The In-Store Retail Media 'Renaissance'

P2PI: In-store retail media has been a really hot topic recently. In our own recent survey, nearly half of the CPG brands marketers we spoke to pointed to in-store digitization as the next frontier or an "up-and-coming area" for retail media. Why do you think there is such an interest now?

Opare-Abetia: This growing interest is very much related to the rise of RMNs in the digital space driven by the challenges that brand advertisers are facing trying to reach their target audiences in a highly fragmented media environment with the rise in connected TV (CTV) and the deprecation of third-party cookies. Because RMNs are powered by retailers’ first-party data from e-commerce transactions and loyalty programs, this gives brands the opportunity to leverage this data to target ads to specific consumers at the point of purchase decision based on demographics, location and prior purchase behavior. The growing number of digital RMNs worldwide, now over 200, make retail media the fastest growing ad channel. … Emarketer predicts that by 2027 ad spends on this channel will be bigger than connected TV, digital audio and traditional television combined and will nearly tie with social media as the No. 2 channel for ad dollars.

To date, in the physical space, there has not been the same growth for in-store retail media, but that is rapidly changing. While today only a few retailers have built out RMNs in their physical stores, such as Walmart, Sam’s Club, Costco and Target, many more brick-and-mortar retailers are in the process of building or planning to build in-store RMNs. These in-store retail media networks are the next frontier for retail media with enormous potential to drive sales lift at the point of purchase decision. Eighty percent of retail sales occur in physical stores, which makes in-store networks highly attractive to advertisers who want to reach shoppers while they’re in buying mode. Forrester Research estimates that profit margins for in-store RMNs are even greater than online — between 70%-80% — without the downside of costly returns, since returns of purchases made in-store versus online are far less frequent.

Brenner: Digitization of in-store is a renaissance period. CPG’s are demanding omnichannel marketing strategies that include investing in in-store media to complement online and offsite efforts, creating a cohesive brand experience for customers. Despite the e-commerce boom, physical stores still dominate, accounting for roughly 85% of U.S. purchases. This brick-and-mortar advantage is particularly appealing for smaller networks compared to giants like Amazon, which struggle to establish a unified physical presence. 

In-store is the channel driving the most traffic, time spent, impressions and, ultimately, sales, representing the biggest (and largely untapped) opportunity for retail media networks to capitalize on.

Marlow: As reach on linear TV declines, brands are looking for other avenues to get in front of their audiences. In-store retail media provides massive reach and brand-building capabilities, while also having the added benefit of being located in proximity to their products. The digitization of in-store advertising has also broadened its creative capabilities, increased its impact and opened up the door for CPG brands to accomplish more than just one objective.

P2PI: What are some notable shifts in shopper behavior you've seen?

Brenner: The shift from traditional, price-focused shopping to a more mindful, value-driven approach is one of the most notable changes in customer behavior today. While cost remains a key factor in purchasing decisions, modern shoppers define value by much more than just price. They find value in discoverability, experiences, convenience and products that align with what matters to them, such as sustainability, ethical sourcing, and health and wellness. People are generally more willing to justify paying a higher price for a product or experience that aligns closely with their individual preferences and lifestyle.

This shift in priorities coincides with the rise of in-store media. For example, digital signage and targeted campaigns allow retailers to connect with shoppers directly at the point of purchase, influencing decisions and creating a more unified brand experience. In-store media can punctuate the various stages of the shopping journey, from online research to physical purchase, offering a powerful tool to meet the demands of today's value-driven and omnichannel shopper. 

Opare-Abetia: The consumer shopping journey has changed. As we have come out of the pandemic, shoppers have returned to physical stores and analysts predict that by Q3 2024 in-store retail foot traffic will have fully recovered to pre-pandemic levels. This resurgence of in-store shopping is being driven by consumers who want an immersive shopping experience that includes seeing and touching products first-hand to ensure a high-quality purchase.

However, consumers are now more apt to have researched their intended purchases online before they get to the store – almost 70% of in-store retail sales are now digitally influenced. If shoppers order online to pick up in store, it is not unusual for them to top off their purchases with items they find while they are there. Shoppers also want more information about the products they buy such as where food items were grown, and the nutrients and ingredients they contain. Increasingly, they want to know whether products were made sustainably. Shoppers want to be able to compare products at the point of purchase to be sure they are getting the best value at the best price whether they are shopping online or in a physical store.

Another interesting trend is the shopping behavior of digital native Gen Zers who have surprisingly shown a greater preference for shopping in physical stores versus other age groups, according to recent research [from consulting and market research firm] 2 Visions. This gives retailers a great opportunity to reach this demographic with in-store advertising, Gen Zers represent $450 billion in worldwide spending power and are one of the hardest groups for brand advertisers to reach through other media channels.

P2PI: What are some of the challenges that might drive a company to invest less in in-store retail media? How do you suggest others navigate them?

Nickell: Organizational silos can sometimes prevent investments as well as a lack of standardization across the in-store retail media landscape. There's already a lot of work being done in the industry to combat these challenges. I would encourage CPG brands to bring different teams together to define their in-store retail media strategy and run experiments to understand what works or doesn't work for their particular brand.

Brenner: Measurement is the key. Digitization of in-store provides the ability to analyze results in the same way on-site and off-site can be measured. Retailers are still evolving and growing attribution capabilities and that can be a gating factor on how quickly advertisers invest in the media.

