Tag: Retail Media Networks

Countdown to Black Friday: Retail Media Strategies for Holiday 2024

Posted on by Caroline Lewis

Retail media has proven to be particularly effective during seasonal periods. Retailers live and die by seasons, which create natural peaks and valleys in consumer demand. From New Year’s resolutions and Valentine’s Day to Easter, summer sales, and a myriad of retailer-specific holidays like Prime Day and Back-to-School, these events offer an excellent tempo for organizing retail media campaigns.  

With fewer days between Thanksgiving and Christmas this year, understanding and leveraging these opportunities can significantly enhance the effectiveness of your retail media strategy. 

Understanding Seasonal Baselines 

One of the key insights for maximizing retail media success is recognizing the importance of seasonal baselines. These periods often come up quickly and create sharp spikes in consumer activity. Therefore, having a clear understanding of historical data and trends is crucial. This data helps in setting realistic expectations and in measuring the incremental impact of your campaigns. 

During these peaks,  methods of test and control may not be feasible. Retailers and advertisers are often unwilling to engage in controlled experiments during their busiest times. Instead, you should focus on gathering as much data as possible from previous years, and use your MMM model, to establish a robust baseline against which you can measure your results. 

Leaning into the Spike 

Retail media strategies need to lean into these seasonal spikes at least two to three weeks ahead of the event. For online sales, this means starting your campaigns earlier, as online consumer behavior tends to ramp up gradually before peaking. In contrast, in-store sales often exhibit a much sharper increase during the actual event period. 

By planning your campaigns to align with these behaviors, you can ensure that your messages are reaching consumers at the right time. This early engagement can help build awareness and anticipation, leading to higher conversions when the peak period hits. 

Flexible Budgeting and Keyword Strategy 

As seasonal events approach, the competition within retail media networks becomes fierce. Events like Black Friday, Cyber Monday, and other major sales can lead to inflated media costs. To navigate this, a flexible approach to budgeting is essential. Shift your focus to higher-margin, longer-tail keywords that may be underpriced compared to the highly competitive terms. This strategy allows you to maintain visibility without overspending on the most contested keywords. 

Additionally, consider diversifying your spend across less saturated retail media networks. For example, delivery apps and hospitality brands may offer lower competition and better value during these peak periods. This approach can help protect your digital shelf and ensure your products remain visible even when competition is at its highest. 

Leveraging Multi-Brand Platforms and Influencers 

During peak seasons, the saturation of ads can lead to banner blindness, where consumers become desensitized to the overwhelming number of ads. To combat this, consider leveraging multi-brand platforms or ads. These collaborative efforts, reminiscent of old retail tactics like tri-brewer ads in the beer business, allow multiple brands to share the spotlight in a single advertisement. This not only reduces costs but also increases the ad’s appeal by offering consumers more choices in one place. 

Influencer partnerships are another effective strategy during these periods. Influencers can cut through the noise and deliver your message in a more personal and engaging manner. Their followers trust their recommendations, which can lead to higher engagement and conversions during these critical times. 

Conclusion 

Seasonal strategies for retail media require a combination of historical data analysis, early engagement, flexible budgeting, and innovative advertising approaches. By understanding the nuances of seasonal consumer behavior and leveraging the right mix of tactics, you can maximize the impact of your retail media campaigns. Remember, the goal is to anticipate the spikes, prepare accordingly, and execute with precision to ensure your brand stands out during these high-stakes periods. 

 

This article was based on a recent webinar, “Navigate Retail Media for Maximum ROI: How Marketers Can Ensure Profitability and Incrementality with RMNs,” hosted by i4i’s Mark Garratt with featured guest, Nikhil Lai of Forrester. 

 For more insights on navigating RMNs, check out our guide here.   

Why is Retail Media ROAS so Hard to Measure?

Posted on by Caroline Lewis

There are a lot of signs that trade and retail media networks (RMNs) are converging. This is driven on the one hand because retail media and trade are increasingly financed from the same source: sales co-op funds. On the other hand, they are both converging on the lower funnel – the first moment of truth. Why would tactics so close to the point of purchase be so hard to measure?

