When it comes to digital advertising, retail media platforms, also known as RMP, have stood out as an essential and accessible strategy for consumer packaged goods brands, especially for startups and those in their nascent stages.
This past year has marked a significant phase in the overall evolution of RMP, where its overall potential, investment trends, and broader strategic implications are becoming increasingly important and apparent. Recognizing its ever-increasing importance, CPG brands increased their spending in RMP by a staggering 64% in 2023 alone.
Keep reading on to learn more about the importance of RMPs for emerging CPG brands and how companies can best leverage this marketing channel to grow and succeed online.
Importance for Emerging CPG Brands
For emerging CPG brands, RMP isn’t just another marketing channel; it’s a gateway to establishing a foothold in the hyper-competitive digital marketplaces. The affordability and flexibility of RMP campaigns allow these brands to enter the market with minimal investment, which is a crucial factor to consider given the often-limited budgets they have to work with.
Unlike more traditional advertising platforms that often require substantial initial investments, retail media platforms offer a low barrier to entry, which is particularly crucial for smaller or newer brands that may have limited marketing budgets but aim to establish a robust online presence, drive unit velocities, and steal market share from established competitors.
One of the most significant advantages of retail media platforms is the greater financial flexibility they offer companies trying to break into the CPG market. Digital Shopper Marketing programs for retailers typically start at significant investments, often ranging from $10,000 to $50,000 for a single two to four-week program.
In contrast to this, retail media platforms, particularly sponsored product search ads, allow brands to begin with a minimal initial investment to start making sales, sometimes for as little as $40 daily. This kind of affordability is a real game-changer for many emerging brands out there, enabling them to compete in the digital marketplace without the burden of large upfront costs.
Sponsored Product, Brand, and Video Ad Placements
RMPs are only just beginning to realize their full and true potential. Over 2023, US digital retail media ad spending grew by 25.8% to $51.36 billion, accounting for more than 18% of the year’s total digital ad spend.
When it comes to the types of campaigns that can be run through retail media platforms, there are three primary categories: sponsored product, display, and video ad placements. Each of these plays a unique role in a brand’s advertising strategy.
Sponsored Product Ads
Sponsored product ads are the cornerstone of modern retail media advertising. These types of ads are strategically placed in search results and product detail pages on online marketplaces and directly target customers who are actively searching for related items. Their pay-per-click model ensures greater cost efficiency, as brands pay only for actual engagement rather than simply having their ads placed.
These ads are especially beneficial for new product launches or promoting specific items, as they drive visibility and sales by appearing at the moment a consumer is most likely to make a purchase.
Display Ads
Brand display ads focus on building and reinforcing brand identity within the greater marketplace. Unlike traditional product-specific advertisements, brand ads aim to leave a lasting impression on consumers, creating and cultivating brand awareness and loyalty.
These kinds of ads often appear in high-visibility areas and are crafted with engaging visuals and narratives that resonate with the target audience, kind of like a billboard along the highway. Simply put, they’re helpful for establishing brand identity and differentiating the brand in a crowded marketplace.
Video Ads
Video ad placements are becoming increasingly popular in retail media due to their more engaging format that tends to be effective with and accepted by millennial and Gen Z consumers. These ads offer a more dynamic, immersive, and memorable experience combining visual and auditory elements. They can showcase products in action, tell a brand story, or highlight unique selling points.
Video ads can be particularly effective on platforms where consumers are already engaging with video content, leveraging the format’s potential to captivate and persuade new audiences.
Together, these three types of ad placements offer a far more comprehensive approach to digital advertising strategies in retail media platforms. Each of them serves a unique purpose in a brand’s overall marketing strategy, and they each have different benefits depending on who you’re marketing your product to, how you’re marketing it to them, and what your ultimate marketing goals are.
Targeting and Tracking Specific Audiences
A key strength of retail media platforms is their ability to target specific audiences, which is achieved by utilizing data on search queries, purchase history, and shopping behaviors. This kind of powerful targeted advertising ensures that the ads reach consumers most likely to be interested in the products, thereby increasing the efficiency of your overall ad spend.
We’ve seen a transformative approach in how retail media influences branding strategies in the modern age. Unlike traditional media, retail media networks, or RMNs, enable brands to segment audiences with unprecedented precision, enabling greater targeting and tracking than ever before.
Retailers now utilize deep datasets and machine learning to identify target groups like loyal buyers, lapsed brand buyers, or those with specific product preferences. This robust ability to predict which households are most likely to respond to a particular ad campaign has shifted the focus from generic demographic targeting to more precise behavior-based targeting, making demographics a secondary consideration in marketing efforts.
Understanding consumer behavior through these metrics can lead to more informed and strategic marketing efforts. With this data in hand, brands can adjust their advertising strategies in real-time by staying current with trends and consumer preferences, ensuring that they remain relevant and competitive as they continue to grow.
While the immediate goal of retail media platforms may be to drive sales, their impact on long-term brand growth is equally significant and beneficial to note. Consistent and strategic use of this advertising medium can help build brand loyalty, increase customer lifetime value, and establish a strong online presence that can pay dividends well into the future.
Using Retail Media Platforms for Sustainable Success
By now, it’s clear that retail media platforms stand tall as a significant and sustainable strategy for emerging consumer packaged goods brands that are aiming to carve a niche in the rapidly evolving digital marketplace. The variety of RMPs that are out there is vast and services a wide range of different retailers. To illustrate, if your goal is to advertise your products on Target, Criteo would be your go-to platform. For Sprouts, Instacart RTD, and for Kroger, Promote IQ would be your options.
Each platform plays its respective part in enhancing product visibility, building brand identity, and engaging consumers. Additionally, RMP’s strength lies in its targeted approach, leveraging data analytics and machine learning to reach specific audience segments, thereby increasing the efficiency and impact of advertising spend.
Moreover, the real-time tracking capabilities of RMP campaigns provide invaluable insights for brands, allowing them to adjust strategies promptly and make data-driven decisions. This adaptability is crucial in the ever-changing digital marketplace, ensuring that brands can swiftly respond to trends and consumer preferences.
Ultimately, the strategic use of RMPs will help drive an immediate increase in your sales velocity at your priority retailers. The strategic use of retail media platforms helps set a foundation for omnichannel success in the digital age by building brand loyalty and increasing customer lifetime value over time.
As the digital marketplace continues to evolve, RMP stands as a critical tool for emerging CPG brands, empowering them to thrive in a competitive environment.