Retailers are in some ways waiting to see the proof of net new revenue. RMN’s are at various stages of extending measurement solutions to include in-store but that is changing quickly. Capital for in-store digital signage is extensive so more justification is required on that front. However, with audio messaging the cost of entry is much lower and provides advertisers opportunities to test and learn today. 

The lack of consistent and standardized data collection across digital in-store media platforms also creates a challenge when assessing the targeting, reach and effectiveness of in-store campaigns. This inconsistency leads to hesitancy among investors and retailers to invest in technologies that produce unpredictable and fragmented data. 

However, advancements in technology and standardized data measurement practices, as highlighted by industry efforts like the alignment with IAB standards, can address these issues head-on. Standardization ensures more reliable and accurate results, enabling retailers to effectively demonstrate the value of their in-store media inventory to advertisers. This, in turn, gives advertisers the confidence to invest in retail media, knowing they can trust the audience insights and campaign performance metrics they receive.

Opare-Abetia: Retail media is disrupting both the retail space and the media space simultaneously and we are witnessing an evolution in both directions. As with any nascent industry this evolution will eventually get everyone on the same page by making incremental moves toward industry-wide standardization. Because each retailer’s approach has been different, brands and their agencies have been compensating with their own measurement models, while at the same time retailers have been moving to make their data and processes more transparent, ceding more campaign control to buyers via self-serve tools. While in-store RMN advertising inventory is currently more limited than digital, all these learnings will benefit both brands and retailers as the move to in-store grows.

Retailers are carefully expanding their digital RMNs in-store by leveraging their existing digital in-store assets before investing in new infrastructure. They are using firms like ours to determine the most effective strategy for screen placement in highly trafficked departments or areas that can attract categories that have deep-pocketed brands who can help fund the build out of the network. As they consider building out these networks some retailers are also looking to leverage programmatic SSPs that can deliver national advertising revenue initially to avoid the immediate need to hire an advertising sales force. That revenue can also help to underwrite the cost of future sales force development.

P2PI: What is your approach to in-store retail media measurement?

Brenner: One of the most important criteria for measuring in-store retail media success is in-store impressions, which represent how often shoppers see or hear specific advertising content in a physical store. Display impressions can be specific to screens or zones, while audio impressions relate to the number of shoppers present within a store during any given hour. By combining audio and display impressions, advertisers can leverage the total reach and frequency among the exposed shopper base.

In-store retail media impressions can then be applied to control/test scenarios to help advertisers place a well-established value when assessing impact to sales and shopper behaviors. With established impression metrics, adjustments in time of day, number of locations, campaign length and frequency, advertisers can drive budget versus impression-driven decision-making.

Nickell: Grocery TV provides both audience and performance measurement. For audience measurement, we have a system in place that allows us to measure overall reach and impressions as well as target specific audiences in our stores. We also offer full-funnel measurement opportunities for our brand partners, including brand lift, web conversion, foot traffic attribution, and sales lift. For CPG brands especially, we look at iROAS as a way to determine the effect of a campaign. We provide our partners with benchmarks to give them a better understanding of what to expect in terms of performance. For example, one of our recent meta studies showed a 14% incremental sales lift for CPG brands sold throughout the store as a result of advertising at the front end.

Opare-Abetia: Early in-store network operators used intercept studies from market research companies, like Nielsen and Liberman, to measure viewership and establish the media value of a particular channel. Interviews conducted with shoppers would be used to determine key metrics like number of shoppers in a department, average time spent watching screens, and ad effectiveness.

These studies helped build a framework for establishing the media value of in-store screens. What we’re seeing now is that brands are expecting more immediate and more obvious measurement metrics leveraging technologies like AI-driven audience measurement, anonymous cell phone detection, beacons, and radar sensors. These technologies can measure viewership of in-store screens, and brands can then look at the sales data. Did a campaign move the needle on sales? And why was that? Was it the time of day? Was it the creative? The ability to test and measure and learn and test again is really going to be more and more important for the success of in-store RMNs.

P2PI: What do you think is the future of in-store retail media? 

Nickell: Brands will start to view this as an audience-based medium that gives them mass reach and frequency in an environment where people are actually in a buying mindset and therefore, more open to advertising. As the industry develops standards, I think it'll become easier and easier for brands to target their audiences across retailers and networks. 

Brenner: The future of in-store retail media is poised to become more inclusive and interconnected as independent and regional retailers join larger chains to form expansive retail media networks. In fact, Emarketer found that U.S. omnichannel retail media ad spend is projected to exceed $100 billion by 2027, a result of retailers increasingly recognizing that these collaborative networks maximize their advertising reach and effectiveness.

This growth is fueled by technological advancements, which enable data-driven content and targeting strategies. For instance, sensors on screens and within aisles measure foot traffic, ad exposure tracking and responsive experience triggering. Contextual targeting, acquired through these technologies and based on a shopper's real-time location and attributes, further enhances the effectiveness of in-store advertising.

While challenges do exist in the landscape, such as standardizing impression measurement and integrating disparate data systems, fortunately, the solutions exist today to tackle these challenges, paving the way for a more integrated and effective in-store retail media landscape.

Opare-Abetia: The future really is bright for in-store retail media, which has enormous potential to have a big impact on a retailer’s bottom line if the in-store RMN is expertly built and operated. EMarketer estimates that in-store retail media spending will exceed $1 billion by 2028. While this number still represents just 1 percent of the total RMN spend, digital RMNs have created the necessary momentum for in-store acceptance. We’re excited to see the evolution of this channel and anticipate that by the end of 2025, the number of in-store screens will have increased significantly across multiple categories.