What is e-retail media and what are the associated challenges ?
Still a fairly recent concept, but not all that new, E-Retail Media is a fast-growing tool thanks to the ever-increasing interest of brands and the sudden acceleration of online consumer purchases by shoppers. A sign of its growing importance is that it is becoming an increasingly important part of the relationship between retailers and manufacturers. With more mature and demanding brands and shoppers on board, the story that is being written can be a good one. But then, what are the challenges and what organizations will the E-Retail Mediaa ecosystem have to deal with in order to adapt to the needs of shoppers?
E-Retail Media: ultra-connected, ultra-reactive and ultra-fast.
E-Retail Media is quite simply a tool of our time. Everything is changing fast, the offer is getting bigger and bigger, the multiplicity of players is disrupting the market, but above all shoppers are ultra-connected, ultra-solicited and volatile. The fundamental change is precisely… the speed of these changes! They keep coming one after the next, with new tools, also becoming faster, but on the other side, business organizations have difficulty adjusting at the same pace.
Concretely, E-Retail Media has enabled brands’ communication to get closer to the purchase act itself and, above all, in a precise and ultra-fast manner. The time lapse between seeing a TV or print ad and visiting a shop seems incredibly long compared to the near-instantaneousness of E-Retail Media In the same way, the front display that must speak to the greatest number of people seems obsolete compared to e-commerce banners that can be adapted to each shopper. Once again, the potential to communicate in a more relevant way and especially in the crucial moments before the act of purchase is incredible.
Additionally, it is easier to analyse and quicker to modify or adapt. Change a TV copy? Change a TG? Impossible, too expensive, too long. Analyse in real time or a few weeks before the end of an action? Now it is finally possible. Mechanically, E-Retail requires more decisions, at a faster pace than traditional media tools. Of course, the costs are also more attractive, but it requires specific attention.
A tool that is enables highly precise analysis, is faster and more flexible.
With omnichannelity, E-Retail Media is more important than ever: customers now check products via their smartphones, tablets, etc. and once they get home, they make their purchases on their desktop to pick up the next day. Of course, there are major differences in shopper’s involvement between food and non-food, but this omnichannel nature means that the buying process is becoming increasingly complex, specific and even fully customised.
Yes, but we all feel that traditional marketing is no longer enough to convince the shopper. The number of touch points has exploded, the media journey is totally fragmented, the number of incentives to buy or products has become almost infinite. The result is complete saturation: drowned out by thousands of advertising campaigns, shoppers massively reject traditional advertising. Because it is more finely targeted, E-Retail Media enjoys a better reputation and acceptance among consumers.
Moreover, the continuing explosion in promotional budgets confirms that traditional mass communication has not been working as effectively for some time. The consequences are numerous, but shoppers are encouraged to buy too much for their actual consumption, and the impacts in terms of production, logistics, plastic and paper waste are huge.
Let’s not be mistaken, the challenge of E-Retail Media for consumer goods is strategic. Shoppers are evolving faster and faster and in an increasingly specific way. It is no longer a question of targeting a few groups of individuals here and there, but of aiming for ultra-personalisation in order to remain relevant, agile and useful for shoppers. A trend that is already showing its face… As we all know, in the consumer goods sector, shoppers’ interest can be low: few shoppers will spend hours researching household products or paper towels. In the case of food, it is mainly a question of researching the impact of a particular food or component, for which shoppers have become more suspicious; food scandals do not help. It is therefore a question of understanding shoppers better, communicating in a convincing way and proposing relevant offers and products at the right time to ultimately recreate trust. For retailers, this represents a unique opportunity to monetise their audience and develop a very lucrative business. The pure players have more practice and are ahead of the game.
However, the annual budgets and priority of these E-Media investments remain relatively low, while :
To those who think that the drive is only “cannibalising”, NielsenIQ provides an interesting insight: 11% of Leclerc Drive customers are not customers of the shop.
Not neutral! From there, we can imagine that the drive is a recruitment channel… (especially when the lowest prices are offered), it’s only a short step!
– Olivier Dauvers.
A tool that is enables highly precise analysis, is faster and more flexible.
In 2022, Retail Media is a far cry from the standards of 10 years ago. Data analysis is the main difference. The data itself is not necessarily new or revolutionary, but the tools for analysing it or exploiting it on a mass scale are profoundly changing the outlook. By getting closer to, or even including, the act of buying, campaign analyses become more exploitable and actionable from a business point of view.
E-Retail Media imposes two major changes, once again linked to speed: on the one hand, greater speed of implementation of E-Retail campaigns compared to traditional media and, on the other hand, the speed of analysis of these same campaigns makes it possible to react or test quickly and effectively. Let’s face it, there is clearly a lot of work to be done to compare the different E-Retail tools, but it is also clear that fine, reliable and fast analysis is available like never before. In terms of granularity, it is possible to go down to the EAN level for analysis. Of course, mass effects still come into play (e.g. an EAN with very low sales or little distribution is still difficult to analyse), but this seemed unthinkable only 5 years ago.
The sudden growth has taken organisations by surprise.
From a tool with interesting potential in 3 to 5 years to a strategic priority during the lockdowns, E-Retail Media has evolved very quickly leaving little time for organisations to adapt, or even to understand more precisely how to use it in the marketing mix and to invest in the best way. Being at the crossroads of several professions, teams, organisations and even know-how, E-Retail Media does not really have a dedicated team, let alone a clearly identified budget… Let’s take a needed step back.
