Wondering how retail media experts recommend scaling retail media networks (RMN) should integrate sponsored products? Curious to find out why fixed versus flexible ad placements are a critical consideration?
We consulted a handful of retail media experts, and we have answers.
Before launching our 2023 Sponsored Products Benchmarks Report, we shared the data with former executives from Best Buy, Walmart, Wayfair, Carrefour, and Unilever, and they came back to us with their advice.
Below, find seven recommendations on how to nail onsite strategy and sponsored products for scaling retail media networks.
What should retail media networks consider when planning their onsite strategy?
Recommendation #1: Aim to reach consumers at the point of sale without disrupting the user experience.
“The future of onsite retail advertising lies in a personalized and contextual approach – one that dynamically adapts the ad load to each user utilizing available first-party data signals, aligns to the users search and browsing context, and optimizes based on relevance and advertiser return objectives.
Products with financial backing from advertisers, products that are sponsored, will gain visibility and prominence over those that are not sponsored when relevant and accretive to the customer experience.
This represents a major shift – retail and media blending together. But ultimately, it will enable brands to reach consumers at the point of sale without disrupting the user experience.”
Recommendation #2: If sponsored products lack personalization, there’s a risk of undermining the core business.
Matthew Smith, Founder & CEO, MASMovement and former Head of Strategy at Walmart Marketplace highlighted how sponsored products have the potential to unlock high-margin revenue, if done right.
“In today’s challenging retail landscape, diversifying revenue streams is essential for survival. One effective strategy is leveraging sponsored products, which can unlock high-margin advertising revenues when executed correctly.
However, caution is required. If these products lack personalization and underperform in conversion, there’s a risk of undermining the core retail business.
Recognizing this, leading retailers like Amazon and Walmart have invested in developing their proprietary technology. These investments have demonstrably yielded positive results.”
Recommendation #3: Doing sponsored products well will require smart yield management and relevancy tools.
“Sponsored products should be a serious consideration for any retail media network with plans to scale. However, very few retail media solutions maximize the potential of sponsored products.
Doing it well requires an objective approach to deciding the number of ad slots and associated rules, and smart yield management and relevancy tools to maximize ad slot utilization.”
Have you noticed a trend from fixed placements to a more dynamic approach?
Recommendation #4: If you’re allowing the data to dynamically define sponsored placements and organic in real-time–that’s really progressive
Diane Abrebese, Global Retail Media Lead, EPAM Systems highlighted how implementing a dynamic approach may require a mindset shift—but ultimately is the way forward.
“It can be a difficult, emotional negotiation with the retailer to persuade them to give up some of those ‘top’ placements for sponsored products.
Generally, they believe that most of the sales come from the top row.
But if you’re allowing the data to define sponsored placements vs. organic in real-time and more dynamically, then that’s really progressive. It’s interesting to see how Staples is comfortable allowing business rules and algorithms to take control of which sponsored products sit where, rather than being in fixed places.”
Why is it important for retail media networks to go beyond keywords to determine relevancy?
Recommendation #5: Relevancy should include both literal interpretations of keywords AND inferential, AI-based, interpretations of a consumer’s intent and context.
“It’s important that retail media networks work with CX and eCommerce partners to align on an understanding of contemporary customer expectations and behavior.
In particular, the definition of relevancy should incorporate both literal interpretations of keywords AND inferential, AI-based, interpretations of a consumer’s intent and context.
Relevancy shouldn’t be overly restrictive any more so than it should be overly broad to serve customers. That understanding will help find the Goldilocks zone that optimizes CX, merchandising, and media objectives. The reality is that all three are important to the flywheel.
That also impacts ad supply. It’s worth remembering that both the digital shelf and, by extension, sponsored products ad inventory are finite. That’s true from customer, retailer, and ad supplier standpoints.
Retailers operating a scaled RMN need to have an always-on supply-side strategy that is attentive to everything from CX to their RMN P&L and everything in between.”
John Greca, Retail Media Advisor, ex-Head of Retail Media, Carrefour summarized the point: “If your strategy is limited to keywords, you are not going to get much ad coverage”.
Recommendation #6: Advertisers need their RMNs to cater to different types of searches
Sebastian Bardin, Ex- Head of Ecommerce Marketing, Unilever highlighted the advertisers’ perspective on the importance of going beyond keyword search:
“For some of our products, we have so many variants/format/sizes- we need our retail media networks to cater to all of those different searches.
For example, with brand investing more and more into sustainability, keyword search capabilities need to reflect them too, i.e. Persil capsule plastic-free box or Biodegradable multipurpose cleaning wipes.”
Recommendation #7: Optimizing ad spend for organic will be the key to maximizing top and bottom line for the long term
“There will be a heightened need to tie organic rank with ad serving as efficiency will continue to be an expectation in the eCommerce space.
Brands and retailers are looking to maximize /accelerate profitability in eCommerce –a notoriously profit-challenged commerce channel.
The reality is that industry cost pressures don’t appear to be subsiding, so optimizing ad spend for organic will be the key to maximizing top and bottom line for the long term. I believe that partners with an intentional strategy to enable organic optimizations within ad spending plans will win for the foreseeable future.”
Curious to read more about the 3 sponsored products trends we uncovered in our 2023 Sponsored Products Benchmarks Report? Download it here
