data platform, the usual starting point for such initiatives.

There is still however an elephant in the room and that is the concern around data safety and privacy. Customer information leaks or abuse of their privacy can have a severe impact on the retailers credibility, erode their shoppers confidence & engagement with their brands. Once you lose trust, it is a difficult road back.

So, is it for everyone?

With cut throat margins in the business, it is but natural for retailers to start exploring new business models. Building a retail media platform presents a great opportunity for retailers to unlock that incremental revenue, build a deeper collaboration with their brands and most importantly, provide better service, offerings and experience to their shoppers.

But is it for everyone? Well, it may not be so. In my view, this comes at a higher end of the digital maturity curve and the prospective retailers need to be ready before jumping into building one. As a prerequisite, you need to have a commerce platform with large traffic generating high quality/quantity of data coupled with a vast network of brand engagement. In addition, organizational alignment is key as typically, these media platforms are run as separate businesses with clear guidelines on ad formats, KPI’s and campaign execution parameters. Moreover, the brand-retailer relationship gets a bit more complicated given that a retailers ends up selling ads inventory to the same brands who are also selling to them.

From the technology and digital maturity perspective, If a retailer has already set up the foundational capabilities around customer data consolidation/ insight generation mechanisms, a comprehensive digital commerce platform is already in place and the inhouse data is already being successfully used to improve operational efficiencies, it is then probably time to start looking at data monetisation which will then lead to the topic of RMN.

But one thing is clear, every established retailer is now looking at building their own media platforms. Apart from the revenue generation and personalisation for their shoppers, one of the big wins of doing this is the collaboration with brands. Building relationships with your brands, gaining trust and jointly investing in the retail ecosystem, is gold. These collaborations ultimately have a very positive impact on the shoppers retail experience and that to me is priceless.