Yesterday I was twenty years old… but also and above all the brand and retailer organisations were synchronised: there was a marketing team, a trade team, established job descriptions and a single sales medium: the physical shop.
The product catalog, the promotional campaigns, the activations, the leaflet campaigns… Everything was jointly orchestrated to seduce the shopper in large physical shops. Of course, on a day-to-day basis the level of complexity and effort required to make it all work was very high, but it worked effectively. The brands took care of the communication upstream, outside the shop, and then it was the retailers’ turn to take over once the shopper entered the shop until the eventual sale. But that was yesterday!
For E-Retail, who is responsible? Is it the marketing team insofar as it involves offer and communication? Or is it category managers, who are responsible for developing the turnover of each retailer ? But we are talking about e-commerce, so it should be the role of the e-commerce manager at national level, shouldn’t it? Well, well, well, but at least we know whose budget it is … right ?
On the one hand, it always takes time for an organisation to adapt, but on the other hand, in the case of E-Retail Media, we are faced with a truly hybrid tool: when it works at its best, it is the last step before the act of buying. Is it only a media tool ? Or is it a purchase incentive in the same way as a coupon or even a promotion? Is it only a tactical tool at the end of the funnel? Or does the fact that it can be personalised, or even ultra-personalised, make it possible to work on top of mind awareness at each visit to the shop? We can quickly see that E-Retail Media raises many questions and above all opens up new opportunities for brands and retailers.
How to build a more efficient E-Retail ecosystem?
To seize these opportunities, organisations must be able to make decisions efficiently and quickly. However, compartimentalised organisations remain a barrier on two levels. Firstly, the new digital professions (SEO, SEA, E-CRM, conversion, even data scientist) are more or less integrated into matrix organisations, with teams accountable to several departments: marketing, trade, e-commerce and budget responsibility varies enormously from one company to another. On the other hand, the division of roles and responsibilities between brands, customer teams, media agencies, advertising networks and ad-techs is unclear to say the least, with many stakeholders and ‘layers’ before decisions are made. Discussions on E-Retail are often very operational and short term whereas the tool can easily be strategic, work on brand image in the long term and is more relevant to younger generations than traditional media.
There are still many companies today that, often due to a lack of resources, entrust this new channel – which has its own challenges – to an existing department or to an employee for whom this is not always the job or the primary objective. As we know, having a dedicated e-commerce team is more than half the battle and gives you the best chance of making a success of your digital transition”
– Laurent Broncard, head of the Amazon marketplace
How can we make the most of these new opportunities?
The consumer E-Retail ecosystem needs to be structured. This is not surprising, as it is a new tool, hybrid of media and sales, based on complex and rapidly evolving technologies. The central need is to generate trust in the ecosystem, and therefore to establish more synchronised and efficient organisations. To achieve this, 3 challenges need to be addressed:
1. Include E-Retail in strategic and planning discussions with a time horizon of at least 12 – 18 months.
This will allow to address fundamental issues to get the best out of E-Retail. For example, how to use the complementarity of E-Retail tools to create a specific e-marketing mix? How can we use ultra-personalisation for e-commerce beyond visibility and probably move towards ultra-personalised promotions?
2. Align the ecosystem on more reliable E-Retail performance metrics and enable a better understanding of the calculation methods.
Because of the number of ad-tech players today, there are almost as many measures as there are tools. Yes, this is an exaggeration, but between the types of sources and the calculation methods, it is difficult to find one’s way around. In summary, there are 3 methodologies:
i) period comparison (e.g. campaign period vs. N-1 or an average of previous periods),
ii) data modeling (use of neural systems including media pressure, sales, price, promotion data) and finally
iii) A/B testing which allows to specifically isolate the effect of a campaign (at least 2 groups with a control group which is not exposed to the campaign and another group which is exposed, all other conditions being equal). Purchasing organisations need to better understand the advantages and disadvantages of these methods and ad-techs need to be more transparent about the methods actually used.
3. Making the most of shopper data to enable a closer relationship with the FMCG shopper.
The amount of shopper data is simply staggering and increasing exponentially. Of course, the RGPD framework poses a number of safeguards, but the possibilities are nonetheless incredible. The goal is to understand the mass retail shopper as well as or better than the local shop, and to be able to offer the shopper tailor-made services/offers and the appropriate communication. Of course, the first reflex is to use this data to improve known tools: shopper data to refine TV or off-site web targeting. The real potential is probably more in the area of ultra-personalisation in real time, of the message, of the catalog, of the price, of the offers, of the look of the e-commerce site, or in the area of in-depth work to work on the frequency of purchase (rather than the illusion of loyalty) with prediction tools.
For each of these challenges, it will be a joint effort by the entire E-Retail ecosystem: distributors, advertising agencies, agencies, ad-techs, brands to better coordinate, better understand the issues/difficulties and ultimately meet the needs of our final boss: the shopper. There is no miracle solution in terms of organisation, it will obviously depend on the strategies of each player. On the other hand, in order to build a relevant strategy, it is necessary to bring the players together rather than maintaining the brand/agency/advertising/ad-tech compartmentalized set up.
As you can see, Lucky cart is passionate about these challenges and our door is always open on all these subjects. So when is this strategic and efficient E-Retail organisation coming to life ?
* Etude Harris Interactive – août 2020.
* Etude McKinsey & Company – novembre 2021