The third instalment of the Circana 2023 FMCG Outlook report series, Discover The Next Frontier Of Advertising, outlines the challenges and opportunities facing the retail sector in response to the demise of third-party cookie marketing. Retail Media Networks are rapidly emerging as the new essential ingredient for digital marketing in a cookie-less world.

Shoppers are using a variety of different devices and platforms to conduct their shopping, meaning they now have a complex and varied journey of digital touchpoints. Even when a shopper makes a trip to a traditional bricks and mortar shop, they are also increasingly engaging with digital experiences through mobile apps, QR codes and digital payment technologies.

This web of disparate shopper touch points is intensifying the need for businesses to increase their investment in digital marketing, in particular, the establishment and growth of Retail Media Networks.  

Retail Media Networks is the new digital marketing buzz term that every business needs to know in 2023 and beyond. Retail Media Networks are defined as a connected set of media channels that include the retailer’s website, app and other owned channels such as email and offsite ads served programmatically or via publisher partnerships.

A Retail Media Network enables advertisers to reach shoppers across the purchase funnel down to the point-of-purchase in owned channels. In a post-cookie world, Retail Media Networks will become an attractive channel to an increasing number of advertisers since high-quality Retail Media Networks provide better methods of analysing attribution and return on investment (ROI).  The challenge for industry is how to create, manage and utilise them in a meaningful way.

Reaching Australian consumers through increased digital touchpoints

Retail Media Networks are being seen as the next frontier in the advertising sphere. By connecting with shoppers through a variety of platforms, businesses can target consumers when they are most primed for purchase. In addition, Retail Media Networks provide brands with privacy-compliant first-party data that both reaches Australians effectively through advertising and also measures its effectiveness.

It’s an imperative to reach Australians through relevant advertising at the right time, wherever they are, to continue to build connection points all the way through to the point of purchase. Personalisation through this process will also encourage customers to buy more items per order, defray delivery costs over more goods, negotiate better deals with suppliers, and tailor goods to local areas. Retail Media Networks have the power to achieve this outcome for brands and retailers.

Growth in new budget allocations for Retail Media Networks

Research undertaken by the Interactive Advertising Bureau Australia (IAB Australia) identified that Australian businesses are tracking along the global trend of allocating new advertising budgets into Retail Media Networks. Its findings showed that 31% of Australian Retail Media Networks investment is coming from new budgets, while 69% is being reallocated from other budgets such as digital advertising and trade retail.

It’s expected that Australia’s Retail Media Networks market will reach A$1 billion by 2025, and not only bring in up to AUD$1.2 billion in ‘new’ advertising revenue over the next five years, but also provide the platforms with valid measurement of media effectiveness on sales; an incremental revenue stream; and the ability to provide partner brands with significant levels of data to access.

This is a rapid shift in the way brands and retailers allocate their marketing spend to engineer growth, and signals the strong need for the sector to embrace and better understand the benefits and potential of this new frontier in advertising in order to extract maximum return from it.

Evolving advertising strategies in a post-cookie world

The decline in third party cookies due to consumer privacy concerns has resulted in Google’s plan to entirely remove third-party cookies by the second half of 2024, meaning that brands that have relied on such advertising reach to consumers will have to evolve their marketing strategies quickly, while at the same time, also respecting the privacy of these changes.

There are added pressures on media spending during this process of cookie deprecation, on companies to reach the right audience in a fragmented media landscape. As our data-driven world continues to evolve, marketers, category and brand professionals are all being held more accountable than ever for success and delivering results. So, what can a brand reliant on third-party cookies to deliver targeted, measurable and hyper-personalised digital marketing do as they face stricter privacy regulations and increased customer demand for transparency?

The answer is they need to turn to insights in a more comprehensive manner.  For example, ecommerce transactions provide greater visibility into the purchasing journey with game-changing, high-quality, first-party data.  This data creates huge opportunities in technical and creative innovation ultimately providing the ability to learn more about customers at a more granular level.  This is where the omni-channel environment comes to the fore.

Omnichannel provides an integrated lens on how the same shopper uniquely uses each channel on their disrupted path to purchase.  Synchronising your data and your omni-channel customer experience is critical to achieving this.  Retail marketing will ultimately centre around the omni-channel shopping experience as shoppers leave more obvious fingerprints online which can be analysed and as a result, more advertising dollars will migrate to ditigal because of its ability to provide marketers with powerful insights.

According to Circana research and IAB Australia data, six in ten marketers state that retail media is key to advertising strategy when third-party cookies are removed while nine in 10 advertisers already use retail media advertising campaigns to increase sales, with over half saying the top opportunity is getting access to first-party data.

Incorporating Retail Media Networks into marketing budgets

As Retail Media Networks continue to evolve, increasing numbers of Australian retailers are incorporating them into their marketing budgets, realising their effectiveness in reaching consumers at the right time and in the right space. As Retail Media Networks continue to optimise their data, the impact of their effectiveness on marketing will grow.

The first-party data available on these fast-growing media platforms can deliver compliant, reliable, safe and potentially highly personalised data collected with consent. Best of all, Retail Media Network campaigns deliver proof of ROI; critical in this current trading environment where marketers must justify impact and every dollar spent. Retail media absorbs its data from the actions of real customers in the moment after their exposure to an ad.

In the absence of cookies, Retail Media Networks will grow in importance as brands and retailers look for ways to reach and engage with customers.  The opportunities for innovation will come from the ability to reach customers enmasse in a targeted way so that spend and messaging are allocated towards customers with a higher propensity to buy.

Media solutions offered by Circana

The removal of cookies from the digital market landscape is something that we have been preparing for, for some time. We believe that in unison with the global retail sector, we can harness an even greater opportunity to reach and connect with consumers through Retail Media Networks capable of delivering more potent results than cookie technology.

The key to achieving this is to ensure that brands and retailers understand the possibilities available to them and the technology and capabilities required to embrace them. Circana has been working on building groundbreaking technology solutions to assist businesses to optimise leverage of Retail Media Networks. Our range of media solutions is designed for advertisers to maximise their media spending while improving sales results.

Alistair Leathwood is head of product and solutions for APAC at Circana.