In today’s era of digitization, consumers are exposed to various types of products and brands on the internet that have been tailored to their personal interests and insights. With high product exposure, some might think that what is left is for the consumers to make their choice of purchase when this is not entirely true.
It takes a holistic approach for brands and retailers both to persuade a consumer’s intention to purchase, from resonating and engaging the consumer to expanding brand awareness and eventually boosting sales, be it offline or online to a conversion of repurchase.
Retail media, also known as the next wave of advertising, has undoubtedly risen to the top to become indisputable to brands and retailers. In fact, retail media is estimated to capture 1 in 5 ad dollars by 2024 and will become a $100 billion market in 2026
Southeast Asia, one of the fastest growing regions in the world, has an estimated 589 million internet users dispersed, reflecting the increase in internet penetration which has led to more consumers favouring digital services, and as a result led to an e-commerce boom. Retail media enables brands to improve their visibility on the “digital shelf” on a retailer’s website and mobile app, much like exclusive in-aisle items in physical stores.
“The challenge now is for brands and retailers in the region to understand their markets and mobile-first consumers.”
Despite rising interest in e-commerce purchases, consumers in Asia Pacific remain relatively traditional – with almost 7 in 10 (69%) of consumers needing to see and feel a product before purchasing it. In-store shopping still reigns supreme with 7 in 10 consumers preferring to shop in stores, driven by factors such as not needing to wait for delivery or having to pay for delivery fees.
The challenge now is for brands and retailers in the region to understand their markets and mobile-first consumers, enabling targeted ads and increasing touchpoints to consumers on the retailer’s website or mobile app thus accelerating point of purchase online or offline. From recognising consumer trends to addressing the need of contextual targeting, here are my rationales on why brands and retailers should optimise retail media in the AdTech industry.
Retail media empowers brands and retailers to utilise first-party data to engage their target audience at scale
Retail media uses first-party data at scale with retailers taking the lead. Where retailers have access to identity data in a consented relationship with their consumer, they will market to consumers wherever they can successfully match that identifier with a publisher who also has a consented relationship with that consumer. Retailers use those hooks across their own digital stores and offline to partnering publishers to create a unique and personal connection with Consumer – especially consumers who are on their buyer journey.
At its most basic, targeted advertising can just mean that ads are chosen for their relevance to site content, in the assumption that they will then be relevant to the same target audience. However, when consumers are shown products that are personally relevant, they are more likely to click and thus increasing brand awareness.
Further personalising ads based on consumers’ interests could potentially enable brands to get even more value from their digital advertisements on retail media platforms. Nevertheless, to do so brands must improve first-party data collection and transform the relevance of ads and campaigns basing them on meaningful insight like transactions, shopping behavior, and contextual data collected on the retail platform.
This is critical in an environment where third-party cookies will no longer be supported. It puts the retailers in a powerful position because retailers have those first-party relationships with consumers and can bring to consumers exactly what they need.
Retail media provides additional revenue opportunity
The increased popularity of retail media can be attributed in part due to the growth of ecommerce and the desire for secure and safe advertising spaces. Additionally, retailers are now seeking to acquire durable, privacy-safe first-party data, following the end of support for third-party signals. These shifts have led retailers to establish their own retail media networks.
Retail media is a mutually beneficial solution for both retailers and brands, as it generates a new source of income for retailers and helps brands reach their advertising objectives in secure digital spaces. 70% of brands have reported better results with retail media networks compared to other channels, according to McKinsey. Additionally, retail media also improves the consumer experience by providing them with relevant product and brand recommendations based on their first-party data obtained from the retailer’s website.
“Providing personalised targeted ads in a timely manner will enable brands to increase consumer touchpoints and engage with their target audience more efficiently.”
However, establishing a retail media network (RMN) is a process that takes time and requires retailers to develop a new business model with updated operations, including new billing structures. Once a retailer has set up their own RMN, they can use the revenue generated to offset operating costs and finance innovation. Developing a RMN typically necessitates retailers to acquire new, scalable technology and possibly create new teams. One way to do this is to collaborate with an advertising technology partner who can provide the necessary infrastructure and expertise, which shortens the time needed to launch, as compared to developing all the technology in-house.
Consumers are cost-conscious and they demand value for money
In response to inflation and rising cost of living, consumers are heading online to search for the best deal despite the return of in-store shopping. They are also planning ahead and thinking of what to buy in bulk to maximize their spending power and make use of cost savings. According to 84% of consumers, useful information often promotes intention to purchase. The same group of consumers also often conduct initial product research on retailer mobile apps and websites. Providing personalised targeted ads in a timely manner will enable brands to increase consumer touchpoints and engage with their target audience more efficiently.
“Retail media enables brands to improve their visibility on the “digital shelf” on a retailer’s website and mobile app, much like exclusive in-aisle items in physical stores.”
Consumers believe that deals should not come at the expense of quality. Though saving money is top of mind, shoppers still want great products that are made to last. They want more from brands than just discounts. Alignment with a brand’s values and loyalty programs are strong motivators for shoppers to make a purchase right now. In fact, 44% of consumers in the region highlighting that great deals are an important criterion for purchase however quality is essentially key to driving a brand switch and subsequent repurchase.
The good news is that consumers will still find a way to purchase items that they love. Consumers have no choice but to spend more on non-negotiables like mortgages or food. At the same time, a majority are still purchasing the goods and experiences they want most.
Brands and retailers can leverage retail media to be visible on the digital shelf using contextual ads to engage with consumers while they’re shopping.
Rebalancing online and offline: Seamless shopping experience across platforms
Despite rising digital activity across the region, there is still a need to shop offline; 80% of FMCG in the region is still bought offline.
Consumers are adopting a hybrid path of purchasing, and that is likely to stay. In other words, consumers want the best of both worlds – while returning to brick-and-mortar shops, they still rely on retailer websites and mobile apps to supplement their shopping experience. By making sure consumers know what available in-store is—and what they will be spending—ahead of time, brands can supply the consumers the seamless shopping experience that in return builds loyalty and trust.
Simply put, I believe today’s brands must meet shoppers at the crossroads of in-store and online shopping—and embrace the opportunity to create an integrated seamless shopping experience that meets shoppers where they are, be it online or offline while still delivering the value they expect.