Future of Retail Media: Disrupting the Consumer Purchase Funnel

Customers have information when and as they need it and thanks to search social and digital media in its entirety they39re moving through the funnel faster than ever before With the rapid growth of online options having accelerated over the past few years traditional promotion and advertising approaches have been disrupted requiring rapid response and innovation from marketers Words like these may seem like Henny Penny who cried quotThe Sky is Fallingquot to those who have been warned before of imminent change in an industry that has traditionally responded to new technologies only after they have been adopted and embraced by consumersThe key difference today is that marketers have been more proactive in adapting their advertising and promotional strategies in sync with changing consumer needs and behavioursRise of Retail Global and Local Retail Media At the Epicenter of Marketing 300At the intersection of this shake up is retail media As quoted by eMarketer39s Andrew Lipsman retail media is digital advertising39s third big wave For the foreseeable future retail media will grow at a faster rate than all other media including search and social mediaDozens of retail media networks have launched over the past few years and according to Forrester39s Predictions 2022 report retail media spend will grow to 50 billion globally in 2022 eMarketer predicts US retail media spend alone will surpass 50 billion in 2023 representing 20 of total US digital ad spend with 2021 retail media surging 534 to 3149 billion following a nearly identical growth rate in 2020 They expect growth to begin tapering this year rising 314 to 4137 billion Global growth rates are comparable In Australia for example the retail media market is expected to reach 1bn by 2025While Amazon has dominated retail media globally since the launch of their ad marketplace in 2012 brand advertising and promotion budgets are now flowing into the growing market of leading retail media partners Rich Lehrfield Senior Vice President and General Manager for Walmart Connect says quotAs a closed loop omnichannel media business of America39s largest retailer we are working hard to innovate and move faster than ever before to deliver distinct omni solutions and accelerate growth for advertisers of all sizesquotOne of Australia39s leading players in the space Cartology is advancing local growth as part of the nation39s third largest and quotmost trustedquot company the Woolworths Group At Woolworths says Brad Banducci Woolworths Group CEO quotWe39ve been watching closely how other largescale retail businesses internationally are better engaging customers along the path to purchasequot Banducci points out that quotour suppliers are looking for simplified ways to engage with customers and Woolworths is well placed to provide a platform for them to engage potential customersquot As customers shift their shopping behaviour to an omnichannel journey retail media is positioned to reach customers both on and offline at crucial moments pre during and post their shopThe Market Response Is the Collapse of the FunnelLuke Kigel head of Walgreen39s Media and Advertising Group told Mark Stewart of the Association of National Advertisers US that quotMost funding for retail media networks still comes from Shopper Marketing budgets with many retail media networks saying they aspire to access brand awareness budgets These are industry constructs that limit the value potential of a brandretailer relationship and reinforce a more traditional and outdated purchase funnel It doesn39t reflect how consumers actually discover engage and shop brands and productsquotConsumers don39t see a difference between 39brand39 and 39shopper39 they are fluidly moving through their journey in their own individualized way There39s an opportunity for brands to disrupt legacy budgeting practices and enable fluidity and agility to best meet their consumers where they are as that evolves in real time for each individual personquot Kigel saysThe recent growth of retail media is being spurred by upperfunnel display and video ads bottomfunnel goals and midfunnel retention and customer acquisition priorities The evolving omnichannel marketing ecosystem requires that brands and retailers understand the role purpose and performance of every tool in their arsenal including online search and social media advertising sales promotion and instore presence This requires sophisticated data and analytics tools that while still at an early stage are influencing budget shifts both in response to positive performance results and in anticipation of growing privacy regulations and thirdparty cookie restrictionsRetailers are uniquely positioned to help brands understand the relationship among retail media traditional advertising digital media influence and offline salesRetailers Brands and Agencies Institutionalize Retail MediaWhile advertising to consumers at or near the point of purchase is hardly new retail media fills the vacuum of data that was either limited or nonexistent in the past In the retail media environment messaging and offers can be targeted to consumers based on their shopping behaviour and purchase history both on and off network Promotion and advertising investments across the traditional purchase funnel can be directly tied to sales outcomes And with sophisticated technology now available many retailers can deliver that data to brands in a secure and privacycompliant waySpark Foundry a division of Publicis Media was one of the first media agencies to embrace the opportunity to collaborate with retail media on behalf of their food and beverage clients Amanda Mollet Senior Vice President Director at Spark Foundry in the US advises that while her team always looks at opportunities through a quotcommercefirst lensquot the key performance indicator is not simply a direct response immediate conversion There are upper funnel applications as well quotWhat39s interesting about our engagement in this new offering is that the budget actually came from a brand budget not a DR or shopper marketing approach We are seeing a lot of our Consumer Packaged Goods CPG clients rethink the role of their shopper budgetsquot she reportsBlending Brand and Shopper Marketing BudgetsAs the business goals of retailers and marketers converge around data highly effective programs and partnerships that deliver on mutual business objectives will expand the role of retail media throughout the consumer journey For decades I39ve written extensively about and forecast the convergence of sales promotion and advertising budgets a trend driven primarily by the growth of search and social and their direct connection to commerce Retail media is accelerating that trend by delivering more sophisticated knowledge about the connection between consumers and marketingThe best partnerships emerge through real customer insight and closed loop reporting that measures effective engagement purchase influence and transactions By disrupting traditional planning practices and blending brand and shopper marketing budgets specific KPIs can be met by identifying the right audiences and delivering the right message at the appropriate moment on the purchase journey Through these partnerships both brands and retailers are activating deeper customer relationships increasing repeat purchases and generating improved media cost efficiency Retail media is also uniquely positioned to eliminate cookies and assure customer privacy concerns are metThe Future of the Funnel in Retail MediaThe sales funnel has been a cornerstone of marketing strategy since it was invented by Elias Elmo Lewis in 1898 While it remains relevant in understanding product discovery and brand loyalty marketers now operate in a reality of collapsed purchase funnels and personalised purchased journeysWhile the word quotjourneyquot may have less application to purchase decisions made from inception to transaction within seconds which can occur online and instore consumers are engaging with retailers on a near continuous basis Technology and data will continue to empower brands to think less about the role of retail media networks as a bottomoffunnel investment and more about the role of retailers across the entire marketing budget

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Future of Retail Media: Disrupting the Consumer Purchase Funnel

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Jack Myers

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Future of Retail Media: Disrupting the Consumer Purchase Funnel

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