Retail Media Can Build Brands—Including Ways Other Media Can’t

Mark Ritson’s latest ADWEEK column, Don’t Let Retail Media Tell You It’s Brand-Building, reflects an unfortunately common refrain from the marketing effectiveness community. Anti-retail media bias runs strong in these circles. It’s a “tax” from retailers, the media’s too expensive, and it doesn’t deliver ROI. It mostly takes credit for sales that would’ve happened anyway—after brand marketing has done all the heavy lifting. He’s not alone in this view. Professor Byron Sharp of the Ehrenberg-Bass Institute and How Brands Grow fame claims retail media just catches people who are about to buy. Ritson is a frequent critic of the overinvestment in performance media, and the overall demise of the marketing effectiveness discipline—often at the expense of brand marketing. On these things, he’s not wrong. With retail media, however, he’s identified the wrong culprit. Not only is retail media capable of brand-building, in the future the smartest advertisers will depend on it. Retail media boosts marketing effectiveness Marketing effectiveness research from Binet and Fields and Ebiquity establish that brand building should account for 55% to 60% of ad spend. CMOs prefer the majority of their budgets support brand-building. But in the U.S., over 70% of investment goes to performance media. When high-quality media is adjacent to commerce, ad effectiveness happens. This is true for on-site, off-site, and in-store retail media. Retail media obviously creates physical availability but also reach and mental availability in ways that are underappreciated. I’ve previously called retail media "a mass-reach advertising vehicle ideal for national brands,” and called on brands to invest 5% of their linear TV budgets to in-store media. Digital surfaces in stores can replace the fast reach, cultural relevance and high attentiveness linear has lost. CMOs and brand marketers are loath to concede this budget, one of the few remaining pools of brand-building dollars that consistently delivers ROI in their marketing mix models (MMM). However, those models are weighted with the “priors” of past MMMs that have always shown linear TV to be effective—and they don’t account for retail media, according to 70% of marketers. Causal modeling, another approach to measuring incrementality, doesn’t have this problem and consistently reports retail media networks to be among the highest ROI channels. Linear TV isn’t ineffective, but brand marketers should let go of their biases and reconsider retail media as a complement rather than a threat to existing campaigns. Rory Sutherland, vice chairman of Ogilvy UK, puts it best when he calls retail media “context-sensitive brand-building.” The future of retail media is the future of all media According to Emarketer, retail media constitutes a meaningful percentage of every major pool of ad spending, including search (29%), programmatic display and video (11%), social media (6%), CTV (16%) and digital-out-of-home (15%). Most of these formats are where brands are built today. Retail media is both a channel and a layer. It even has certain advantages over traditional brand-building media: Increased penetration with better targeting of high-value shopper segments; driving incremental audience reach by suppressing ad delivery to existing brand buyers; and higher average brand lift across the funnel. Here are a few ways to think about brand-building in retail media: On-site retail media – Sponsored products are bottom of the funnel, but moving up the funnel into on-site display and video ads is effective at brand-building as higher-impact creative drives brand awareness and mental availability at opportune moments. They can introduce shoppers to new brands and win new customers through conquesting. Off-site retail media – If off-site retail media can’t build brands then why is Procter & Gamble investing in it so heavily? Sensor Tower data indicates that P&G’s off-site retail media investment has more than doubled in the past year—well beyond that of other CPGs—with social and streaming TV gaining significant share. It’s probably not a coincidence that the advertiser known for pushing for 90% to 100% target reach for its brands is throttling up its off-site retail media. In-store retail media – Ritson called attributing sales to people already in the store ready to buy your product “the single most flattering metric in marketing.” He’d be right if that’s how in-store advertising was measured, but no sane brand would ever accept ROAS or attributed sales. Matched market tests are most commonly used to determine incremental sales lift. Top retailers’ in-store audiences compare favorably to the largest TV broadcasters and provide a dynamic new creative palette for brands and agencies to experiment with, and those campaigns deliver marketing effectiveness well after the shopping trip is over. Retail media can build brands if you allow it Ritson is completely right about marketing effectiveness, but he shouldn’t be so selective in its application. Performance marketers aren’t the only ones with myopia. While brand marketers are understandably protective of TV budgets, I will offer this concession: Instead of new retail media budgets coming from linear, they should come from performance media that don’t perform: overinvested channels like search, social, and low-quality open web programmatic. And especially from black box AI tools like Google’s Performance Max and Meta’s Advantage+. When brands cut from these channels and shift into retail media, marketing effectiveness soars and brands actually grow. Just like with MMM, only when you relinquish your priors does the true value of retail media reveal itself.

Voice

Retail Media Can Build Brands—Including Ways Other Media Can’t

On-site, off-site, and in-store retail media all build brands, and the smartest advertisers will lean in harder

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Andrew Lipsman

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