The State of In-Store Retail Media
While e-commerce sales, fueled by the pandemic, have accelerated in recent years, the lion's share of retail sales are still generated from in-store transactions at most retailers. To dive into the retail media opportunities and challenges that exist in the industry, the Path to Purchase Institute recently chatted with executives from PRN, a 30-something-year-old company focused on shopper media, shopper experience and turning a retailer's physical stores into digital media platforms at a national scale.
As a part of Stratacache, PRN deploys purpose-built hardware and software, including custom displays, interactive experiences, enterprise-level CMS, programmatic ads and proprietary analytics tools. The company boasts more than 41,000 screens across 13,000-plus retail locations, including Costco, Walmart and CVS Pharmacy. Read our recent interview with PRN's Chuck Billups, senior vice president, retail media advertising, and Jonathan Rosen, senior vice president, content strategy and consumer experience, below.
P2PI: Founded in 1992, PRN goes almost as far back as the P2PI. How long has "retail media'' been part of PRN's vernacular? How did the company first define it and how do you define it today?
Billups: Much like P2PI, which used to be the In-Store Marketing Institute, the vernacular has shifted over the years. But the term "retail media" has been core to our mission from the beginning (in fact, the "RN" in PRN stands for Retail Networks). But "Retail Media Networks," back in 1992, two years before Amazon, didn't mean what it does today — i.e., digital ad exchanges.
When we began, we had a vision of the store as an experiential media platform, which allowed us to create some of the first in-store media networks — the Walmart Network 1.0, for example. Because the audience in-store are shoppers first and viewers second, we developed content strategies designed to work at the speed and purpose of the shopping trip — strategies that harmonize the idea of advertising media with merchandising and experiential goals. But, as we've evolved, we understood that advertising in retail is both upper funnel (awareness) and lower funnel (conversion) by definition of location. And the advertisers have held the media far more accountable in this regard well in advance of current advertising return-on-ad-spend trends. We've built ways to recognize this duality and measure accordingly.
P2PI: How has the rise of retail media looked from your unique vantage point?
Billups: It's been interesting to see how the web has transformed it much the way it has transformed every aspect of our lives. We created retail media in the store to drive marketing to the shopper on the cusp of Web 1.0, some time before the e-comm bubble even burst, and well before e-commerce truly took hold in many categories. Indeed the first e-commerce marketing companies like Triad were simply display based. Search became a part of the equation. But it wasn't until data and personalization became actionable with first-party data tools, that it became truly powerful. Of course, Amazon pioneered it and drove the competitive imperative to adopt for every retailer. Now retail media has come into its own with unique gravity for funds, vendors and tools.
P2PI: Do you think there's more of a focus on in-store retail media right now in the industry? If so, why do you think this is?
Billups: Now it's really interesting to see the physical retailers who've developed digital-first retail media networks realize that unlike Amazon most of their shoppers are physical and they must figure out how to capitalize on their own Amazonian scale by extending the digital RMN to in-store. Most are finding that unlike Amazon they don't have huge e-comm traffic comparatively and they don't have the robust third-party marketplace search and pure play non-endemic media heft that Amazon has used to attract true media funds from digital and search budgets. They are finding that their true scale lies in the "audience" in their store.
P2PI: In-store retail media offers massive audiences that are an average of 70% larger than digital audiences for leading brick-and-mortar retailers, according to Insider Intelligence based on data from Placer.ai and Comscore Media Metrix Multi-Platform. How can brands and retailers best leverage the in-store media opportunity?
Rosen: When they start to "extend" to in-store, they find that it's very different in terms of tech, capital approach, media funding, content development and measurement. The web developed as a dwell-attention-span oriented, digital-content-rich outlet that became a commerce powerhouse secondarily. The store is a physical space that is mission focused and requires media that serves multiple stakeholders — the retailer, the brand advertiser, but by far the shopper first. It's not at-home TV and it's not the web; however, we can still create media that is about relevant content and storytelling as well as price and promotion. The hooks may be in totally different areas — innovation, simplification, family, self care. But it's fast and short focus so content must be simple and useful. Interrupting the shopper is not the goal or desired outcome. It's a medium that needs to serve the shopper.
P2PI: The biggest challenges we hear from brands are data sharing and transparency, measurement standardization and managing so many networks. What advice do you have for brands facing these challenges?
Billups: This only gets harder in the store where all of the standard tools of one-to-one engagement online get far harder to measure. In-store is about lower funnel and upper funnel. It's imperative that brands break down their silos to allow digital marketing and commercial teams to work together to understand how the funds are best utilized and measured in-store.
P2PI: What is and isn't possible with in-store media from a measurement standpoint?
Billups: There is a lot that is possible, much of it dependent on the type of media deployed — display versus interactive. The really interesting thing is that with first-party data layered on our sensor technology, we can now understand the shopper journey — where they went, what they saw, what they bought (and what didn't they buy). Added to loyalty, and [point of sale], and we can build a robust shopper graph that provides many analytical insights and effectiveness measures.
P2PI: Many remember that scene in the 2002 film “Minority Report” where Tom Cruise's character is walking around and getting served personal ads. In reality, what does personalization mean in the store and what can and can't be done?
Rosen: We can know who is in the store and what they should see with layered sensor and personalization data. We can also understand who is in front of a screen. Does it make sense with a one-to-many display form to interrupt content to play hyper-individualized content at the speed of a shopping trip? It's not really effective. Which individual shopper do you target? How do you keep it from being "Minority Report" creepy? What is most effective is to "tune" the content for each store, each department, based on data, and build aggregated personas for the store for any given time. Then it's a matter of dynamically altering the content playing based on triggers that are relevant to shopping — weather, POS trends, seasonality, time of date, etc. Of course, one-to one, in-store interactive digital experiences don't have the same issue. Here we can solve educational needs, digitally onramp, and convert shoppers with corresponding rich data and personalize the experience effectively by leveraging smart filtering by attributes — just like the web.
P2PI: How would you define a good in-store experience? Any specific examples?
Rosen: The store is a complex environment, but what defines a good in-store experience is pretty simple. The shopper wants to be able to navigate the store, find what they are looking for in-stock and at a fair price, and be delighted by products and categories that were not on the list. And then they need to be able to check out quickly. It's actually very hard to do all of this well, which is why retail is detail. Successful in-store media inserts its way into these details in a manner that helps accomplish these things better, while adding absolutely no friction. Content and form drive these. For instance, an endcap display that focuses on an out-of-stock product and loops an ad that can be seen at home — well that's what we call ugly wallpaper. Content should enhance merchandising with new information and rapidly serve up the most effective "hook" of the product for the shopper. And, perhaps most critically, the old days of hanging TV monitors on the wall are dead. Digital fixtures — including interactive shelf edge and endcaps — need to feel native to the store design and utilize novel form-factors. Areas of the store need to be preconceived and designed as "digital first" at the store planning phase.
P2PI: We recently did an interview where the participants said education is very important and needed in the retail media space. Is there anything new you recently learned or what information do you think is best to get across to marketers right now when it comes to retail media?
Billups: In-store digital media matters — it's where 70% of your business is generated. The barrier to entry has never been lower and the upside is undeniable — increased sales, better merchandising, incremental ad revenue and better shopper experiences. The tech is mature, and the data collection methods are robust. Our best advice: Model what your network looks like at scale before you plunge into the waters. It's a longer game, so to speak, so you'll want to work with a highly consultative partner with a track record of scaled success.