What's Happening?
A significant debate has emerged within the marketing industry regarding the effectiveness of retail media in brand building. Mark Ritson, in an ADWEEK column, argued that retail media primarily serves as a bottom-of-funnel, defensive investment, akin
to 'slotting fees with a fancy name,' and is not suitable for brand building. Conversely, Andrew Lipsman contended in his own ADWEEK op-ed that retail media can indeed build brands, offering unique capabilities. The core of the disagreement lies in the definition and application of retail media. Ritson emphasizes that retail media typically targets consumers already shopping in a category, while proponents like Josh Clarkson of Mars and Brian Spencer of Kroger Precision Marketing argue that retailer data allows for targeting new customers, lapsed buyers, or those in adjacent categories through various channels, including CTV, audio, and social media. A 2024 ANA survey indicated that only 10% of retail media budgets were incremental, with the majority coming from existing brand budgets.
Why It's Important?
This debate is crucial for U.S. businesses and marketers as it directly impacts budget allocation, strategic planning, and the perceived value of retail media investments. If retail media is primarily seen as a performance marketing tool, it will continue to draw funds from trade promotion budgets. However, if its brand-building capabilities are recognized, it could attract more significant investment from brand-building budgets. The ability of retail media to target specific consumer segments, such as lapsed buyers or those who have never purchased a brand, presents a powerful opportunity for growth that traditional advertising might not offer as precisely. The discussion also highlights a potential disconnect between the capabilities of retail media and how marketers currently utilize it, suggesting a need for greater education and strategic integration. The findings from Kantar, indicating retail media's effectiveness in improving unaided awareness, online ad awareness, brand favorability, and purchase intent, provide empirical support for its brand-building potential, challenging Ritson's initial assertion.
What's Next?
The ongoing discussion is likely to prompt marketers to re-evaluate their retail media strategies and measurement approaches. There will be an increased focus on demonstrating the incremental value of retail media beyond immediate sales, potentially leading to more sophisticated measurement techniques like holdout studies. Brands may begin to experiment more with retail media's advanced targeting capabilities to reach new customer segments and build brand awareness, rather than solely focusing on bottom-of-funnel conversions. This could lead to a diversification of retail media investments across different formats and channels, including off-site activations like CTV and social media. Retail media networks will also likely continue to evolve, offering more robust tools and data insights to help brands prove the brand-building impact of their campaigns. The industry may see a push for clearer definitions and best practices for utilizing retail media for both performance and brand objectives.
Beyond the Headlines
Beyond the immediate tactical implications, this debate touches upon the fundamental nature of advertising in a data-rich, e-commerce-driven world. It questions whether traditional definitions of 'brand building' are still relevant when consumer journeys are increasingly fragmented and personalized. The ability of retail media to leverage granular shopper data for highly targeted campaigns blurs the lines between direct response and brand advertising. This could lead to a paradigm shift where brand building becomes less about broad awareness and more about precise engagement with specific, high-potential consumer segments. The ethical implications of using extensive consumer data for such targeted advertising, particularly concerning privacy and potential manipulation, may also become a more prominent discussion point. Ultimately, the evolution of retail media could redefine how brands connect with consumers, emphasizing relevance and personalization over mass appeal, and challenging long-held marketing orthodoxies.