To make sense of this and to understand why retail media ROAS is so hard to measure, we have to look at the simple formula: ROAS = Contribution/Media Cost. When evaluating the profitability of retail media, there are problems with both the numerator and the denominator. The cost (denominator) is often higher for the same service (programmatic or social)  if you buy it through the retailer versus buying directly. As a client-side friend put it:

“CPMs for RMNs are (basically) made up. They’ll charge you $18.00 CPMs for a Facebook buy that is completely disconnected to the actual CPMs in the auction. They just pocket all the overage and margin.”

On the other side of the table, an industry consultant reported a Walmart executive saying:

“I’m glad that Walmart connect generates such high margin income for us to offset losses in other parts of the business.”

What is happening in practice is that the RMN costs are being bundled together with other fees as a cost of doing business with the retailer. So, in truth, there are other goodies hidden in the RMN cost such as slotting fees, preferred display locations, etc.

The other problematic part of the ROAS equation is in the numerator – the contribution or lift from media. With most performance media, the drivers of contribution are audience reach and frequency, sometimes at DMA level. With RMNs the media is driving offline sales within the retailer’s marketing area. It is also focused on specific UPCs. This specificity is a two-edged sword: it makes the impact easier to derive because it is so specific, but it also reduces its scope. In fact, only the biggest retailers (e.g., Amazon, Walmart, Kroger, Target, Best Buy, Instacart) have the scale to drive enough traffic to read.

The current practice for deriving the effect of retail media is to treat it just like any other performance media variable in a marketing mix model without paying attention to details of tactic, geography, or the mix of online/offline sales channels.

With all that in mind, here are of the top considerations to improve the quality of the estimate of lift (the numerator of ROAS):

  1. If the retailer is one of the top RMNs (excluding Amazon), then it makes sense to derive the retail media impact on sales within the trade RMAs. This requires access to chain or RMA-level data.
  2. If the RMN advertising is for specific UPCs or sub-brands, it makes sense to estimate the sales impact at least at the sub-brand level. Because RMN data moves through media systems, it is not easy to obtain UPC-specific data. Text processing is usually required to infer the sub-brand from various identifying strings.
  3. Since all these sales impacts are proportional to size of retailer marketing areas and of the sub-brand, a multiplicative marketing mix model will provide much better results than an additive model, since its effects are automatically scaled. This is similar to the way that multiplicative models are more accurate for trade promotions.
  4. The impact of adstock/saturation must differ by tactic. Onsite search is lower funnel and short-acting whereas offsite media can be much longer-acting.
  5. There are many types of impacts on sales to consider, including both direct and halo. This table shows the relationship between the type of media (onsite vs offsite) and the sales impact as we move from the most direct (onsite search driving online sales) to the most attenuated (offsite media driving sales in the same high-intent lookalike target anywhere).
Media Type Direct Halo Secondary Halo
Onsite Online (DTC) Offline sales of same retailer Offline and online sales of other retailers (informational search)
Offsite/in-App Offline and online sales of all retailers

Using advanced modeling systems such as Robust Hierarchical Bayes that take geography and UPC into account, we can accurately track the effectiveness of RMNs (the lift per impression). DTC (onsite search/display driving online sales) has the most direct attribution path. Offsite targeting is usually less effective although there are exceptions. The ROAS depends on transparency in media costs – which at the present time is caught up in the vendor-buyer negotiation and escapes rationalization.

If you would like to discuss how our approach to Robust Hierarchical Bayes can help you better measure your Retail Media investment (and your marketing mix performance as a whole), schedule a call with the i4i Team.

Breaking Down Silos to Unlock the Full Potential of Retail Media Networks

Posted on by Kevin Youts

Introduction: In today’s rapidly evolving marketing landscape, Retail Media Networks (RMNs) have emerged as a critical component of marketers’ media strategies. According to a recent article in Insider Intelligence, RMNs have grown exponentially across an exploding number of retailers, becoming a $30Billion channel in just 5 years.

With the deprecation of first-party data and the need for real-time insights into shopper behavior, RMNs offer a tantalizing antidote to both trade marketers and media buyers. However, to harness the full potential of these networks, brands must avoid the pitfalls of organizational silos, and provide the resulting teams with the optimal tools to make win/win decisions retail media decision that benefit the company overall.

