Retail media is all the rage. But while industry dialogue around this market focuses on innovation (e.g., CTV/programmatic applications for retail data, measurement standardization), there is little talk about the high concentration of the market in national retailer platforms.
Continued low concentration in the mid- and long-tail retailer segments could pose an existential threat to grocery businesses, negatively impacting local communities.
Much of retail media to date has used repurposed trade advertising budgets, bringing more transparency and accountability to those funds. However, those budgets will plateau at a level commensurate with gross merchandise value at a particular retailer.
Thus, a retailer’s ability to drive sustainable growth in its retail media network (RMN) will depend on attracting share from brands’ media budgets. Currently, national retailers are in a stronger position to do this than regional retailers given their scale.
Here’s how local retailers can secure their share of media budgets.
Learn from local news pubs’ mistakes
There are some universally recognized core elements of building a media business: robust customer data, campaign delivery and measurement. But the ease of doing business is a simple human need that should not be underestimated.
According to Insider Intelligence (Sept 2023), 64% of brand advertisers work with four or fewer RMNs, and, of the top 14 RMNs as surveyed by CPG (consumer packaged goods) manufacturers, only one included regional banners.
What is the incentive for brands to shift media budgets into many disparate regional retailers when they believe they are already reaching that audience through a national retailer platform or their own social media marketing?
Regional retailers can take a page from local news media. Over the past 20 years, these properties paid the price for a lack of early collaboration that exacerbated the shift of media spend from local media to national. Most media executives prioritized defending their trade areas. Meanwhile, there was a profound shift of local and traditional media budgets flowing into national and digital media.
Complementary incentives
Beyond its attractive financial attributes, retail media is highly strategic, used to subsidize the low pricing and loyalty perks that power retailers’ respective flywheels. And the sales that result from these incentives help retailers gather first-party data that can attract advertisers.
But the inability for mid- and long-tail retailers to attract media budgets will mean less flexibility to support important shopper benefits. It could push consumer spending to national brands.
Therein lies the possibility of a cascading effect: store closures, food deserts, loss of opportunity for local food suppliers to efficiently reach shoppers and loss of choice for consumers. Advertising could gobble up the grocery business.
How can regional retailers strengthen their position?
The answer lies in a collaborative effort to bring scale and efficiency to the market. It means providing brands (and their agencies) with a streamlined way to plan, execute and measure retail media campaigns across multiple geographies.
Identity partners with robust data collaboration capabilities can consolidate sales transactions and shopper data across retailers and resolve them to the right identity and household while using a consistent measurement methodology to show incrementality versus national media for both on-site and off-site media.
Communities are stronger when their citizens have access to multiple healthy retailers, providing both necessary goods and vital employment opportunities. Now is the time for regional retailers to act and ensure that the retail media market is inclusive of America’s diverse set of merchants – from national to regional to local independents.
“The Sell Sider” is a column written by the sell side of the digital media community.
Follow TransUnion and AdExchanger on LinkedIn.
