There has been a lot of talk recently about retail media as the advertising format of the future that will capture a greater part of the advertising budget of brands. The recently held event 'Retail Media Spain', organized by Programmatic Spain, and the success achieved are a clear example of the interest in this topic. We understand Retail Media as advertising inserts on the digital sites of retailers and marketplaces.
Retail Media has a great advantage, since the consumer is being impacted at the time of purchase and, therefore, not only is it possible to build brand awareness among relevant consumers. But also, do it at the time you are going to buy to additionally have an effect on the conversion. It seems like the ideal world, I impact a qualified audience (people who buy the category) at a relevant moment (moment of actual purchase) in an appropriate place (place where the purchase is made) and, therefore, with the same budget I attack different parts of the conversion funnel. In addition, very valuable first party data is obtained for segmentation and retargeting.
But in order to maximize the full potential of retail media, advertising brands need the retailer to share data on what has happened and segmentation possibilities, offering variety and flexibility in their inventory of advertising space in order to optimize the dedicated budget. And the reality is that these two things do not usually happen.
The reality is that most of the advertising options currently offered by retailers are fixed spaces at a price per day of insertion, without access to any type of information on impact or conversion. This greatly limits the development possibilities, since it does not offer measurement or optimization possibilities.
Amazon is the great operator that has long ago discovered the great opportunity and has developed a huge catalog of possibilities for the advertiser both inside (sponsored ads and stores) and outside its space (through its DSP), in a flexible, segmentable, measurable way. and therefore it can be optimized by being able to manage both ROAS (for conversion) and visibility indicators (for notoriety), segmenting by audiences or by keywords. It also offers great retargeting possibilities, all on open platforms that allow you to manage campaigns with great flexibility. And with that, Amazon achieves a very relevant extra benefit as advertising space, in addition to that achieved as a place of purchase.
At the other extreme are the retailers that are dedicated to offering fixed positions based mainly on advertising banners in a Home carousel with endless consecutive ads, at a high price without any type of metric to analyze. Is it worth paying to have your brand in position 8 of a retailer's home page carousel? Is someone going to see you? Are you going to have any branding impact? Let's not talk about conversion impact anymore!
These limitations lead to the fact that a large part of the current retail media advertising inserts are agreed upon in the annual negotiations between retailers and brands as compensation for improvements in commercial conditions and another part is used by high-margin brands that use these spaces to give learn about its novelties as part of its communication strategy for these products.
Brands will definitively turn to retail media when retailers offer greater segmentation possibilities and share enough data to be able to manage these campaigns with flexibility, in order to optimize their results, and at that time Retail Media will take off, obtaining an important part of the budget of the brands. Brands want to invest, the future of this medium is in the hands of retailers.