by Sean Cheyney, VP of Global Business Development at Triad
With the steep and lightning-fast rise of Amazon’s advertising business, most retailers have been left to watch helplessly as the #3 digital advertising player in the US market eats their lunch. In the process, Amazon has also chipped away at traditional retailers’ mainstay trade budgets and taken an oversized share of brand media dollars.
Retailers like Target, Walmart, Best Buy and Kroger have made their stand by building ad platforms that further business goals while benefitting customers.
If you are a retailer, or have retailer clients, one critical question begs for a little self-discovery. Will you put your head in the sand while your trade dollars and relevance among suppliers shrink, or will you act to transform your digital assets into a media publishing property?
The Blessing of Amazon
Yes, you read that correctly. Amazon’s dominance is a blessing for retailers looking to build their own ad platform because it’s a hard-to-ignore impetus for change.
Ten years ago, speaking to ad agencies and brands about investing brand budgets and shifting some trade funds into a space on retailers’ websites was a major uphill climb. Now, thanks to Amazon, these concepts are no longer met with confused looks. The field of digital retail media — and the act of bringing it to life via the monetization of retailer ecommerce sites — have both evolved into an integral part of brands’ media plans and their overall budget allocation process.
In reaction to the “the Amazon effect,” consumers have already been shifting their in-store shopping behavior to online. Now, they expect more meaningful and personalized cross-device relationships with their favorite retailers.
As retailers’ ecommerce experiences face increasing pressures to match Amazon’s speed and efficiency, consumer expectations show no sign of slowing down. A 2018 study found that 43% of consumers expected “much faster delivery times that same year” — a sharp increase from 2017. Finally, with Amazon’s widespread use as a search engine, consumers are migrating to retailers’ sites for initial product discovery instead of using traditional search engines like Google.
So, what does this have to do with ad platforms for traditional brick-and-mortar retailers looking to compete with Amazon? They need to create a holistic omnichannel shopping experience to complement their physical presence. If they want to preserve their allocation of trade funds and redirect brand media dollars from suppliers, building a retailer-centric online media platform is the only way to capture their fair share.
Retailers’ Unique Opportunity to Win
By harnessing the benefits of physical locations alongside engaging ecommerce experiences, retailers are in a privileged position to benefit their customers and the brands their customers favor. Opportunity is best realized at the customer/supplier intersection when integrating digital ad tools such as product search, native ads and shopping experiences previously only seen in-store.
When done right, this integration counters Amazon in several ways.
First, it creates an engaging, educational experience for customers, removing friction from the buying process. This is a big shift from bare-bones ecommerce plays on landing pages to interactive, personalized experiences across multiple devices that can increase sales regardless of purchase and delivery method (delivery-to-door, click and collect or simply driving foot traffic for in-store purchase).
Second, when retailers use customer data correctly for personalized targeting and effective measurement, they can measure the in-store lift created by online ads or experiential exposure. This accountability is highly sought-after and makes a retailer’s online ad platform stand out as premium — thus garnering larger supplier budgets. In a January 2019 IAS study, 25% of digital marketers confirmed that, due to the current state of how people shop, they would increase their own ad spending on premium publisher platforms. Brick-and-mortar retailers can get a leg up by bringing this value to the table, whereas Amazon — for the most part — cannot.
Retailers are not generally set up to become media publishers, manage advertising or delineate between trade dollars and media brands’ dollars. Target, Walmart and Kroger can, thanks to their scale and size, but smaller retailers are daunted by the complexities of integrating the right technology, digital tools, and ad sales. Barriers include internal cultural resistance to advertising, scarcity of ad inventory on their site and the risk of compromising user experience during the learning curve.
The complexities take many forms, particularly in technology and operations. Critical steps include choosing an ad delivery mechanism, gathering support staff (from marketing, ad sales and campaign management to billing) and preparing for the internal, brand-facing and legal needs of reporting. Clearly, defining goals, objectives and a realistic starting point are a must.
Here’s the Good News: It’s Worth It
You don’t have to start from scratch and figure this out on your own. Learn from retailers who are already doing it well. Also, companies like Triad are structured solely to help retailers build a monetization business.
Regardless of whether you decide to fully outsource all functions, outsource specific functions or get consulting to manage it internally, leaning on proven expertise will dramatically increase your speed-to-market and program success.
Any retailer with size and scale can start bringing in significant revenue that goes straight to the bottom line. With brands happily funding media programs, successful ad platforms deliver big benefits to customers including a smoother ecommerce process and more engaging, memorable experiences.
For brands, a good platform provides the opportunity to execute a comprehensive omnichannel program that surrounds the consumer by amplifying shopper marketing initiatives with national branding solutions. Layer on reporting and you can allocate dollars toward programs directly tied to shopping engagement and sales.
For retailers, there are several benefits above and beyond a significant new source of high-margin revenue. Retailers often find that aligning internally to achieve omnichannel success means breaking down traditional silos between digital and merchant teams. Having brands fund onsite experiences can bridge the gap between the online and in-store experience, creating a higher level of consistency for your customers.
The decision is in retailers’ hands, and big rewards await those bold enough to take a page out of their competitor’s own playbook.