Shopping for retail media? Browse Lessons Learned From Search Marketing First
“Data-driven thinkingIs written by members of the media community and contains new ideas about the digital revolution in media.
Today’s column is written by Bryan Wiener, CEO of Profitero.
Barely a major line item a year ago, retail media is the new black – capturing the attention of brand marketers and leading them to open their portfolios in unimaginable numbers around the same time. last year.
The accelerator is making more and more online purchases due to the pandemic. EMarketer sees online advertising grow almost 40% year over year in 2020, accounting for 12% of all digital ad spend. Additionally, almost every major retailer has launched or announced the launch of an advertising solution, the most recent being Walgreens in December.
And brands that integrate this new channel into their media mix can get a boost by applying the lessons learned from the early days of research. There are some weird similarities to many growth inhibitors found in early stage search marketing, but with a few new twists.
Two of the biggest challenges are ecosystem alignment and data connectivity. Solving the two could give retail the opportunity to take search marketing to heights Google can’t reach.
Aligning the ecosystem: putting all stakeholders on the same page
Brands need to adopt a more effective retail media strategy to stand out on the crowded digital shelf, especially since e-commerce generally has an economy that is less attractive than brick and mortar to brands (an article for another day).
Yet in too many brands maximum efficiency is impossible because traditional buyer and consumer marketing is siled, with separate agencies, analytics, and experience manager oversight for e-commerce and media teams. This structure does not work in the age of electronic commerce where the lines between consumer and buyer have blurred.
Established brands are already taking a critical look at organizational structure by realigning teams to better connect the dots between sales and marketing. However, to be successful, budgets and service providers also need to be fluid across channels and managed by stakeholders who have the expertise to execute each channel flawlessly.
This dynamic is played out in real time between full service advertising agencies and specialized distribution agencies. When research and social media started to gain momentum more than ten years ago, the agency Dentsu 360i, of which I was CEO or chairman for 14 years, was initially successful. to compete with full-service agencies, and then, to avoid trivialization, to integrate fully.
I expect the same dynamic to play out in e-commerce.
Each brand must weigh the cost of simplification against the benefits of specialization. Brands should consider the importance of e-commerce to their business, the size of their e-commerce budgets relative to other media, and conduct a capacity assessment of their current agency versus specialty offerings.
Data connectivity: integration of product analytics and advertising
Retail media is much more complex than research. This forces buyers to understand the dynamic changes and interconnected relationships between the supply chain, competitive pricing, and consumer ratings and reviews that drive conversions and organic impressions. All of these levers go well beyond discovering a brand.
And the real-time nature of all of these metrics is a key consideration. Too often, media buyers who make minute-by-minute decisions about retail media do not have all of the information at hand to make optimal decisions.
When research was less mature, brands optimized keywords based on historical data rather than examining how real-time analytics could expand the addressable market for profitable revenue. This has created opportunities for smarter, more picky brands. Take for example Red Roof Inn, one of the first 360i customers. Even on a lower budget than its competitors, it generated huge performance gains by using flight tracking data to automatically adjust creatives and bids for mobile search in areas where flights have been canceled or severely delayed.
Inventory rates are the simplest example of how real-time analytics can fit into retail advertising strategy to improve campaign performance. Putting advertising dollars on out-of-stock products creates damage beyond the lost sale. Brands lose an average of 42% of their online sales when inventory rates drop to a low level (less than 30% inventory rate). It also takes several days for sales to fully recover after a shortage of even one day.
Going on the offensive, brands dramatically increase their ROI by monitoring competitor uptime rates and aggressively increasing offerings and spend on out-of-stock products elsewhere, a strategy known as conquest. .
Finally, this real-time data must be constantly tested. Running analytic tests on the optimal relationship between SEO and SEM to drive ROI was a differentiator at the start of research, but now that’s the issue at the table. The same phenomenon exists in retail media, which requires gathering and looking at the right data in real time, and then setting up test and control groups to deliver optimum volume and efficiency: two practices still far from effective. ‘standard operating procedure today.
At the end of the line
Complexity and fragmentation are enemies of the weak, but present monster arbitrage opportunities for the best and the brightest. The best way for brands to position themselves to win? Align budgets; deploy advanced media buying strategies that leverage product analytics and advertising; and facilitate collaboration between internal and external service providers.