Source: Walmart.com
How do consumer brands really feel about buying ads from retailers?
Consumer brands often feel as if they have little choice when it comes to purchasing ads from retail media networks (RMNs), according to a new survey of its members by the Association of National Advertisers (ANA).
Eighty-eight percent of advertisers said they felt pressured by retailers to purchase ads to one degree or another. Forty-seven percent said that retailers exerted a lot (44 percent) or complete (three percent) influence over their buying decisions. Forty-one said that retailers exerted some influence and eight percent said a little. Only two percent said they felt no pressure to purchase advertising.
The report said that those interviewed said that using RMNs was rarely a “choose to use” decision but a “have to use” one. Numerous factors influenced buying decisions including product sales, shopper marketing and joint business planning goals. Advertisers expressed concern that RMN budgets have remained largely unchanged even as overall spending on marketing has been cut, which shifts the emphasis from brand building to sales promotion.
Fifty-eight percent of respondents said they have used RMNs in the past year. Fifty-three percent of those have been making RMN buys since 2019, with most of those dollars going to Amazon.com.
The list of places where advertisers go to spend their money is expanding as more retailers have created their own networks. The study found that 40 percent are buying from five to nine RMNs and 16 percent use 10 or more.
Advertisers, no surprise, are attracted to the biggest RMNs. Eighty-two percent buy from Amazon and/or Walmart. Sixty-five percent use Target, 61 percent use Kroger and 53 percent have bought from Instacart. Dollar General (38 percent), Walgreens (27 percent), Albertsons (24 percent), Costco (21 percent), Sam’s Club (20 percent), HEB (15 percent) and CVS (14 percent) follow on the list of most often used RMNs.
The good news for retailers is that consumer brand companies plan to continue spending on RMNs. Fifty-eight percent expect to increase their spending and the balance plan to stand pat. No respondents said that cutbacks were in the works.
Advertisers clearly value RMNs as a sales promotion tool, with 75 percent saying that is the most important role. Fifty-two percent see RMNs becoming more valuable to their marketing efforts as many expect that improvements will be made to deliver on key performance indicators.
Discussion Questions
DISCUSSION QUESTIONS: How does consumer brand spending on retail media networks compare to other types of trading partner spending? What key marketing performance indicators do RMNs deliver well on now and where do you expect to see improvements in the near future?
Poll
Loading …BrainTrust
Carol Spieckerman
President, Spieckerman Retail
Brian Cluster
Director of Industry Strategy - CPG & Retail, Stibo Systems
Nothing has changed other than the tools in the last 60 years. Back then, it was money for ads and displays. Promotional deals were structured to pay the retailer for support. Today we have RMN that not only speaks to the shopper, but also engenders support from the retailer, online or brick-and-mortar.
This is simply the evolution of existing channels. Vendors have been paying retailers ad coop money for decades. There are slotting fees for planograms, incentives for endcaps and promotional spaces. If I were a vendor, I would think this is a good use of my marketing dollars. I get access to a pre-screened audience, in a place where converting an impression to a purchase is about as seamless as can be.
Are dollars spent on RMNs efficient and effective? Do they work? Or are they another bludgeon retailers use with brands like stocking fees and margin deals? I’m surprised at the statement that RMNs are rarely a “choose to use” decision. 98% said that they get some level of pressure to participate in RMNs. That’s not totally shocking in that retailers will always behave like retailers. That doesn’t mean RMNs are a bad use of marketing dollars. I would have thought RMNs provided access to consumers that were already actively engaged in a shopping moment, ready to make decisions on what, and where, to buy. Sounds like the perfect moment to catch their eyeballs. So why the “have to use” versus “choose to use”?
If one brand participates and a rival does not, guess who gets the retailer’s support.
Even “pay to play” evolves in a digital world!
Of course!
RMNs are a carrot-and-stick proposition. Retailers are touting the benefits to brands while strongly encouraging them to pony up (or else?). The ad spend competition has evolved quickly from retailers competing with outside agencies to furiously competing with one another. All of it will be good for brands in the end as options abound and retailers up the ante with new perks. Brands will be in the driver’s seat soon yet strong-arm tactics may be in the picture for the short term.
Retail media attracts more ad dollars as brands target points along the shopper journey to drive product discovery and sales growth.
Retail media’s measurability is a big brand benefit, and metrics like click-through rates and cost per click are clear. Enabling closed-loop measurement helps brands track trickier KPIs like sales and return on advertising spend per individual product.
Consumer brand spending on retail media networks provides the opportunity to reach and message consumers in a more relevant context, the retail experience. Having a more precise way to attract an attractive segment of retail/brand buyers is desirable. As more different marketing capabilities and options are built, brands will gain intelligence to understand which retailers and RMN product work best in certain situations. It’s a must for any brand to be on key RMNs as the growth of these programs generates more consumer awareness and opportunities for the foreseeable future.
KPIS are tricky and situational. For regular seasonal promotions, you may want to consider cost per million for impressions and cost per click and others. However, if you are launching a new item, the brand will be more interested in incrementally and new consumers reached. Smart brand leaders will have tools and talent in place to constantly monitor similar programs across retailers and over time to continuously strive for improvement and a better investment.
CPG advertisers are reluctant to form relationships with every retailer with an RMN. However, there is no getting around the fact that RMNs have more valuable reach with customers in the buying flow and measurable results. They’re looking for an easier way to engage large sets of retailers. Overall spending will continue to grow and new innovations will find ways to build ad decisions into programmatic buying and self-service engagements.
The complaint that retail media amount to a “tax” on CPG vendors dates back decades to the dawn of the Walmart in-store video network, which (insiders told me at the time) was sold by some heavy-handed agents.
Much has changed since then, but some discomfort is natural for brands when they are asked to invest in Retail Media Networks. Thankfully, today’s digital advertising processes enable measurement of conversions — the goal most highly rated in the AMA survey.
Retail media buying remains a clumsy and intricate process for brands from the perspective of reaching their preferred target audience across multiple networks. Options for reaching shoppers at their strong regional partners (think Publix, Wegmans, Raley’s, etc.) are not yet well-developed, although that seems likely to change soon.
If retailers want to increase their brand visibility, they must increase their spending on RMNs because customers searching on platforms such as Amazon, Walmart, and others are looking for products to buy. If a brand’s advertisement appears frequently on these platforms, it will create strong brand recall in the minds of customers.
These advertising tactics, in my opinion, will allow retailers to remain competitive and dominate the market in product categories in which they specialize.