Retail Media - The Advertising Market of the Future?
Well-known retail companies in various industries have made it increasingly clear in the past that they will eliminate printed brochures from their marketing mix, either completely or at least in part. This will be accompanied by an expansion of digital reach - in owned and paid channels. One buzzword that is coming up more and more frequently in connection with retailer-owned media channels is retail media. We provide an introduction to the topic.
A number of retail companies gained attention in the past year with announcements that they will discontinue their printed brochure activities and focus more on digital measures. Online retailers such as Zalando and Otto, as well as stationary players such as OBI and Media Markt, are now turning their focus to the topic of retail media.
Offer communication via printed brochures is still of great importance for many retailers when it comes to presenting the range of products and increasing frequency in stores. Retailers use them to reach a broad audience of occasional shoppers who do not actively use the retailer's own channels. At the same time, brochures are a popular way for retailers to partially refinance their own advertising through so-called advertising cost subsidies (WKZ). While the WKZ has also become increasingly established digitally in recent years, the concept of retail media goes one step further and is becoming a relevant source of revenue for retailers: by 2023, retail media sales are expected to grow by 27 percent.
What exactly does retail media mean?
As more consumers shift their shopping habits online, retailers are investing more resources in developing and maintaining their websites and mobile apps. These digital resources provide a wealth of data and insights about consumer behavior that can be used to design personalized shopping experiences and targeted advertising.
In a nutshell, retail media means the placement of advertising on digital marketplaces or within online stores. In other words, a kind of shelf advertising - only digital. Retailers use their owned channels to show and sell advertising for brands, offering them the opportunity to address specific target groups, increase brand awareness and boost sales.
And there are various benefits for retailers: for example, they can generate additional revenue, gain insights into customer behavior, and strengthen their relationship with brands. In addition, retail media can also be used to offer consumers personalized shopping experiences and promotions to encourage customer loyalty and repeat purchases.
For the end consumer, this type of advertising means even more personalized advertising based on their usage behavior in the familiar shopping environment, for example on the website of their preferred retailer.
Why is everyone talking about retail media?
Offer communication is undergoing an unprecedented transformation. The focus on digital advertising measures is no coincidence: the Corona pandemic, but not least the Ukraine conflict and the associated crisis scenarios have noticeably changed the industry and consumer behavior. The current inflation and the associated price increases are not stopping at paper prices either. For example, the paper price in November 2022 is around 28 percent higher than in 2021. This development is prompting retailers and brands to rethink their marketing mix and digitize it more fundamentally.
Consumer behavior has also changed since the Corona pandemic: Kantar, for example, reports that up to 80 percent of shoppers now make half or more of their purchases online. This change was already ongoing but was dramatically accelerated by the pandemic. So it's only logical to position yourself with these merchants or platforms.
Another issue that will completely change marketing in general in the future: The end of the third-party cookie era. Even though advertising with third-party cookies will no longer be possible, the need for personalized, targeted advertising will remain. Personalized advertising will not disappear, it will just be based more on data collected in a first-party environment.
The right time is essential
Retail Media enables retailers and brands to better exploit the potential of retailers' owned channels. Independent platforms for digital offer communication are suitable for addressing occasional shoppers who do not use the retailer's owned channels. These include the Profital brochure app, which displays personalized advertising in a targeted manner and can be used to reach shopping planners and bargain hunters.
Targeting specific groups is part of Profital's DNA. Not only retailers but also brands can present themselves perfectly in the independent brochure app in order to map the upper funnel (branding and awareness) on the one hand and to set the final impulse for a purchase decision in the lower funnel on the other.
The advertising in the app is perceived as content because users actively use Profital to find out about products and offers, to be inspired, and to plan their purchases. In other words, it's the ideal advertising platform.
In addition, Profital is the digital showcase for brick-and-mortar retailers, but of course also for brands. For example, we work successfully with well-known brands and manufacturers from all sectors, such as Alpro (in cooperation with the shopping list app Bring!), Ramazzotti, or Bepanthen.
