Friday, July 26, 2024

Retailers risk missing the rising wave of retail media spending

Australian retailers have a “12-month window” to deliver retail media platforms that respond to how the pandemic has fundamentally reshaped customer behaviour warns CitrusAd CEO Brad Moran.

The explosion of online ordering driven by COVID-19 has seen digital retail media spending soar. Mr Moran says many Australian retailers were failing to capitalise on this marketing megatrend because they lack the in-house expertise and experience to build a retail media advertising platform that could compete with Amazon, Google and Facebook.

“They have a 12-month window to recognise and respond to how the pandemic has flipped the script for brand advertising in retail media,” he says.

“Until 2019, traditional retailers saw website sales as an adjunct to their core business. The pandemic has made online sales central for retailers and brands as millions of customers started ordering from home due to lockdowns and social distancing. You can see this in how click prices in some categories now exceed the product cost because brands are understanding the broader influence of online shelf space: They are buying customer loyalty both online and in-store rather than just a single transaction.”

Turbocharging retail media

Founded in Brisbane in 2017, CitrusAd provides a software as a service (SaaS) platform that is said to “turbocharge” brand advertising delivery and website profitability for large Australian and global retailers, including Woolworths, Coles, Dan Murphy’s, The Iconic, Sainsbury’s, Target (US) and Tesco.

Its online auction engine accepts bids from brands that give their ads prime positions on a retailer’s website, comparable to the “eye-line” shelf in a store.

A large omnichannel grocery retailer in Southeast Asia recently conducted a study across multiple product categories on the impact of using CitrusAd on online sales and in-store sales:

  • Four campaigns went live for just one week
  • Advertised products that won first row positions experienced an average 90 per cent lift in online sales plus an average 26.5 per cent increase in in-store sales during that week
  • After the campaigns were switched off, these products experienced an average 53 per cent drop in online sales and a 24.5 per cent decrease for in-store sales from the previous week.

Mr Moran said CitrusAd’s consistent delivery of those sort of results demonstrated why retailer and brand investment into retail media would continue to grow in 2022. “Australian brands need to understand that if they win top position in retail media, they win in-store as well as online,” he said.

Digital importance

Mr Moran says customers increasingly research, browse and shop online, regardless of whether they buy online or in-store.

“Between 30-40 per cent of people undertake their regular shopping based on their past orders,” he says, “so when you win their attention, you are acquiring a long-term customer rather than just a transaction. Once your product is in their basket, you’ve won their repeat business in future.

“That is why click prices are getting so aggressive. Brands and agencies are prioritising digital retail media because they increasingly measure the lifetime value of a click rather than just its transaction value. Retailers who fail to recognise this new reality will lose retail media spend market share to those who understand it and exploit to their advantage,” Mr Moran says.

CitrusAd co-founder Nick Paech says the company, which was bought by Publicis Groupe in July last year, was experiencing growing demand for both its retail media technology and its IP about how to succeed in this space.

“Retailers and brands have long known how in-store shelf space placement affects purchasing decisions,” he says. “2022 will see them extend this insight to the online brand placement and how it affects not just online purchasing, but also in-store behaviour.”

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