According to eMarketer, 40.7% of China’s digital ad spending in 2022 went towards retail media networks owned by the likes of Alibaba and JD.com. This spending is far more than in the US, where 14.5% of digital ad spending went to retail media networks owned by the likes of Amazon, Walmart, and eBay.
Advertisers invest in retailers’ owned and operated media through their trade marketing budgets. These are usually bottom-funnel campaigns with strict return on advertising spend targets.
“The offsite retail media offering expands retailers’ audience and measurement capability to the open web. In addition, it is much more significant because the offsite ad inventory is almost unlimited,” Waters tells Campaign Asia-Pacific.
“Advertisers can pair retailers’ data with consumers’ preferred media channels. In doing so, brands not only benefit from better decisions, but they can also connect ad exposures to actual purchases.”
However, not all retail media networks are born equal because the depth and breadth of a retailer’s relationship with its consumers are linked.
Dave Yang, regional head of brand engagement at GrabAds, explains advertisers should ask how hard they can make retail media networks work for them.
For example, to capitalise on the trend for fast and convenient recipes that emerged from the pandemic as more people chose to cook at home, Unilever’s Knorr partnered with GrabAds to introduce shoppable recipes to Grab users within the app.
Knorr used ads to promote cards promoting “full recipe delivery”, allowing users to click on the cards to shop for the recipe by adding ingredients to their GrabMart baskets.
“Retail media networks are in a unique position to offer advertisers valuable shopper data and corresponding ad placements across several different categories and consumer journeys, on and offline,” Yang explains to Campaign Asia-Pacific.
“This means an advertiser can cover a lot of ground within a retail media network’s owned properties whether they want to target a profile across multiple points in their purchase journey or bridge the omnichannel gap. The shoppable recipe is a thoughtful idea that turned the mundane chore of grocery shopping into a journey of discovery, inspiration and hassle-free shopping.”
Retail media networks versus other channels
Retail media networks have the potential to become virtual channels like search and social, especially as more consumers start to rely on them earlier in their buying journey.
However, Neha Tejuja, the head of performance strategy for APAC at Reprise, says platforms need to manage supply and demand for this to happen more consistently. On the demand side, they need to give consumers more reasons to use them across the journey, especially in the earlier stages.
On the supply side, she says the platforms need to provide more self-serve solutions and consistently provide valuable insights beyond aggregated data views. These solutions and insights will allow brands to go deeper into consumer buying behaviour and cement these relationships and their place as a platform of choice.
“We have found that recommendations and ads on these platforms feature more strongly in the research and purchase stage than in the discovery stage,” Tejuja tells Campaign Asia-Pacific.
“While not every shopping occasion is ripe for discovery, finding the opportune ones based on aggregated and individual-level data can make these platforms indispensable for consumers.”
Networks are finding evidence to support this. According to Grabs’ 2021 NEXT Food Trends Report, 54% of GrabFood users in Singapore turn to Grab to discover new restaurants, while more than 50% use the app’s search function to generate alternatives as they decide what to eat.
“Retail media gives brands direct access to critical stages in the consumer journey, from influencing discovery and building awareness to consideration, purchase and loyalty,” Yang contends.
How retail media networks can use data to help advertisers unlock growth opportunities
Retail media networks can leverage their first-party data with advertisers through targeting, behaviour tracking and sales reporting.
Being able to approach a supplier or advertising partner with the ability to target their existing customers, lapsed customers, and future customers are highly compelling as it is primarily against classic media targets based on reach and crude demographic segments.
Jonathan Hopkins, the founding partner at Sonder Media, says that advertisers with limited budgets have to ask themselves if they want to invest it with someone interested in their category or product or buy blind reach.
He explains every retailer has the potential to offer a high degree of customer targeting, which will always be attractive to advertisers.
“The ability of retailers to monitor customer engagement in different media formats allows them not only to optimise ad campaigns in real-time but also to offer unique insight reports into customer behaviour in each shopper category,” Hopkins tells Campaign Asia-Pacific.
“For example, a department store can monetise beauty insights, homewares insights, women’s fashion insights, and multiple vendors within each category. Walmart’s Retail Link is a reporting software developed by Walmart that gives Walmart suppliers access to point-of-sale data, documentation, reports, store information, Walmart communications, and special applications that suppliers use to manage their business.”
Most importantly, he points out retailers hold robust sales conversion data because loyalty programmes typically generate rafts of customer data points shaped at a scale and depth that often the suppliers cannot source themselves.
“Savvy retailers have taken this asset way beyond campaign reporting and always-on reporting. This approach allows retailers to build longer-term relationships with advertisers and extract more campaigns, equating to revenue growth,” he explains.
“Woolworths in Australia has pioneered this data-led sales approach with phenomenal results in revenue growth (both supplier sales revenue and media revenue).”
Yang says while retail media networks do not reach everybody, they do get people who have opened their app and mobile wallet when they are looking for something to buy, somewhere to go or eat.
