A Guide for Building and Scaling a Retail Media Business
In this month’s Retail Insight, Diana Abebrese, Global Retail Media Lead at EPAM Systems takes some time out to offer us a guide on how a retail media business can be built and scaled in the world of today.
Retail media, often dubbed “the third wave of online marketing,” holds enormous potential, enabling retailers to achieve a new, high-margin revenue stream. Forrester predicts that the market will reach $85bn by 2026. Moreover, by 2027, retail media will almost tie social media as the second advertising spend channel, second only to search.
Nevertheless, many challenges and concerns can impede organisations from building a retail media business – such as integrating with legacy systems, unintentionally disrupting the shopper journey and other internal culture lags.
At the same time, the initial experimentation phase is coming to an end and it is paramount that retailers act accordingly amid the ongoing consolidation. In mature markets, we see a small number of retailers – potentially no more than five per vertical, per market – dominate, leaving the rest squabbling over the little that remains.
To ensure a spot among the limited few market leaders while avoiding internal constraints, retailers can leverage this eight-step guide to help outline their retail media strategy.
Organisation
Since retail media touches multiple stakeholders and business functions, a retailer must determine where their retail media sits within the business, whether marketing, e-commerce, trading or a standalone business unit. They also must align on objectives, roadmaps, structure and reporting.
From an organisational structure, retailers should decide who will own the profit and loss; likewise, they need to plan the structure of the retail media team.
Operating Model
There are numerous ways retailers can build and operate their retail media business. Whichever direction retailers decide to take, they should consider the pros and cons of each model. Some typical choices retailers will encounter include, but aren’t limited to, a direct or programmatic approach to media sales, a managed or self-service sales model and whether to use a walled garden or an independent open AdTech platform.
Business Process Optimisation
With retail media, end-to-end campaigns and business processes will often interact with multiple internal teams and third parties, many of which may use their own unique platforms and templates. Retailers can implement standardised ways of working to scale their retail media business effectively. They must also map current processes, touchpoints and hand-offs and document all pertinent data flows.
Media Proposition
Typically, retailers already have several monetisable assets in place. However, turning those into a workable media proposition won’t happen overnight. Retailers can build a three-year proposition roadmap that considers these existing assets and identifies notable gaps. For example, retail media strategists must ascertain which media channels are already in place, which will need to be developed, which belong to third parties, the profitability of each channel, etc.
Partnerships
A successful retail media business needs a strong partner network. As such, retailers must define a framework for partner selection and onboarding, create a corresponding partner support team and outline a skeleton RFP template and process. Some valuable partnership options include operations, technology and data partners, media partners and any outsourced media sales and account management. The key challenge here is to build a partner network and composable ecosystem that reflects the retailers’ differentiated brand positioning and meets their specific business needs.
Customer Data and Targeting Strategy
First-party customer data is central to a successful retail media business. By understanding and managing this data, retailers can enable campaign targeting, media planning and tailored messaging. When strategising, retailers must determine what data inputs and outputs correspond to each stage of the process and what data is available at the various levels, i.e., customer, product, category and campaign. Market leaders will want to ensure they have full control of their data and that it is securely housed within their own cloud environment, reducing their reliance on third parties for customer targeting, insights and measurement.
Revenue Plan
To justify any asks from the business, retail media strategists must devise a robust revenue plan, covering everything from financials and resourcing to technology investment and potential changes in business rules. This revenue plan should also consider how the business will protect existing monetisation activity, including how to scale incremental revenue. Other important considerations involve non-endemic revenue sources, working with suppliers, agencies and brands and ensuring the value of media assets and inventory.
Technology
It is almost impossible to scale revenue without an effective technology platform underpinning one’s retail media strategy. Of course, no off-the-shelf platform can meet the specific needs of every individual retailer. As such, retailers should consider designing an end-to-end ecosystem based on their unique requirements. Then, they can decide which elements to build or buy.
Getting Extra Help to Bring Everything to Fruition
It is important to note that while the technology aspect of this guide is perhaps the most vital to building and scaling a retail media business, it is also the most complicated. Building an end-to-end ecosystem can be a time- and resource-intensive ordeal – even if a retailer is not starting from scratch. To that end, retailers looking to build or scale their retail media business should look to collaborate with a qualified partner with experience in building composable cloud-based platforms.
This partner should be skilled in digital platform engineering to ensure retailers can deliver high-quality advertising experiences with effective measurement and targeting capabilities. They should also understand how to craft and implement a strategy sensitive to timeline constraints. By utilising this guide and a capable partner, retail media strategists can more effectively articulate a persuasive and comprehensive vision, convincing key stakeholders and fostering greater executive buy-in.
