The following excerpt is taken from an episode of The CPG Guys Podcast and their interview with Shock Torem, GM & SVP of Retail Media Solutions at Vestcom, where they discussed the rising power of in-store media. Listen to the full episode here.
Summary: While the retail media boom has been largely concentrated with onsite and offsite digital applications, the reality is, physical stores represent a massive media opportunity for brands to connect all through the funnel messaging to critical moments of decision making in store. The CPG Guys partnered with Vestcom to explore how brands are utilizing innovative tactics to connect with shoppers in physical retail to drive incremental volume.
The CPG Guys: Can you start with a quick overview of Vestcom?
Vestcom: Vestcom is the largest developer and distributor of productivity solutions for retailers to manage pricing, assortment, and merchandising communication at shelf. Over time we’ve introduced enhanced solutions that enable CPG brands to complement in-store price communication while also integrating their marketing messaging at shelf, to create a more holistic media solution and a more complete shopper experience.
The CPG Guys: Why should brands consider re-allocating dollars to in-store media?
Vestcom: E-marketer recently published that for the first time retail media spend has surpassed connected TV and is on pace to surpass broadcast TV by next year, with nearly $60 billion in projected spend. The reason for this massive budget shift is that CPGs continue to realize that engaging the shopper in a contextually relevant environment yields much higher returns for their media spend. What's interesting is that while 90% of that Retail Media Network (RMN) spend is focused on digital, 90% of the transactions still occur in brick & mortar. If you think about the eyeballs that are in-store as a media audience, they actually represent over twice the reach of a retailer's average digital audience – which is really powerful.
If brands apply a digital media mindset to the shelf-edge as an equally viable media channel, they can leverage the massive reach in-store with actionable shopper engagement at the final point of decision to drive measurable volume impact. There's nothing more contextually relevant than that, and there's no better time or place to reach that audience then at the exact moment they're ready to buy.
The CPG Guys: At NRF, you were talking about the disconnect between brand marketing messages from click to brick, and the need for brands to achieve “phygital” success. Can you elaborate on what that means?
Vestcom: The truth is shoppers still prefer to shop in a physical environment – the whole notion of, "I want to touch and feel my produce" applies to the rest of their shopping trip as well. So while COVID accelerated e-commerce, we're normalizing now back to standard behavior. The other dynamic that's evolved is a more gradual evolution to omnichannel media consumption and shopper behavior. Most consumers are now hybrid shoppers, and there's a need for a more integrated approach to engaging them.
So the question becomes, how do you create a dynamic that leverages the best of the physical and the digital? Hence the emergence of the term “phygital”, which aims to address this consumer need. And if 90% of transactions still occur in brick & mortar, there’s fertile ground to continue that conversation with the consumer and connect your brand messaging in-store to the narrative that you've already begun higher up in the funnel. Making that connection and triggering that recall will change shopper behavior and drive more brand volume.
The CPG Guys: How are you partnering with Retail Media Networks to help activate the shelf-edge as a media channel?
Vestcom: RMNs are essential to optimizing in-store media strategy, both for Retailers and CPGs. The primary shift that's occurred in the last several years is that retailers recognize the shelf-edge is as much a media channel as their owned and operated digital properties, and they're looking for solution providers like Vestcom to help them monetize the 220 million eyeballs that walk up and down their aisles every week. To put that in perspective, this is double the size of a Super Bowl that's occurring every week in grocery, drug and mass in the U.S.
We partner with virtually every RMN out there, such as 84.51°, Albertsons Media Collective, Peapod Digital Labs, DG Media Network, and others to customize our approach with their overall strategy and make it simple for brands to deploy at scale regardless of the retailer through our shelfAdz solution. shelfAdz enable CPGs to leverage a portion of the price tag to communicate their brand messaging. It’s the only price data-integrated media solution in market, which creates a powerful combination of price promotion in concert with brand messaging to create that tiebreaker at shelf that compels a shopper to choose their brand over a competitor.
The CPG Guys: Can you elaborate on the measurement brands can expect from shelfAdz?
Vestcom: One of the fundamental principles of shelfAdz is measurability. Vestcom has access to first-party point of sale data from many of our retailer partners, including a recent expanded partnership with Kroger's 84.51°, affording access to their Collaborative Cloud data. This type of data enables us to conduct industry standard test versus control methodology to determine the true incrementality of a shelfAdz campaign. Depending on the tactic and the category deployed, most brands experience a 10% to 20% increase in incremental volume lift and an average iROAS of 2-3X. We only measure iROAS as we want to ensure we don’t take credit for volume that would have occurred organically.
The CPG Guys: Is in-store media really a trade function supported at the individual retailer account level, or should brand marketers be coordinating efforts across retail customers to drive brand value?
Vestcom: There's several buckets that can fund shelf-edge media depending on the initiative, the campaign objective, and the infrastructure at each individual CPG. It certainly makes sense to use shelfAdz to amplify trade promotion or to support retailer driven events. And historically, that's a very common use case. That said, what we see happening more is that national brand media budgets are being utilized to communicate key brand benefits, tentpole events, new item launches, and initiatives that are universal to the brand and not necessarily retailer specific. This is where brands can use Vestcom to deploy across 50+ retailers at once without having to rely on individual sales or shopper teams to execute. It's no different than making a national media buy with another medium — shelf-edge media. And especially with the increased leverage of RMNs, we’re seeing shopper marketing, promotional spend, and brand dollars converging as branded media opportunities are realized at shelf.
The CPG Guys: How do you see in-store media capabilities evolving as physical stores digitize?
Vestcom: Whether it's QR codes, NFC technology or now digital displays or smart screens, you're going to see emerging technology that retailers will be piloting to optimize that shopper experience, with a balance to not create too much disruption for shoppers. I think a lot will get flushed out in the next three to five years with respect to the intersection of technology at scale, with what retailers and consumers are willing to accept as value added versus disruptive. At the end of the day, the consumer voice and the data will determine that direction.
With respect to Vestcom, our core value in serving our retailer partners with their everyday pricing, assortment, and merchandising needs enables us to complement that with powerful media solutions in both analog and digital form in-store. You're going to see a lot more innovation and new solutions coming forth from us to create those phygital shopping experiences.
The CPG Guys: What final thought would you leave for brands on better leveraging in-store media?
Vestcom: In-store media will continue to evolve in ways that provide marketers exciting choices on how to better engage shoppers, while doing so in a contextually relevant environment that motivates immediate action. As the shelf-edge continues to become an extended media channel, Vestcom will be there to help retailers and CPGs along that journey. It's a true win-win-win for consumers who gain inspiration and clarity to make better buying decisions, for retailers who can monetize their in-store traffic, and for CPGs who can connect their key messages at the final point of decision to drive measurable volume impact. Going back to the Super Bowl analogy, as a brand you've spent a ton of money higher up in the funnel driving the shopper down the field. You finally got them in the red zone by virtue of them being in the store. Now, when they're at the goal line standing in front of your section, let's not drop the ball. Let's make sure we can drive that conversion and get it across the goal line by putting your item in their basket. And the best way to do that is with shelf-edge media that enables you to communicate price value with your product benefits.
Listen to the full episode with The CPG Guys and Vestcom’s Shock Torem here.