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The Role of Retail Media in Your Consumer Products Organization

Consumer products companies have had to balance retailers’ expectations for trade investments with their own profitability objectives for a long time. More recently, retailers’ additional requests for shopper marketing investments have compounded the spending pressures put on CP companies. Increasingly, retailers are expecting CP companies to participate in retail media programs to drive the value of their online and in-store media channels. Keep reading to learn about the role of retail media in your CP organization and why it’s critical to evaluate now.  

What is the Role of Retail Media in Your CP Organization? 

Retail media encompasses promotional and marketing activities that are carried out by the retailer in their digital or physical stores. The goal of shopper marketing is to target consumers while they are actively shopping or engaging online with the retailer and are most inclined to make an additional or incremental purchase. 

Just as trade promotions can be considered a cost of doing business at many retailers, retail media has increasingly become a cost of doing business, thus taking up a larger and larger portion of the shopper marketing or trade budget. The increase in dollars is bringing increased scrutiny to these activities, requiring proof of performance and return on investment to secure funding. 

Retail media is a relatively new tactic for many retailers compared to traditional tactics such as shopper marketing or trade promotion, and therefore has a less established structure at many CP companies. Traditional CP roles and team structures for Shopper and Trade are being challenged with this new tactic, requiring a deliberate focus on not only organizational structure but retailer investment management as well.  

While retail media may look different and use different measures, the same fundamental questions must be addressed around assessing the strategy, execution, and ROI of these investments. How do we fund retail media? How do we add value with our retail media tactics? How do we track the value added in a measurable way? Given that retail media is still somewhat in its infancy, often lacks historical data, and comes with high retailer expectations, there’s a risk of overspending when spending is not managed holistically. 

How Do We Set Ourselves Up for Success in the Retail Media Landscape? 

Align Around Definitions 

The definition and management of promotional methods often vary from company to company, so each company needs to decide how each promotional method can drive value, how each method should be funded, and who should be responsible for managing each method. Let’s quickly review the definitions of each promotional method so that we have a consistent foundation to think about the roles of each.  

  • Trade Promotion is generally defined as price discounts offered at the retailer. Trade typically has a set budget and is owned by the sales team to increase overall sales. 
  • Shopper Marketing aims to influence consumer buying decisions through targeted campaigns and marketing activities. Examples of shopper marketing include digital or paper coupons, cross promotions, and shelf-level materials.  
  • Retail Media drives trial and repeat purchases on retailer-sponsored media platforms, including shopping platform search optimization, online sponsored product listings, display ads on retailer websites, digital coupons, or sponsored content on retailer websites.  

Consider Organizational Structure  

While the organizational structure may look different at different CP companies, there are some fundamental tenants that must be in place for success. Retail media is a lever of shopper marketing and should be treated as a key component of the shopper marketing strategy. Structuring retail media into shopper marketing is not standard across all organizations, and the team structure and budget allocation look different at different CP companies. However, the two must be closely intertwined – whether one sits under the other or they work in parallel. Clear definitions of roles and responsibilities and rules surrounding spend allocation are necessary for success. 

The retail media team can be housed within the sales, marketing, shopper marketing, or trade teams.  Regardless of where the function lives, the team must work closely with the sales, trade, and marketing teams to be successful. A role and responsibilities overview for the teams can look like: 

  • Sales managing overall customer relationships and coordinating the planning calendar and managing trade spending. 
  • Marketing managing the overall brand message, consumer messaging, and product focus areas, as well as long-term brand planning. 
  • Shopper Marketing and Retail Media team developing and executing the strategy of retailer marketing and media programs in coordination with the trade and brand calendars.   

Include Retail Media as Part of Your RGM Strategy  

To be effective, retail media needs to be closely aligned in strategy and execution with Revenue Growth Management (RGM). Retail media should be a key part of an organization’s trade strategy, shopper marketing strategy processes, and customer profitability strategy to maximize effectiveness. Retail media should work in parallel with trade investment to drive sales and distribution growth and serve as a core component of customer strategy.  

As consumer behaviors evolve, aligning retail media closely with an organization’s RGM strategy becomes more and more important. An effective RGM strategy helps lead organizations to answer the fundamental question of how to spend the next dollar toward customer engagement. When retail media is closely aligned with the RGM framework, data-driven insights can be used to maximize impact on the next dollar spent. 

Looking Ahead: Retail Media in Your CP Organization 

Retail media is a vital part of any CP company’s promotional strategy, but as a promotional method, it’s still very much in its infancy. As retailer pressure to participate in retail media spending increases, it becomes even more critical to understand the value it can provide to your mix and how to leverage retail media along with other tools to support a retailer. 

If you’re looking for guidance on how to integrate retail media into your RGM strategy, contact our Sales and Marketing consulting experts today.  

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Contributions from Meg Longwell

Tags: Trade Promotion, Revenue Growth Management, Retail Technology