Unleashing the Power of Retail Media: Transforming the Intersection of Performance and Brand Marketing

Brands have found solace in retail media amidst the chaos of recent years, where constrained household finances have impacted advertising efforts. With substantial investments in technology and supplementary platforms from retail media behemoths such as Amazon, it is anticipated that this sector will garner a significant portion of marketers' budgets in the future.

GroupM forecasts that advertising revenue from retail media channels will reach $125.7 billion in the current year. Notably, GroupM also predicts that these channels will exceed television revenue by 2028, accounting for 15.4% of total ad revenue. However, a panel at the IPA's EffWorks Global 2023 recently highlighted the significant influence of this increase in retail media spending on the internal setup of brands. This change necessitates adjustments in team structures and financial planning.

Speaking at EffWorks, Pawan-Kumar Marella, Unilever's strategy director, highlighted the challenges faced by brands in the retail media market. With an increased choice of retail media opportunities, advertisers struggle with finite budgets and infinite possibilities. Building on this, Marella questioned how budgets should be allocated and how much should be spent.

The panel, comprised of Nilam Atodaria, group product director at The Goat Agency, and David Tiltman, CVP of content at WARC, acknowledged that this issue is further compounded by the nascent nature of retail marketing and social commerce within the marketing industry. They observed that the traditional siloed approach to brand and performance within marketing teams has contributed to confusion regarding ownership of retail media spending.

According to their explanation, this has resulted in situations where promotions are implemented simultaneously by ecommerce and performance marketing teams, resulting in wasteful spending.

Nevertheless, the panel mentioned that there are significant opportunities for brands that effectively utilize retail media. Tiltman highlighted the successful case of the Irish brand WaterWipes, which utilized Amazon's smart pricing and targeting strategies to disrupt consumers' journeys with timely recommendations and advertising. As a result, WaterWipes has emerged as a leading brand in its category. They emphasized that this serves as an exceptional illustration of how retail marketing can effectively integrate performance and brand marketing.

The Amazon effect

The retail media industry, valued at approximately £60bn, remains significant according to the EffWorks panel members. It is important to note that this value is calculated without considering the substantial investments made in retail media by China. Furthermore, an estimated £53bn of this total amount is attributed to advertising efforts conducted on Amazon's platforms.

Boots and Tesco recognized the potential to generate revenue and introduced dedicated retail media platforms in 2021. Following suit, Morrisons, Asda, Deliveroo, and Uber have also launched their own platforms. Despite their efforts, Amazon's extensive first-party propensity data has given it a significant advantage.

Despite Amazon's dominance, the panel also observed that the company is reacting to changes in the broader commerce landscape. Atodaria from The Goat Agency commented on Amazon's integration of social features, such as follow buttons, posts, and live streaming. Additionally, Amazon is transforming brand pages into content hubs.

Marella discussed the challenge that advertisers face in managing Amazon and TV advertising separately. She emphasized the need for organizations to restructure their internal teams, particularly the sales and marketing teams. This presents additional challenges for marketers. One possible solution is to appoint a dedicated retail media 'champion' who can oversee and coordinate all relevant teams. To address this issue, PepsiCo recently created such a position and also emphasized the importance of considering retail media from the beginning stages of a campaign.

Retail media giants like Amazon, along with challengers like Channel 4 in partnership with Nectar 360, are increasingly focusing on a full funnel strategy. This has prompted marketers to evaluate whether retail media poses a threat or an opportunity for their brand building efforts in the long term.