Collaboration between brand and trade marketers and category managers, alongside media planners and buyers, can be crucial for maximizing return on investment (ROI) in RMNs and achieving both trade marketing and media effectiveness. Too often the two groups are functioning with separate budgetary parameters or not working off the same models to drive the most effective media buying decisions.

Let’s look at what each group brings to the challenge:

Brand and Trade Marketers:

Brand marketers, including shopper marketers, category managers and omnichannel leads play a crucial role managing sales, and coordinating merchandising and promotions with distribution partners at retailers. Their skill sets revolve around understanding consumer behavior, market trends, and effectively positioning products within both the physical and online retail environments. They typically possess the following key competencies:

• Retail Strategy: Trade marketers and brand category managers have a deep understanding of the retail landscapes in which their products are sold. They develop strategies to maximize product visibility, optimize shelf space allocation, and ensure effective pricing and promotion tactics are negotiated and well executed across an array of retail partners, increasingly in both physical and online environments.
• Merchandising Expertise: These professionals excel in creating compelling product displays and planograms that capture shoppers’ attention and drive sales. They have an eye for visual aesthetics and possess strong knowledge of consumer purchasing behavior.
• Channel Collaboration: Trade marketers and omnichannel leads and brand category managers establish strong partnerships with retailers, negotiating slotting fees, and ensuring optimal product placement. They possess exceptional communication and negotiation skills to drive mutual success.

Digital Media Planners and Buyers:

Media planners and buyers specializing in digital opportunities, play a pivotal role in targeting specific audiences and executing programmatic buying across relevant channels. Their expertise lies in leveraging digital platforms and various data analytics tactics to deliver targeted messages to the right audiences that can generate measurable outcomes. The following core competencies define their skill sets:

• Data-Driven Insights: Digital media planners and buyers are adept at analyzing consumer data and identifying targets and how best to reach them. They leverage sophisticated tools and technologies to extract actionable insights, enabling precise audience targeting and effective campaign optimization.
• Multi-Channel Mastery: These professionals have a deep understanding of various digital channels, as well as offline media, that in combination make up the optimal media mix. Their core competency lies in balancing expenditures and often dynamic investments across channels including social media, search engine advertising, display advertising, and video advertising. They are tasked with crafting integrated media strategies that reach consumers at multiple touchpoints.
• Programmatic Proficiency: Digital media planners and buyers excel in utilizing programmatic buying to automate media purchases and optimize ad placements in real-time. They possess a strong grasp of ad exchanges, demand-side platforms (DSPs), and supply-side platforms (SSPs). They lean on direction that comes from robust data analysis to retrospectively calculate ROAS, and proactively optimize their media plans to achieve optimal growth in the future.

The Pitfalls of Organizational Silos

Failure to bridge the gap between these two groups can lead to several detrimental outcomes. Budget disputes often arise when teams compete over limited resources, hindering the overall marketing effectiveness. Moreover, the absence of collaboration can result in one team allocating budgets without considering the expertise and domain knowledge of the other, leading to suboptimal decision-making and wasted opportunities.

Harnessing the Power of MMM for Optimal ROI

Retail Media Networks, especially if brands are investing in several, produce a maddeningly complex set of data to analyze (time, geo-spatial data based on physical location of stores, consumer behavior on and offline, and the staggering array of products many sales and media teams must account for).

There is renewed enthusiasm across the media analytics industry in the power of robust Market Mix Models (MMM) to make sense of increasingly complicated media planning required to optimize RMN spend as part of overall advertising strategies.

The best MMMs enable marketers to analyze behavioral, historical sales, and other causal data at the individual channel partner level across all media. With this granular understanding, organizations can identify the most effective tactics for driving sales within retail settings, analyzing overall media spend as well as the relative contribution of each media partner, including RMNs, in relation to each other.

Conclusion:

As Retail Media Networks assume greater significance in marketers’ media partner choices, organizations must dismantle the barriers of organizational silos to achieve optimal ROI.

By embracing collaboration between brand marketing and media management and providing them with effective tools like MMM, advertisers can leverage the strengths of both groups to make better-informed decisions that drive sales growth effectively.

By embracing these strategies, organizations can seize the opportunities presented by RMNs and unlock their true potential in today’s dynamic retail landscape.