Unpacking Retail Media ROI With Colgate-Palmolive & Hero Cosmetics
The explosion of retail media networks (RMNs) are a significant opportunity for the consumer goods industry, but that doesn’t mean manufacturers are always having an easy time of things.
There are currently more than 600 RMNs currently in existence, according to Elizabeth Lafontaine, chief retail analyst of EnsembleIQ, in citing the Walton College of Business at the Consumer Goods Sales & Marketing Summit last week, and they generate anywhere from 70-90% profit margins compared to traditional retail categories of 20-40%.
“The retail industry 30 years ago couldn't imagine running a business that could be that financially stable,” said Lafontaine. “But there's also an extension of the true shift and thinking by retailers around the use of their first-party data.”
“Retailers are keen to monetize that data through avenues like retail media, but also by selling it to market researchers, working and renting it to vendors, and optimizing it in their own products and services to ultimately provide their shoppers with the best and most authentic brand experience,” she noted.
Despite the challenges of measuring the impact of RMNs, they’ve yet to reach their full potential. Joining Lafontaine at the Summit to explore the challenges consumer goods companies are facing were Cherie Leonard, senior director of North America insights for Colgate-Palmolive, and Aaron Mizrahi, director of Amazon at Hero Cosmetics.
“When we consider why retail media has really seen the explosion of growth over the past few years, it really aligns with where the customer is, how the customer is shopping, where the customer is shopping, and why the customer is choosing those networks to really do the search to begin with,” noted Mizrahi.
RMNs do serve as an untapped resource and can act as the connective tissue in the customer journey between media and retail, agreed Leonard, but it’s important for consumer value to be added to that journey.
“I think that's a really critical component of it,” she said. “It can't just be for us sitting in our seats to drive incremental sales, for instance. It has to be something that's bringing value to the shopper.”
Building Retail Media Partnerships
Companies like Amazon are unlocking new value in these relationships. Amazon Marketing Cloud and other solutions provide first-party data for brands to leverage in designing new products, promotions, and messaging, and Mizrahi credited this data in the creation of one of Hero’s newest additions.
Initially renowned for the original acne-treating Mighty Patch, through Amazon reviews and first-party data, Hero identified an opportunity with consumers seeking an equivalent patch for their nose 一 something not yet on the market. Using these insights, the Mighty Patch Nose was born.
“If you remove the add-to-cart and the buy-now button on Amazon, what do you have? The most trafficked product review site on the internet,” Mizrahi said. “It allows brands to really do customer research on what brands want, what they need, and ultimately what they're searching for pretty much in real time, with a day or week lag.”
RMNs and the accompanying data monetization have the potential to build not only sales, but the brand as a whole. Leonard described this marketing as both art and science, capable of building relationships between company and consumer provided that companies use it as one part of a larger, holistic strategy.
“Humans have a lot of things going on in their lives,” Leonard said. “There's really strong future potential in understanding the human side of it, how people are leveraging retail media and where we can actually enhance their brand experiences by recognizing that we're not marketing to robots; we're marketing to humans.”
Listen: Albertsons’ Claire Wyatt On Retail Media Tech Team Lessons
