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“[We have] an incredible opportunity just to think differently about how we connect and drive a really meaningful customer experience … The retail media industry is going to continue to grow because we're doing things to solve customer problems [and] drive media accountability.” — Cara Pratt, Senior Vice President, Kroger Precision Marketing
While investment in digital retail media is in its early days, it’s growing rapidly. Not only that, but retailers that have invested in it — like Kroger Precision Marketing — are already seeing significant results.
As a pioneer in the retail media space, Cara Pratt, senior vice president at Kroger Precision Marketing, joined a recent episode of the “Unpacking the Digital Shelf” podcast, “Driving Accountability, Transparency, and Results in Retail Media,” to discuss how retail marketing is becoming one of the driving forces of the retail industry and its impact on the future of ecommerce.
Retail media is the “third big wave” of digital advertising, according to Insider Intelligence. It follows the waves of search and social, and it’s poised to make just as much of an impact.
U.S. retail media ad spend has grown drastically in the last couple of years — it saw a 53.4% growth in 2021, says Insider Intelligence.
According to Pratt, there are three primary reasons why this is the case:
Pratt explains that consumers’ purchase journeys are fundamentally different today because the internet shortens the time from when a consumer becomes aware of a product to when they buy it.
“Because of the opportunity to connect with customers at any point in time so quickly, this journey … is turning into a sprint,” Pratt says.
By appearing in the right places, “retail media can shorten the gap between inspiration and purchase,” she adds.
Brands want to see a return on investment for every dollar spent — and they’re looking for a higher level of accountability from their investments.
Retail media, with its close connection to the point of sale, has the potential to deliver this level of accountability.
Consumer trust is eroding. In a PwC study, 76% of consumers called sharing their personal information with companies “a necessary evil,” while 36% were less comfortable sharing their data than they were a year prior.
This weakening of trust is reflected by new approaches to consumer privacy — and heralds a future where sharing consumer data will become more difficult for organizations.
In this environment, the first-party data retailers use to power retail media algorithms becomes much more important. It gives brands the opportunity to give consumers relevant experiences without obtaining consumer data from a third party.
“We all need to be at the table. We need to dissect problems together … Retailer, advertiser, and agency — and the CPG is like the connective tissue across how we all come together.”— Cara Pratt, Senior Vice President, Kroger Precision Marketing
At its best, retail media can combine advertiser expertise with retailer data to create powerful and meaningful customer interactions. Reaching that level, though, requires open collaboration between all stakeholders.
By planning across silos, organizations can find the most impactful opportunities to connect with shoppers, gain their trust, and shorten the buyer’s journey. “
It really is about this three-legged stool — advertiser, retailer, agency — coming together, dissecting problems, planning across silos, focusing on short-term and long-term impacts, and removing friction in that entire buying process,” she says.
Both short-term and long-term gains can be achieved this way, according to Pratt, because collaboration helps organizations implement sophisticated strategies that can target both.
“Efficiency and effectiveness can coexist. We're seeing that opportunity to help brands [and] agencies think differently about the KPIs that are fueling a short-term lift to a long-term ability to convert a new shopper,” she says.
When all parties come together with a focus on outcomes, retail media can make amazing things happen. Working with retailers means brands and agencies can leverage rich first-party data.
This data, according to Pratt, has a 90% effectiveness rate. Advertising with third-party data, by contrast, has a 30% effectiveness rate.
Pratt also believes retail media can enable better advertiser accountability — and that this accountability is very much needed.
Currently, there’s no agreed-upon standard on which metrics or key performance indicators (KPIs) indicate success in digital advertising. Pratt hopes that retail media will become a driving force for the retail industry to develop a more standardized approach that focuses on concrete results.
The key to this push for better accountability and improved outcomes is, according to Pratt, for “brand partners — the buy side — to hold the sell side accountable. Once you do that, and you do that consistently, it's going to make all boats rise.”
Transparency is also a part of this push because “you can't drive media accountability unless you bring a new layer of transparency to the forefront,” Pratt says. That layer of transparency will require cooperation from all players — advertising platforms, retailers, and agencies alike — but if that cooperation occurs, it can push the industry to new heights.
As shopper journeys collapse and relevant experiences from trustworthy brands become more important, brands will need to meet consumers in remarkable new ways. Retail media can provide those unique interactions — and in the process, keep key players accountable for providing measurable results.
Retail media is still in its early stages, but it’s growing fast, and organizations are learning new ways to use it every day. As Pratt says, “When we get this right — which is a when, not if — it's really going to drive amazing benefits for consumers, most importantly, and of course brands as a fast follow.”
Want to hear more of Pratt’s perspective on how the industry can unlock the full potential of retail media? Check out the full episode of “Unpacking the Digital Shelf.”