They would also know who has ordered pizza before, when they typically get hungry, and whether they are within a restaurant’s delivery radius. This insight translates to reaching relevant audiences in the right mindset to take action.
In addition, he also notes that retail media networks can identify synergies because they have insight into multiple categories and facets of day-to-day life.
For example, fashion platform Pomelo wanted to expand its digital reach in Malaysia in a crowded ecommerce landscape. So, partnering with GrabAds, it launched two high-impact takeover campaigns on 11.11 and 12.12 to target users with proven transaction ability.
However, the campaign also generated unique consumer insights on Pomelo’s top-performing affinity audiences, allowing the brand to engage additional profiles. Overall, Pomelo saw a 15% increase in traffic.
“Over the past few years, retail media networks have rewired how we interact with brands in-store and online. As retail media networks aggregate a wide variety of activities within a single ecosystem, they have insights into real-world actions taken by users. They can use these insights to build rich audience profiles that advertisers can target and reach at every stage of the consumer journey,” says Yang.
“Imagine, for example, that you want to launch a new pizza. You could turn to social media, which would offer a vast audience categorised into interest groups based on pages they’ve liked or posts they have interacted with. But in reality, most of these users won’t ultimately buy that pizza. “
Retail media networks can also help brands to tap into their omnichannel customer data to activate media on channels outside its properties and access insights like point-of-sale data.
Michael Sweeney, head of marketing at Clearcode, says allowing advertisers to use consumer data from a retailer to run media campaigns across channels outside the retailer’s properties is known as audience extension.
“Third-party cookies have typically powered this process. However, we all know their availability is limited and on borrowed time. Third-party cookies pose a challenge to retail media networks and advertisers,” he tells Campaign Asia-Pacific.
“Tech platforms that function as retail media networks should look to other technological solutions to help advertisers run media campaigns on channels outside the retail media outlet’s properties. Examples include universal IDs and data clean rooms.”
Using Mastercard and Visa as examples, Sonal Patel, managing director for Asia at Quantcast, says their relationship is with banks and financial institutions, which in turn has a relationship with customers rather than the two credit card companies.
She notes Grab has a fully digital banking licence with Singtel, so it easy to understand the data benefits for brands like Singtel.
“Hopefully, this relationship will bring more data to the overall ecosystem in Asia outside of the walled gardens. Retail brands have a tremendous opportunity to engage and entice more of their shoppers on platforms that allow advertising on the open internet,” she tells Campaign Asia-Pacific.
“We will see more retail media networks like GrabAds emerge in future, and they will have to stay innovative to be a mainstay for their consumers. New data and the integration of offline to online data will only make it more of an addressable advertising market for brands, so this is good news for the industry.”
Optimising media mix and measurement data with retail media networks
One of the main ways retail media networks can provide advertisers is transparency and viewability into the performance and placement of their ads. They can achieve transparency and viewability by utilising a third-party verification tool.
Retail media networks may have proprietary tools that advertisers can use for verification, but trust is the issue.
“One of the key mantras of digital advertising is “trust, but verify”, so using a third-party verification tool can go a long way to helping advertisers verify metrics they’re receiving from retail media outlets and the ad platforms they use to run campaigns,’ says Sweeney.
Yang adds that retail media networks offer a simple inventory supply chain and no user-generated content, which means they can meet higher standards regarding viewability and brand safety. For example, retail media networks own and control every aspect of the ecosystem.
“There is no user-generated content, and because every user is verified and transacting, no bots are generating fraudulent traffic. In addition, no bots translate into a 100% brand-safe environment for advertisers because retail media networks’ ad placements reside within their properties. Therefore, they can ensure that ads meet viewability standards,” he explains.
As consumer behaviour changes in the current climate, media buyers want measurement data more quickly as they are accountable for producing measurable impact. As a result, retail media networks that can close the loop between media exposure and real-world purchases are desirable for advertisers who need to understand the returns of their media spend.
Brandon Lee, director for audience and identity for APAC at PubMatic, says there need to be more standards as the commercial media industry is emerging. For example, 'incrementality' can be defined differently.
“For some, it lapses customers (beyond six to 12 months), but for others, it is net new customers. We need to establish measurement standards as an industry, with tech platforms supporting and adhering to these. Our role is to make this data accessible for buyers while respecting the privacy of the outlets’ customers,” Lee explains.
Yang shares the example of how within the retail media network, an entire campaign can be built within the platform’s ecosystem from discovery to the transaction to order last-mile fulfilment. Although it’s easier and quicker to execute campaigns and generate results, it also gives advertisers access to metrics that are typically difficult to measure.
“Unilever Walls’ Ice Cream in Thailand was looking for a way to meet rising online demand during the pandemic but lacked physical stores. By working with GrabAds, they could scale quickly using virtual storefronts on GrabFood and mobilising their network of mom-and-pop shops as GrabFood pick-up points,” he explains.
“An ad campaign was also launched within the app to build product awareness. As a result, the marketing budget could be attributed to every sale, enabling the client to report a 2.1x return on ad spend.”