TopShelf Spotlight: Mastering Your Retail Media Strategy
A Comprehensive Guide to Excel in Retail Media
Retailers, are you set up to expand your CPG relationships and capitalize on the $45 billion retail media industry?
As competition intensifies, it’s essential to harness this growing marketplace for your advantage. In this actionable edition of TopShelf Spotlight, we’re joined by Peter Nakamura, Product Marketing Manager, and Rob LaGrave, Digital Ad Operations Manager at Mercatus, to share invaluable insights into developing your retail media strategy for 2023.
Let’s get started!
The Retail Media Landscape: Key Insights
Retail media is not a passing fad. It’s a $45 billion industry, with Walmart accounting for a staggering $3 billion in 2022. Further, McKinsey’s analysis reveals that retail media could unlock 2-4% of online sales and positive EBIT contributions for retailers.
So, how can retailers best navigate this complex landscape?
Rob and Peter’s Top 5 Recommendations
1. Evaluate eCommerce Traffic and Order Data
The foundation of a successful retail media strategy begins with data. That’s why it is important to understand your eCommerce traffic and order data as a critical first step. This involves assessing your advertising potential and revenue projections, which are directly tied to the volume and quality of traffic your site receives.
But it’s not just about the aggregate numbers; it’s about diving deep into the specifics. Retailers should break down their web traffic by various page types and environments, such as the home page, product pages, and checkout pages. Knowing the percentage of traffic that comes from the web versus mobile apps is also pivotal.
Lastly, understanding the average value of online orders can offer insights into what kind of return you can expect on an advertiser’s investment. This data acts as the compass that guides your retail media strategy.
2. Choose the Right Retail Media Solution
Once you’ve gathered and understood your data, the next step is to choose the right retail media network that aligns with your needs and capabilities. Thus, retailers should consider several criteria when making this choice: brand coverage, types of ads offered, and budget requirements, both national and regional.
However, one aspect to pay specific attention to is the ‘lift required,’ which refers to the amount of work your team needs to contribute compared to what the network will handle. This is especially crucial for smaller or regional retailers who may not have extensive in-house capabilities. The right partner will not only meet your criteria but also be in sync with your operational capabilities, ensuring a successful collaboration.
3. Capitalize on Both Web and Mobile Traffic
Don’t underestimate the power of mobile. Here’s a surprising statistic: between 40-70% of eCommerce orders come through mobile apps. This represents a significant shift in consumer behavior and a massive growth opportunity for retailers. When choosing a retail media network, it’s imperative to find a solution that leverages both web and mobile app environments. This will maximize the advertising reach and, consequently, the return on investment. In today’s digital age, neglecting mobile is not an option.
4. Develop In-House Expertise
As your retail media strategy matures, developing in-house expertise becomes increasingly essential. This starts with engaging directly with brands to work towards a seamless omnichannel experience. The more advertising opportunities you can offer, the easier it will be to align your marketing strategies for both in-store and online campaigns.
Retailers should also manage placements through their eCommerce platform’s Content Management System (CMS), providing more control over their advertising spaces. Once retail media strategies are live, regional brand representatives will be keen to participate. Retailers have the option to direct these leads towards the retail media network or manage some inventory themselves—a great way to earn additional revenue and strengthen brand relationships.
5. Monitor Key Metrics Rigorously
Last but not least, continuously monitor key performance metrics. These metrics include the number of advertised products, ad fulfillment rates, click-through rates, conversion rates, and Return on Ad Spend (ROAS). For those who are new to retail media, start with click-through and conversion rates to understand how consumers are interacting with the ads. For more mature networks, ROAS becomes a pivotal metric to ensure that advertisers are indeed making a return on their investments. Remember, metrics are not just numbers; they’re indicators of performance and guides for improvement.
Retail Media Strategy Action Steps:
- Assess advertising potential and revenue projections.
- Understand traffic sources, breaking down data by page type and device.
- Determine the average value of online orders.
- Consider brand coverage, types of ads, and budget requirements.
- Pay special attention to the ‘lift required’—the effort your team must contribute versus what the network handles.
- Don’t overlook mobile; it accounts for 40-70% of eCommerce orders.
- Engage directly with brands for a seamless omnichannel experience.
- Manage placements through your eCommerce platform’s CMS.
- Track metrics like advertised products, ad fulfillment rates, click-through rates, conversion rates, and Return on Ad Spend (ROAS).
By following these recommendations from experts in the field, retailers can navigate the increasingly complex and lucrative landscape of retail media with confidence and success.
Thanks for tuning in to TopShelf Spotlight! Until next time, when we’re back with more valuable insights for your grocery business.