• December 5, 2022

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No matter how volatile and uncertain the world can be, every holiday season brings us joy. In 2020, when stores were shuttered and society was dislocated, consumers showed remarkable resilience by spending on gifts that warmed the hearts of loved ones near and far. In 2021, despite supply chain crises, stubbornly high inflation, and the very transmissible Omicron variant, holiday retail sales had their largest annual increase in 17 years. This year, consumer sentiment in the US is at an all-time low, and uncertainty about inflation is at its highest point in 30 years. Nevertheless, history guides us to believe that shoppers will find reasons to celebrate this holiday season as they have for millennia.

To generate and harvest demand while expanding sell-through this holiday season, many marketers are turning to retail media. As they do, here are three things that they should bear in mind:

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  1. Budget flexibly to outperform. Whether funding retail media with shopper marketing budgets, paid social dollars, or with a new budget dedicated to retail media, it’s important to do so flexibly. Why? Each retail media network’s (RMN) profitability will vary. For example, many retailers are following Amazon’s lead by hosting Prime Day-like events, such as Walmart’s “Rollback Deals,” Target’s “Deal Days,” and Wayfair’s “5 Days of Deals.” These events cause cost-per-clicks to spike on saturated RMNs, making it harder to maintain market share. In anticipation, marketers should focus retail media on high-margin products and on less competitive, long-tail keywords — specifically 3–5-word keywords — that signal strong purchase intent. In addition, they should proactively shift budgets to less saturated RMNs, such as those from delivery apps and hotels, to get an early-mover advantage.
  2. Be customer-, rather than product-, obsessed. Every consumer has a unique path to purchase — some will move down the funnel from awareness to purchase in less than an hour, while others take months. Still, marketers will often times optimize retail media with metrics like product-level contribution margin or (mis-)believe that optimizing their product feed eliminates the need for paid media altogether. Instead of being product-obsessed, marketers should plan, buy, and optimize retail media based on consumers’ intent, like they should for other channels. This means mapping and sequencing media exposures to consumers’ decision journeys based on where consumers are in those journeys and how fast they’re moving through them.
  3. Measure retail media’s omnichannel impact. Supply chain shortages will encourage people who would have bought online to shop in-store instead, and “buy online, pick up in store” will be increasingly popular. With the hybridity of this year’s holiday shopping experience, marketers should evaluate the omnichannel impact of their retail media spend. This means measuring both the most visible, shortest-term impacts of retail media — such as retail media’s impact on online sales — along with its less visible impacts, like retail media’s effects on offline placement and offline sales. Doing this sensitizes marketers to the halo effects that onsite media have in-store. Research from the Digital Shelf Institute found, for instance, that a laundry brand’s paid search campaigns on Amazon contributed to a 10% increase in point-of-sale sales velocity in-store. Evidence like this helps marketing (and finance) leaders prove retail media’s omnichannel impact while influencing consumers across digital and physical shelves.

To uncover more insights from our latest consumer surveys, check out more holiday blog posts here.

This post was written by Senior Analyst Nikhil Lai and it originally appeared here.

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