Delhi-based millennial Megha was on a quest. The object of her desire was a rosemary oil elixir touted by Instagram’s haircare influencers. Landing on Amazon, she mindlessly “added to cart” the first brand that materialised on her screen. Convenience, it seems, trumped curiosity. What she didn’t realise was the invisible hand guiding her selection. This was the magic of a “sponsored” placement, thanks to data generated by retail media.
As the world says goodbye to third-party cookies — snippets of data used to store information on web browsers to track consumers’ moves across different websites — this marketing tool has gained immense popularity among brands and retailers alike.
According to GroupM, retail media was the third-fastest growing advertising channel in 2023. It will contribute 18% (Rs 15,930 crore) to India’s Rs 88,502-crore digital advertising spends in 2024, with a spectacular CAGR of 41% between 2019 and 2024.
The thing is, customers using, say, a retailer’s app or participating in a retailer’s loyalty programme offline have a measurable digital trail. Used smartly, retail media could give the world’s online giants a sales bump of between 7% and 10%. “Retail media offers direct access to valuable first-party data. These platforms, often associated with major e-commerce players, provide advertisers with insights into consumer behavior, enabling targeted and personalised campaigns,” says Kalyan Kumar, co-founder and CEO, KlugKlug.
Mind you, retail media isn’t a new monkey. Physical retail has been at it for the longest time — using in-store standees, gondola ends and even parking lot banners — to get the message across. What has changed is that retailers have become increasingly sophisticated — they see themselves as publishers that must monetise their physical and digital assets, even roping in brands that might not be selling on their platforms.
Integrating retail media into the marketing mix will become essential for optimising campaigns and leveraging transactional data, adds Kumar.
Collaborations with major retail platforms such as BigBasket, Amazon, Myntra and Flipkart will be crucial for advertisers seeking to capitalise on its potential.
As the world tightens privacy regulations, retail media becomes even more crucial for brands, says Sahil Chopra, founder and CEO of iCubesWire.
Experts agree, highlighting another key benefit: retail media shrinks the marketing funnel by directly connecting advertisements to sales. Brands can measure and track customer journeys in real-time, and conversions become clearer.
It also serves as an additional stream of revenue for retailers. Analysts say global retailers might already be turning in up to 3% of their revenues by turning retail media into a strategic asset.
Navigating complexities
Finding a unified, standardised measure of performance across various retail media platforms poses a significant hurdle, given their isolated operations. This isolation complicates performance comparison and the development of optimisation strategies, according to experts.
Juggling campaigns across diverse platforms and interfaces also presents a challenge for certain brands, resulting in constrained outreach compared to prior open ecosystems.
“Emphasising customer relationships and offering valuable content alongside product recommendations will be key strategies for retailers to navigate the post-cookie era effectively,” says Sumon K Chakrabarti, co-founder, Buffalo Soldiers.
Additionally, retail media placements typically command a premium.
Some experts observe that while larger brands might possess their own retail media platforms, smaller ones would struggle to establish their presence independently. Moreover, the number of brands advertising on a retail platform may be limited, particularly if they are not available for sale on that platform, as retailers are reluctant to divert users elsewhere through advertisements.
These are, as they say, teething troubles. To an extent, retailers are banking on artificial intelligence and machine learning to iron out at least some of the glitches.