There has been a steady drumbeat of in-store retail media investments by major retailers in recent years.
Kroger, for instance, signed a deal with Cooler Screens (a company that turns refrigerated doors into interactive advertising displays) for 500 stores in May 2023. Regional grocer HyVee closed a deal with Samsung to introduce 10,000 screens over its footprint of stores across aisles, deli, meat, and seafood counters. Over the last few years, these in-store retail media investments have begun to happen in a much more concrete way.
So Retail Brew sat down with Andrew Lipsman, independent analyst at Media, Ads + Commerce, to talk about the evolution of in-store retail media and why it should matter to CPGs.
This interview has been lightly edited for length and clarity.
Are retailers prioritizing in-store retail media this year?
Going back to 2022, in-store retail media was barely a blip on the radar of most retail media networks. It hadn’t moved to the forefront of conversation. Things started to shift in a pretty pronounced fashion throughout 2023 and when this research was done in mid or late 2023 it was looking at retailers’ top monetization solution investments and in-store digital media, which only registered 9% in the previous year, had jumped up to No. 2 on the list at 33%. That really aligned with what I had been hearing in talking to a lot of the retail media networks, which is that they were starting to shift attention and focus and starting to allocate investment, knowing that they were going to need to build out the retail media networks. Now last year, they were still very much in the strategizing mode. And what we’re seeing now in 2024 is it’s kind of still in strategizing mode, but also moving toward execution and increasingly rollout of screens.
Can you give us an example?
I’ve always looked at Walmart as being the major player who’s going to cause this market to materialize in a significant way, because they consistently are a scaled player. So, Walmart, I think, late last year, started to roll out some announcements about what they had for their offering in store. A lot of it centers around self-checkout and the TV wall.
What can CPGs do to get a bang for their buck with in-store retail media ads?
A big push that I’m making that I think needs to happen is there has to be scalable third-party measurement so that brands can plan their investments against the stores and the audiences within those stores that will drive results for them. They need sales lift measurement to understand that what they buy, the advertising they buy, is actually driving those sales in store. So measurement is a key piece to it. Every major scaled advertising market has a measurement foundation. That’s evolving. There’s some great progress happening, but that’s something that needs to come into place.
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Secondly, they don’t have budgets. They don’t have a carve-out in their media budgets for in-store retail media yet, and they’re having a little bit of difficulty figuring out where it fits, because in some sense, they tend to think of it as shopper marketing. So, maybe they can splinter off a little bit of shopper marketing. But the way that digital media is activated, actually, is more akin to digital out-of-home. So, the dollars actually often come through digital-out-of-home investment, which is not the biggest ad budget. It’s only about a $3 billion market, so it’s relatively modest compared to some other budgets.
And my argument is that this actually should come out of national media budgets. That big allocation that goes to TV, and some of the other large investments, I believe that needs to start going to in-store retail media, because it does a lot of what linear TV has historically done.
Why is in-store retail media being considered the new version of TV ads?
It can provide that scale and high-quality advertising that mass consumer brands have traditionally thrived on. And, by the way, this advertising also reaches people close to the point of sale. So, there’s this tendency to think of it as performance first.
But, my argument is to say, let’s actually think about reach and scale and quality first, then think about performance. And what the call to action that I’ve made in the past is, because it’s harder and harder to reach those younger audiences through TV, the traditional money demographic of 18- to 49-year-olds, the “unreachables,” because it’s harder and harder to reach them on linear TV, start to shift some of your budget. And what I argue for is 5% of their linear TV budget into in-store retail media by the end of 2025.
I think that’s something that brands could at least wrap their heads around.