Retail media is expected to exceed $50 billion in the United States in 2023 alone, representing 20% of total U.S. digital ad spend. As a result, consumers are dictating the pace of the funnel to be faster than ever before.
Danielle Brown, svp of data enablement and category strategy for advertising sales at Disney Media and Entertainment Distribution, and Janine Flaccavento, svp of new stream media at Merkle, joined Adweek during our NexTech 2022 summit to discuss what marketers can do to adapt to this changing environment.
Changing ad strategies
As the retail media space evolves, Brown said the biggest change she’s seen in the past year is the proliferation of retail media networks.
“Starting out, there were just a handful, and now they’ve expanded to 20 or 30 different retail media partners that are in the marketplace and trying to get advertisers closer to that transaction data and first-party data,” she said. “Over time we’ll see how that lasts because I think there’s some bandwidth that’s a challenge in terms of marketers and agencies working with different partners.”
Although retail media is providing clients with strong ROAs, fulfilling bottom-funnel KPIs, Brown said the contribution of the upper funnel is not always accounted for.
“There is more to it than the transaction,” she said. “There’s that connection point that marketers need to make with their customer base in order to create that connectivity and brand loyalty that keeps them coming back.”
Standing out from the crowd
As more players enter the space, Flaccavento said it’s becoming increasingly important for brands to differentiate themselves so they can stand out from the crowd.
“That’s a huge challenge—is it going to be creative? Is it a unique audience segment? Is it unique ad products? And then, as a brand, you need to start thinking about how many of these retail media networks can you actually invest in and does it make sense,” she said.
But Flaccavento warns that an increasing number of retail media networks isn’t always a good thing. With forecasts of slowing media spend in early 2023, not every retail media network will be a viable business. Those who are simply selling banner ads at a premium will not be able to compete with the more sophisticated offerings.
“When is there so much overlap that you’re not only paying to reach the same audience over and over again, but you’re, in fact, annoying that shopper?” she said. “If you’re going to spend all of that effort to create these custom segments and reach one-to-one audiences, shouldn’t you be customizing the creative with the same message? You really need to think about the differentiators you are bringing to the market. Otherwise, you’re really just selling another banner ad.”
