By Hugh Stevens, UK MD of LiveRamp
With the cost of living crisis continuing to impact customer confidence, targeting those with a propensity to spend remains front and centre for advertisers. For example, in response to a 2023 survey by LiveRamp, 42% of senior brand marketers in the UK named ‘understanding the whole customer journey’ as a top priority.
Although 2024 brings challenges, such as tighter privacy regulations and signal loss in the ad ecosystem, these changes also present a valuable opportunity for marketers to innovate and find new ways to reach valuable customers and prospects.
As a result, first-party data, which offers valuable customer insight and means of accurate targeting, has become the new cornerstone of the ad ecosystem. Amassed by retailers in particular through their long-standing loyalty schemes, first-party data is extremely valuable to brands looking to understand and target their customers, use insights to drive greater media efficacy, as well as measure and optimise the impact of their advertising investments.
Retailers can benefit from additional revenue when securely enabling their first-party data for collaboration via their retail media networks; the brands gain access to point-of-sale ad inventory, customer data, and insights that would otherwise be beyond their reach; and the customers benefit from campaigns and offers that are more in tune with their preferences.
Indeed, many of the world’s largest retailers have established their own media networks to capitalise on the opportunity, with the UK presenting a particularly lucrative market. Predicted to be the biggest in Western Europe, IAB and PwC recently found that in 2023, UK digital retail media spend was up by 12% to £283m.
That said, retail media is relatively nascent, and many brands are still refining their strategies. For example, in April 2024 IAB Europe released its retail media measurement standards for Europe, which highlighted a need for measurement and transparency if brands are to continue embracing its opportunities.
The question of measurement and what KPIs to use to assess the impact of your retail media campaigns is particularly key. In the fast-paced world of retail media, brands can often become fixated on immediate returns, using the up-to-the-minute shopper data to hone in on metrics like Return on Ad Spend (ROAS) that are calculated by dividing your attributed revenue by your ad spend.
However, the big problem with focusing too heavily on ROAS and treating retail media primarily as a performance channel overlooks its potential to drive improvements across the whole funnel. Retail media can also play a valuable role in supporting more strategic business goals, including brand awareness, customer loyalty, and customer lifetime value.
The power of collaboration
At a time when marketers are looking for optimal returns on their limited ad spend while UK retail sales stall, those investigating the burgeoning opportunities of retail media should consider its impact on sales. Additionally, they should examine other advanced capabilities that will drive long-term value. This means exploring and experimenting with those networks that have rich, first-party datasets, and which enable a deeper understanding of consumer behaviour and brand impact.
‘Conversion’ remains an essential metric for brands, but focusing purely on the impact of a retail media campaign on sales risks ignores potentially valuable outcomes and insights that may be happening elsewhere in the marketing funnel. If we accept that ROAS in isolation shouldn’t be regarded as a true indicator of success, it allows us to broaden our focus. We can consider a wider set of KPIs, such as brand uplift, customer sentiment and salience. These metrics help provide a more cohesive story around brand and business outcomes.
Brands exploring the power of retail media need to consider the full range of insights available from the data made available to them. Many brands are now appointing retail media directors, responsible for the bigger picture, ensuring that retail media budgets remain flexible, and that data insights on offer are not siloed between teams.
A key solution underpinning these brand interactions with retail media networks is data clean room technology, which enables data collaboration within the clean room to activate, analyse, and measure marketing spend. Brands should clearly define the insights they are looking for from their retail media collaborations and identify a data clean room solution that meets their goals. This could be to enhance efficiency, streamline their processes and prevent wasting resources, while best optimising data analysis and integration.
As we embrace a new era of privacy-sensitive, personalised marketing, data partnerships stand as the bridge to a brighter and more collaborative future for both brands and retailers.
Modern marketers should shift their focus beyond ROAS considerations and towards collaboration and partnerships with retail media providers, seeking out alliances with those capable of providing these robust datasets. This strategic shift is a direct response to the evolving challenges marketers face today when understanding the entire customer journey. Partnerships have become crucial as they empower brands with transparent full-funnel metrics and foster a culture of data-driven planning and decision-making. By embracing this collaborative approach, marketers can uncover new ways to enhance their insight into the customer experience and set the stage for long-term success through investment in retail media.
