Does it feel like you’re seeing more sponsored product recommendations on your go-to e-commerce platforms lately?
It’s not just you – online retailers are selling more ads than ever before. In recent years, retail’s top dogs have achieved record-breaking milestones – in 2022, Walmart and Amazon reported $2.7 billion and $388 billion in ad sales, respectively.
At upwards of 50%, retail media margins are impressively high when compared to other retail margins. Experts expect retailers to reinvest these profits to lower prices, enhance the underlying tech that drives their systems, and improve customer experience. How will this shape the industry for years to come?
As retailers explore and progress down their retail media network (RMN) journeys, they must ensure they do so strategically. Have they deployed an appropriate level of resources to each channel? Are they making investments that focus on the right customers? Are they partnering with the right people? Are they leveraging the right technology?
These are just a few of the questions business leaders must address if they hope to take advantage of all that RMNs have to offer.
The evolution of RMNs
Selling ads in retail isn’t anything new, but today’s mega-retailers have turned ad sales into a science. With access to an unprecedented caliber of consumer insights through predictive analytics and powerful business intelligence tools, retailers can now offer data-driven, hyper-targeted ad space that resonates with distinct audience segments.
In recent years, we’ve seen businesses like Best Buy, Dollar Tree, Kohl’s, Lowes, and CVS all launch retail media networks of their own – proving when major players begin up-leveling their ad sales practices, other retailers have no choice but to follow suit. Consumers have come to expect personalization from their go-to retailers; what was once an appealing feature has now become a must-have.
Between the proliferation of digital technology and the pandemic-induced wave of e-commerce, customer expectations are sky-high with little tolerance for errors or miscalculations from their favorite retailers. A 2022 survey from Harvard Business Review and Mastercard found that 45% of respondents expected businesses to “do it right” every single time.
If retailers’ ads are irrelevant or ill-suited for shoppers, they risk losing business to other retailers whose recommendations better resonate.
Competition isn’t the only challenge for RMNs. Consumer privacy concerns continue to add complexity as retailers try to thread the needle between offering personalization and being perceived as “tracking” individual users. Finally, digital tools like ad-blocking browser plug-ins create headaches for all parties involved as they effectively neutralize the meticulously crafted data-driven strategy and strip the ad space of its value.
How RMNs will logistically shape the retail industry
As media selling and marketing activities necessitate a product-, process-, and customer-centric mentality, new roles must be created and aligned. Standalone teams must be shaped to include media sales reps, account managers, business development professionals, and more. From here, a snowball effect goes into play.
When retailers formalize their media operations and create new teams, they must also re-evaluate their talent and recruitment strategy. This means asking questions like: What are our media sales goals? How do we achieve them? What kind of skillsets are necessary to achieve these goals? How do we identify and attract these key professionals?
Of course, it isn’t enough to merely find and hire entire teams— retailers must retain them as well. This requires revisiting compensation and benefit plans, creating and upholding new standards of accountability, and aligning with industry best practices.
Retailers must ensure their corporate culture (a) exists and (b) is engaging and fruitful for all employees, regardless of position. Are there clear career pathways and advancement opportunities for the new media sales team?
But the snowball doesn’t stop rolling here. Once retailers are more sure-footed in their RMN capabilities, they can dip their toes into more complex offerings. As their RMNs evolve and expand, retailers must create and fill even more roles and clearly delineate professional expectations, responsibilities, and pathways.
We’ve only seen the beginning of RMNs and how they’ll shape retail in the years to come. Like any omnichannel engagement strategy, this way of advertising requires a holistic, broad internal strategy from the top down. By allowing retailers to better connect with consumers based on personalized recommendations, they build trust and assist in securing future business.
As we look ahead, we can expect to see retailers formalize their media sales with reallocated resources, transformed go-to-market processes, and new recruitment strategies to ultimately drive a stronger consumer presence in the future.
Source: chainstoreage.com
