By Ben Sillitoe
The Boots Media Group was unveiled at the end of September, in what represented the launch of a full-service advertising agency offering from the health and beauty retailer.
Rooted in insights and first-party data thanks to the over ten million active Boots Advantage Card members that come with working alongside the UK retail mainstay, the new media business is the latest example of how big retailers can take more ownership of the digital marketing space.
It is particularly pertinent in light of the disruption in the online ad environment, illustrated by changes like the depreciation of web tracking cookies which means brands will be looking at new ways to target consumers.
Boots Media Group, which arrives thanks to a partnership with Threefold agency, brings several new routes to target consumers. For example, there’s a chance for co-created marketing campaigns between retailer and brand, and it gives suppliers a roadmap for how to use Boots’ digital and physical assets to reach shoppers in the optimal way.
Boots has joined the likes of Tesco and Amazon in attaching a retail media arm to its proposition. It is also a model that has gained traction in the US, with major retailers such as Walmart and Target using their assets to help brands get in front of potential customers in a targeted way.
Elsewhere, online fashion house Asos is even building its own programmatic ads business to raise its standing in the retail media ecosystem.
What’s the opportunity and what do retailers need to do?
GroupM forecasts the value of retail media spend in the UK, specifically, will reach £2.4 billion by 2024.
So why is that? According to Adam Yates, UK Sales Director for Retail Media at Criteo, “brands want to make sure they’re where the action is and reaching high-intent shoppers at the point of sale on the sites and apps of their retail partners provide this”.
He cites Asda, Currys and The Very Group as UK retailers using their platforms to provide opportunities for brands to reach customers throughout the online buying journey.
For other considering jumping into retail media, Yates advises asking four key questions and building from there.
“How will running a media business complement your eCommerce strategy?,” he says.
“Ads can be a great way to enhance customer experience if executed correctly — in other words ads should be native and relevant to the customer journey. Who are your advertisers? Most retailers start by selling advertising to their suppliers, agencies and — if applicable – marketplace sellers.”
Then, says Yates, it comes down to planning the team and revenue opportunity.
“Hiring media talent and/or partnering with an agency experienced selling retail media is a shortcut to success,” he states, adding: “Build a forecast based on the volume of page impressions on your website and app.”
Kiesse Lamour, global head of media at digital agency Wunderman Thompson Commerce, says remaining relevant will be crucial for retailers “in what is set to be an over-saturated market”.
“Retailers need to clearly outline how they’re going to structure and segment their information in a way that enables buyers to access it and drive additional value for their business,” she says.
“For example, are they prepared to enrich a brand or agencies’ data ecosystems, or is this not in the running? Measurement will also fall under the data umbrella, and the level of insight that retailers would be willing to expose to buyers both pre-, in-flight and post-campaign will be a discussion that needs to happen.”
Retailers will also need to confirm how they’re going to integrate their online and in-store offering, she adds.
Lee Metters, retail client partner at Awin, a global affiliate marketing network, says: “We’ve seen brand partnerships formed at almost every point within the customer journey, be than online or offline.
“But, by tracking brand partnership campaigns online; through tracking links, discount codes or QR codes; retailers can better measure their success.
Retailers should also consider their brand identify before entering into a brand-to-brand partnership. The most successful campaigns always have complimentary association.”
Payal Hindocha, director for customer engagement solutions at marketing software provider Emarsys, remarks: “Selling advertising space to third-party brands makes sense — retailers not only drive additional revenue but also benefit from a perceived wider product selection.
“At the same time, they can also benefit from “inherited loyalty” — customers associating these retailers with their favorite products, even if those products are supplied by a third party.”
Of course, if retail media networks were the panacea to all retailer’s challenges, everyone would already be doing it, wouldn’t they?
There are going to be bumps in the road for those looking to seize a market that research group eMarketer views as having a growing influence. It predicts one in eight digital ad dollars, globally, will be spent on retail media in 2021.
But it’s not going to be for everyone.
“One of the biggest challenges in this area is similar to pay per click advertising,” explains Brad Houldsworth, head of product at eCommerce platform provider Remarkable Commerce.
“The publisher loses a level of control over the part of site being used for adverts. All brands wishing to advertise in those ‘slots’ will want the ability to control the exact segments and visibility of their media activity, this becomes a technical hurdle which many retailers will fall at.”
He adds that selling space offline in a supermarket, for example, or online becomes “a very expensive campaign type, as the space is extremely limited yet the visibility is high”.
Multi-brand retailers like Asos or Absolute Snow, or marketplaces such as Aisle 3 or StockX, are most likely to make this model work, according to Houldsworth.
Meanwhile, Monica Eaton-Cardone, chief operations officer & co-founder of Chargebacks 911, a chargeback prevention technology provider, offers a word of warning in light of new retailer-brand ad partnerships forming. She suggests the world of affiliate marketing where like-minded businesses drum up trade with mutual promotions can be a target for fraudsters.
“Fraudsters love affiliate marketing,” she explains. “It’s an easy way to siphon sales commissions from unsuspecting merchants who often aren’t aware that they are being defrauded.”
Clearly retail media networks are different to traditional affiliate marketing, but with online fraud a growing problem, Eaton-Cardone’s warning is a pertinent one.
In terms of other challenges for those embroiled in the burgeoning retail media network, Criteo’s Adam Yates suggests retailers will encounter difficulties “balancing ad revenue with the shopper experience” as their ad networks grow.
“Ensuring every ad is relevant within the context of the retail experience may be operationally taxing — but feasible — on a small scale, but as the ad business grows, it needs automated tools to generate ad revenue without negatively impacting product sales,” he adds.
As Rory O’Connor, founder & CEO of delivery management software provider Scurri, points out, the lure of retail media networks will bring out that competitive spirit that lives deep within retailers.
“Ambitious retailers need to keep up with the times, and falling behind on any advancements made by competitors could be where they lose out both in the short and long term,” he says.
“With a revenue stream so easily accessible, as it is of benefit both to the provider and third party involved, it would be against retailers best interests to not pursue such activities.”
Boots explored the opportunity, and after around one year of development Boots Media Group was formed. Others will surely follow this route after considering the significant potential for growth now presented to one of UK retail’s most famous names.