The IAB recently released its ‘Retail Media 2023: Operational Strategies to Meet the Growth Potential’ research at its inaugural (and sold out) Connected Commerce Summit in NYC. Projections indicate retail media as one of the fastest-growing digital channels, expected to capture nearly 25% of total media spending by 2027. Discussions that day went so far as to suggest retail media and connected commerce as the “third wave” of digital advertising’s evolution – following in the footsteps of search and social media.
One of the primary factors driving this growth is the promise of maximized ROAS through unique, highly personalized ads using privacy-compliant customer data. Spending estimates show this is a successful formula, but it is not without challenges. Here are a few key takeaways to consider before integrating this channel into your e-commerce playbook.
Industry Standards and Alignment
There comes a time when the siloed nature of emerging digital categories starts to hinder its success and growth. Retail media is at this tipping point, and a call is out for more effective collaboration across retailers, agencies, trade associations and technology providers to, as the IAB states, ‘minimize complexity and simplify activation.’ Until implementation, optimization, and measurement standards are agreed on and in place, retail media networks will struggle to continuously prove ROI and capture media dollars, particularly from one network to the next. The IAB and the Media Rating Council have done an impressive job to jump-start this process in the recently released IAB/MRC Measurement Guidelines and Operational Guide.
The Consumer Must Come First
Consumer privacy and company transparency must be the map and compass to navigate the landscape of retail media. There’s a fine line between an ad experience that’s delightfully relevant and one that is downright creepy or insensitive. Do you really want to see an insurance ad if you’re recovering from a house fire? Probably not. But personalization is still better than randomness, so in an effort to encourage customers to share data willingly and responsibly, brands must continue to emphasize user control, transparent benefits, data protection, and respect for preferences. Enter topics like data clean rooms and loyalty programs 2.0.
1P Data Reigns Supreme
The first-party, opt-in data collected directly from a retailer’s digital storefront holds immense strategic and future-proof value. As signal erosion threatens traditional targeting methods (thanks to cookie deprecation and privacy-preservation tools), access to 1P data from transactions, loyalty programs, and CRM systems is the next gold rush. That said, scale will be an issue unless 1P retargeting and audience extensions are integrated, ensuring these retail-specific ecosystems don’t become the next iteration of walled gardens.
AI will bring Retail Media Beyond Retail
Many panelists seemed hesitant to mention the hot topic of AI (it was the running joke of the day), but the reality is that AI is already transforming the screen-to-store experience for brands – even beyond the tried and true CPG/retail verticals. This was no more evident than when PHD Media joined KERV on stage to discuss how Audi of America utilized AI-powered dynamic QR technology across national CTV/OTT placements to drive regional dealership awareness and foot traffic. At KERV, we see e-commerce clients benefiting from our AI/ML technology in three key areas:
- Frictionless User Experience: AI-driven solutions make the user experience seamless, providing tailored content and personalized recommendations.
- Connecting Offline and Online: AI can bridge the gap between Connected TV (CTV) user engagement and physical store visits, creating a holistic shopping experience.
- Efficiency and Customization: AI enables low-lift dynamic creative and product feed capabilities, aligning user experiences with localized inventory and exclusive deals at scale.
Additionally, the IAB’s research revealed that buyers see AI benefiting them across a wide variety of use cases like ad targeting, segmentation, bid management, copy/creative development, personalization, and optimization.
We’re eager to see how e-commerce will continue to benefit from new technology like AI/ML image recognition and are excited to help lead the evolution of shoppable media.