Any outstanding sales strategy relies on diversification of revenue streams. With instore retail media, this is even more relevant. Retailers offer an exclusive pre-selected audience of active consumers in a receptive environment to advertisers. These Advertisers, SSPs and Media Vendors all want a piece of this cake.
The key reasons for this diversification are:
- Yield optimization: There are three ways to optimize yield: sell more, increase prices or decrease costs. People underestimate the amount of loss that happens over longer supply chains. Tech Fees and commissions stack up massively
- Risk mitigation: relying on a single market or revenue source is a bulk risk as a vendor might underperform, market rates might erode or a team may lose a star salesman.
- Relations: Your suppliers have a direct and close business partnership with you which is your key advantage over any media vendor, agency or programmatic marketplace.
The spectrum of retail media monetisation goes from low involvement low yield strategies like programmatic advertising all the way to high labor intensive direct sales which are rewarded with much higher yields. In short: you cut out the middlemen and provide better service.
This is not infinitely scalable. We have observed that our customers reserve this direct booking approach for high value, high volume deals with their most important suppliers and business partners, whilst they delegate less critical business to external vendors or complementary sales channels. Nevertheless, this highly exclusive personal approach makes up 75-90% of total revenues in most cases.
Let's examine the key arguments for an investment in a retail media channel from a supplier's perspective.
- Channel marketing is not just a means to boost sales and has therefore always been a key component of any supplier negotiation.
- Marketing is key to the success of any FMCG-product: if you have to advertise anyway, having a pre-selected audience of potential buyers is a decisive efficiency gain compared to "general public" campaigns. Any audience member in a retail environment is per definition an active consumer and therefore the most valuable and undiluted representation of your target group.
- Double return: the advertising funds invested directly into instore retail media advertising have the added benefit of strengthening and deepening the commercial relation with the advertiser's main buyer, the retailer, which is not necessarily the case with TV, radio or online ad spending.
The crucial elements of success are that the supplier specifically wants access to the retailer's target group AND that they want to invest directly into their relationship with the retailer. Going through a third party or an anonymous platform negates this advantage.
Advertising is a numbers game, but ad invests are rarely only about the numbers. Professional, transparently accounted and reliably executed campaigns make sure you can book the money that is spent. Great service, trust and good relations make sure that it will be spent over and over again.
