Retail Media vs CX

In the ever-evolving eCommerce landscape where customers are at the heart of every transaction, the synergy between retail media and Customer Experience (CX) can be a game-changer for businesses. But as more online businesses look to maximise their revenue through selling advertising space on their sites, is the user becoming a second-class citizen, with the CX compromised by the pursuit of revenue through new channels? And is a sense of conflict inevitable, or is there hope for harmony?

Retail media is handing vendors an opportunity to monetise their customer data like never before. With the demise of third-party cookie tracking, brands are jumping at the opportunity to continue with targeted, personalised advertising. This is driving rapid growth, with retail media spend expected to grow by 9.9% to $125.7 billion in 2023 alone, and to overtake global TV ad spend by 2028.

Retail media offers brands privileged access to audiences via a trusted channel. It also adds to the arsenal that retailers have at their disposal to personalise the customer experience with relevant, carefully curated promotional content. Done right, the synergies between retail media and CX offer a win-win-win for retailers, brands and consumers.

But therein lies the challenge – doing it right. Consumer frustrations with advertising – particularly with how it intrudes on the buying experience – are well founded. And with a staggering 87% of consumers agreeing that the quality of the experience significantly impacts their purchasing decisions, businesses must take great care to ensure that their retail media ambitions strike the right balance with CX.

At a Glance

$125.7Bn

Retail Media spend is expected to grow to $125Bn+ this year alone

What’s the problem if Retail Media and CX are out of sync?

CX is the sum of everything a customer encounters throughout a purchasing journey. From the content and branding you as a company create to third-party promotions, and from how technology works to person-to-person customer service, it all counts, and it all must add up to an overall experience that is straightforward, seamless, convenient and relevant to the customer.

There are three ways retail media can work against the aims of CX:

1. It gets in the way of what the customer is trying to do

Most of us can relate to the frustration of browsing online, or being part way through a purchase, when out of nowhere a full-page pop-up ad interrupts our flow, and no matter how hard we look, we can’t locate the ‘X’ icon to shut the ad down.

In part, this is an issue with delivery. Unsolicited pop-ups are a particular test of people’s patience. Over one in five consumers (22%) explicitly say that pop-ups get in the way of the experience. A third (33%) say they make a site feel ‘spammy’, complete with all the negative associations for reputation and trust that carries.

But it’s not as simple as just avoiding pop-ups. Anything that consumers feel gets in the way of going from A to B as quickly as possible impinges on the quality of the experience provided. This includes web pages being so stacked with ads that it makes scanning for information difficult, and also includes an unclear distinction between sponsored and non-sponsored content.

Screenshot of website with pop up ads — A web page compromised by unwanted pop-up ads? We could have selected a lot worse!

2. It feels intrusive

This is closely related to the issue of marketing content ‘getting in the way’ – with unwanted pop-ups appearing and with channels being saturated with promotions etc. But it carries an even more serious meaning – the idea that advertising intrudes on people’s privacy as they are trying to go about their business.

This is the widespread sentiment that eventually led to the GDPR privacy crackdown and the effective ending of targeted advertising based on third-party tracking data. Retail media avoids the ‘creepy’ practice of targeted ads ‘following’ people across their online activity, keeping things within the confines of a single space where individuals choose to shop. However, it is still using data for promotional purposes. Brands and retailers must be very careful about acting with the utmost transparency, not just to keep on the right side of privacy rules, but also to maintain the all-important bond of trust with their customers.

3. It isn’t relevant

Being open and transparent about the use of data for marketing purposes is one way to avoid customers feeling the practice is intrusive. Another is to make sure that the offer is relevant and aligned with what the customer actually wants. Research has shown consistently and conclusively that consumers take a far more favourable view of advertising and other forms of marketing if they feel it is relevant to them.

The great promise of data-driven advertising is that it can be carefully targeted and therefore relevant on a personal level. But this cannot be taken for granted, as it requires a thorough integration of analytics at both strategic and operational levels.

How to ensure Retail Media contributes to outstanding CX

Does all of this raise questions about whether retail media is even compatible with delivering a great CX? Is it therefore a question of accepting an uncomfortable compromise between the promotional and monetisation ambitions of businesses on the one hand, and what consumers judge to be a great experience on the other?

Not at all. Retail media can only not just fit hand-in-glove with great CX, it can even play a key part in enhancing it.

Here’s how.

Personalisation is Key

Modern data analytics empowers brands to tailor marketing content to individual customer preferences at scale. Prioritising a personalised, customer-centric approach can ensure retail media campaigns contribute to a relevant and enjoyable shopping experience that builds strong connections with customers.

Seamless Integration

Another key part of making retail media activity customer-centric is making sure that it is the opposite of intrusive – relevant, well-timed, tactful and designed carefully to be a seamless part of the shopping experience. This level of integration comes from a combination of understanding your audience, choosing the right retail media channels, leveraging data and collaborating closely with retail partners on delivery.

Brand Consistency

People trust things that they are familiar with. The more consistent you are with the branding and messaging of your retail media campaigns, the quicker you foster recognition. That, in turn, helps customers to accept promotional content as part of the experience, something they expect and even appreciate.

Transparency

Another thing that builds trust and loyalty is clear communication with your audiences. In the GDPR age, full transparency around the use of personal data is obligatory for brands and retailers. But it should be viewed as more than a compliance issue. By being upfront with customers about what you are using their data for – and indeed using it to offer something of value to them in return – helps to encourage strong customer loyalty built on trust.

Optimise for Mobile

Digital commerce is now mobile-first, with smartphones accounting for a third (32%) of all online spend. That means marketing – retail media included – must be mobile first. When you are designing relevant, integrated and consistent campaigns, the first thought has to be how those campaigns are experienced on mobile devices.

Continuous Testing and Iteration

The final tip to ensuring retail media contributes to a positive CX is to never rest on your laurels. Change is a constant in the digital realm, and sticking to only one approach is bound to end up seeming one-dimensional. But you don’t have to experiment blind. By leaning into data, you can continuously test new approaches and use comparative analysis to identify what works best. Not only does this mean that you are continuously optimising for better results, but you also get the added benefit of consumer appreciation for novelty in their shopping experience.

Pre-2020, retail media was seen as an output available in retail to push products higher up the page - typically for NPD (New Product Development). Since its evolution - largely accelerated by Amazon’s pioneering moves - retail media has developed into the missing piece of the jigsaw for many brands seeking to connect other marketing outputs and finish the customer’s journey. CX collaboration with retail media has been overlooked by many in the market due to the differing natures and ends of the eCommerce team hierarchy. Yet CX allows retail media to enhance key merchandising elements which then enhance organic positioning and product placement on third party sites. It also drives higher click through, sales and conversion rates by educating the right audience with the right credentials at the right point on their online path to purchase. CX embeds into retail media capabilities and enhances functionalities and opportunities beyond all previous expectation.

Jordan Bates

Senior eRetail Trader

VML’s Retail Media & CX experts can help

VML has a team of experienced retail media network specialists as part of its eRetail practice who can deliver a powerful, balanced strategy and execution for your Retail Media Network campaigns. These campaigns will be tailored to your specific KPIs, and we will deliver full and transparent insights into the performance of these campaigns, with recommendations on future investment. To tap into our CX expertise, and register for a complimentary, introductory content consultation to tee up your content strategy, connect here.