As e-commerce and the associated media offerings around the retail sector have grown rapidly over the last two years, consultancy firm McKinsey & Company believes it’s time to view the two as one, by bringing brand advertisers, retailers and media companies under one ‘commerce media’ banner.
The last two years saw more than 12 retailers taking significant steps to embrace the commerce media trend by launching their own Retail Media Network (RMN). Besides retailers, hospitality brands, travel and hotel providers, banks, automakers and telecommunication companies are looking into launching and developing their own RMNs. Non-retail brands are also reaching out to third-party AdTech platforms to set up RMNs and access advertisers that are already using these platforms. Indeed, the RMN space is increasingly becoming popular across various industries.
RMNs are also gaining traction amongst advertisers as it closes the loop between media impressions and commerce transactions. For decades, traditional advertising has been built on the idea of targeting defined audience groups, which is so often based on third-party cookie behavioural type data sets, and predictions on consumer behaviour that stemmed from said data. Now, with RMNs, advertising impressions are being connected with specific sales via in-store and online measurement systems, allowing advertisers to deliver improved targeting and provide more relevant ads and valuable shopping experiences for consumers.
In practice, RMNs are effective and produce desirable outcomes – nearly 70% of advertisers say their RMN spend showed better returns than their spend on other advertising channels. As long as RMN performance holds up, growth is expected to continue, and more advertising investment will go to places where advertising performance can be measured against direct sales. For advertisers who are considering RMNs as a key strategic priority, what are the next steps?
We share some key insights from McKinsey on the actions that advertisers should consider to develop an impact with commerce media, especially RMNs.
1. Create partners internally and externally
Collaboration with your brand’s internal sales team and external retail partners is crucial to achieving ad campaign goals. It’s important to work closely with the sales teams as the consumer data retrieved from any RMN informs the decision-making and changes needed in product inventory, innovation and development strategies. Do ensure there is joint visibility and accountability between your marketing team and sales team.
Achieving your ad campaign goals also involves partnerships with retailers. The first step is to indicate a clear interest in RMNs and articulate your goals clearly. Consider this – what value, new information, product or service can your brand bring to the retailers and RMNs you are looking to partner with?
2. Don’t lose sight of the big picture
While RMNs bring about compelling value propositions, advertisers should not lose sight of their brand’s overall ad spend. Remember, your marketing budget should be assessed at the holistic level – so you would need to evaluate and optimise across brand, trade, consumer marketing, and traditional media.
When engaging with RMNs, advertisers should not limit to a retailer’s owned and operated sites and mobile apps. Spread out your budget with retailers and venture to other aspects like onsite ads, offsite, third-party sites and apps, and direct marketing and in-store marketing.
3. Set clear expectations
Based on McKinsey’s latest survey with advertisers across various industries, they found that the majority of advertisers achieved a higher percent return on ad spend during their RMN ad campaigns compared to other marketing channels. In that regard, advertisers should hold their retail media partners to a high standard. This includes setting explicit reporting and measurement expectations in their advertising campaigns with RMNs, or re-evaluating expectations and approaches as and when necessary.
4. Gain new business insights
Retail media networks provide brands access to first-party data, unique shopper insights and omnichannel reporting, of which is derived from robust reporting and measurement capabilities. With this information in place, it allows advertisers to make tweaks, changes or improvements mid-campaign such as auditing their spending or real-time reporting on the progress and performance of their campaign. This information will be valuable and useful for future RMNs based ad campaigns as well. Prior to making an investment with retailers and retail media networks, ensure that retailers will uphold transparent reporting and check that the measurement capabilities are in place.
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