Brand’s P&L’s are typically inclusive of :
Net Sales Value = Gross Sales Value – Efficient Operations
Trade Terms (ATL) = Consumer Price & Promotion / Feature & Display, Coupons, etc
Turnover = Net Sales Value – Trade Terms
Supply Chain Costs= Cost associate to production of products, raw materials, COGS
Gross Profit= Turnover – Supply Chain Costs
Brand Marketing Investment (BTL/BMI) = Advertising, Media & Promotions
Profit Before Overheads= Gross Profit – Brand Marketing Investment
Only invest if eCom ready – Before investing in any retail media, SKUs must have strong operational health. This includes sufficient inventory, profitability, competitive pricing and positive ratings/reviews. Content serves both the search algorithms and the consumer’s understanding of the product.
Retail Media is still New– The state of retail media is exciting but has challenges from connectivity and developing the right talent with expertise to creating the right structures and processes to manage and evaluate retail media holistically.
Retail Media is High Profit for Retailers – Retailers are aggressively driving retail media because it is a critical opportunity to optimize their capabilities and diversity their revenue stream so they remain competitive.
Not every RMN is the same– Work with your media team to identify priority business objectives and understand retailer capabilities, success metrics and data availability. RMN capabilities vary widely.
Objectives drive measurement– It’s important to identify the objectives and align the appropriate KPIs to measure success and inform campaign optimizations. Not all retailers provide incrementality, which is table stakes for commerce.
Test and learn is mandatory– Each retail media tactic plays a different role in the marketing funnel and works best with a blend of event and always on campaigns. Marketers must test and learn to optimize the right tactics.
Mature brands and products will benefit from funding search products to maximum, while newer or lesser known products should use cost efficient high scale tactics to build awareness.
Mature brands and products have high awareness and penetration and often have very large brand audiences in retail marketplaces. Because these brands are competitive, the first dollar should almost always go to funding gaps in the sponsored search strategy. This is the easiest way to deliver digital conversion quickly and maintain share.
If search is already maximized, the next step would be investing in retargeting either onsite or offsite through programmatic offerings. Walmart and Sam’s Club both have solid offerings. Only when these are funded properly should display media be considered.
First focus on onsite display or video assets which also have high likelihood of delivering conversion as they are very close to the selling point. Then next consider offsite display/video or social media utilizing retailer’s 1P shopper data. This is where a marketer can get creative and deliver custom messages to the shopper.
National media and 3P media providers should only be added to the mix if there are scale or delivery concerns since it delivers high levels of awareness instead of conversion.
New or lesser-known brands and products have lower awareness and penetration and the 1P audience data may be limited. These types of brands have limited budgets, so national media or 3P partners may help deliver wide scale awareness objectives at a more efficient cost.
It doesn’t hurt to fund sponsored search since it is a cost per click model, but a marketer shouldn’t expect to see conversion pick up until shoppers become more familiar with the product.
Display media and social should be considered for awareness but note that delivering conversion and returns will be extremely difficult.
Trade support such as coupons, demos and rollbacks are likely a better investment to encourage shoppers to trial.
Funding both search and display media on reatiler.com is critical to delivering the full conversion strategy.
If a marketer only invests in display or social media, the brand creates awareness but risks losing conversion to competitors who dominate the search space. On the flip side, if only search is funded a brand competes for existing demand which is expensive and limited. The best strategy is to fund both display and/or social and search tactics to create AND capture demand for a full funnel approach that maximizes ROI and market share.
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