‘As retail media grows, the roles of chief marketing officers are evolving rapidly’

In the ever-evolving landscape of digital advertising, retail media has emerged as a new player that’s set to revolutionise the way brands connect with consumers.

With projections suggesting it will surpass TV advertising by 2028, retail media is poised to reshape the future of marketing.

Retail media leverages in-store and online presence as well as customer data to offer brands a direct line to consumers at the point of sale. It can range from highly personalised ads based on a customer’s own purchasing habits to huge physical displays which cast the net far and wide.

For example, Pepsi and Tesco recently partnered to create store ‘wraparounds’, turning entire Tesco superstores into giant Pepsi billboards.

The economics of retail media are compelling.

“In the UK, the market has grown from £1.8bn in 2020 to £3.4bn in 2023”

By 2028 the figure is predicted to be nearly £8bn.

This represents a significant new revenue stream for retailers, with advertising margins often reaching as high as 75% – considerably higher than traditional grocery products.

GDPR and consumer resistance to data collection have resulted in the phase-out of third-party cookies, meaning retailers find themselves in a uniquely advantageous position. Their access to rich, first-party customer data allows for precise targeting and personalisation, giving them a competitive edge in the advertising landscape.

Retail media enables brand advertisers to create seamless, integrated advertising experiences that don’t disrupt the customer journey. By controlling the entire ecosystem, from browsing to purchase, retailers can ensure ads remain relevant and enhance, rather than detract from, the shopping experience.

Brands advertising through retail media channels are seeing vastly improved conversion rates over other digital channels. Ads on retail websites are 50% more effective than social media at getting a response from shoppers.

Brand advertisers seem to be recognising the power of the channel, with 70% surveyed by McKinsey stating that performance in retail media is better than other channels. This effectiveness stems from reaching high-intent audiences who are already in a shopping mindset.

Tesco, with its in-house data science company Dunnhumby, as well as Sainsbury’s Nectar360 programme have emerged as leaders in the UK retail media space. Their offerings include digital and in-store advertising, personalised offers and targeted communications through their loyalty programmes.

“As retail media continues its meteoric rise, the roles of chief marketing officers and marketing directors are evolving rapidly”

Tesco UK and Ireland people director James Goodman comments: “Chief marketing officers must be digitally fluent. They need to be able to connect the customer journey from bricks to clicks, understanding how to build digital assets and, more importantly, understanding in which channel to deploy them – media, social, search etc, to attract and retain customers.”

Marks & Spencer chief people officer Sarah Findlater agrees that this shift demands a new set of skills.

She says: “As the media and retail landscape is constantly changing and evolving, the skills our marketeers need to develop and employ have to keep pace too.

“In order to offer a hyper-personalised, tailored experience to our customers, we’re now increasingly looking for data mastery and a solid understanding of AI alongside a forensic approach to customer behaviour. We are experimenting all the time.”

Chief marketing officers of the future will be adept at leveraging complex data analytics tools and technologies. Understanding how to harness first-party data for targeted advertising and personalisation will be crucial. This is a departure from the creative and branding skills traditionally held as the most important in the armoury of a strong chief marketing officer.

Amir Rasekh, managing director of Sainsbury’s Nectar360 says: “Marketeers need to understand customer behaviour and then engage customers brilliantly through digital marketing.

“Therefore, the modern-day marketeer needs to be data savvy and understand the need to integrate retail media into their omnichannel marketing plans to create a seamless customer experience”

Amir Rasekh, managing director of Sainsbury’s Nectar360

Marketing leaders need to develop strategies that integrate online and offline retail media channels. This includes understanding how to create cohesive customer experiences across digital platforms, in-store displays and loyalty programmes.

The line between retailers and media companies will begin to blur, and retail media networks will need to foster deeper partnerships with brands. This involves not just selling ad space, but collaborating on co-branded content and shared data insights.

With increasing scrutiny around data use, marketing leaders must balance personalisation with consumer privacy. Understanding and navigating complex data regulations will be essential.

Retail media will play a pivotal role in shaping the future of both retail and advertising. For chief marketing officers and marketing directors, embracing this change and developing the necessary skills will be key to staying competitive in this new era of retail.