Everyone, everywhere, all at once: why audiences hold the key to full-funnel retail media

“$101 billion in global annual revenue by the end of the year[1]”.

“Retail media is now 11% of total ad spend[2].”

“One of the fastest-growing parts of the advertising industry[3].”

With even a cursory Google search enough to turn up headline after headline praising retail media’s stratospheric successes – and rightly so – I think we also have to acknowledge the elephant in the room: retail media has a perception problem, and it’s one that won’t go away unless we work at it.

One of the issues here is that there’s a definite tendency to conflate retail media with ecommerce. Undoubtedly linked to Amazon’s overwhelming successes in the area, it’s become all too common for people to think of retail media as an online-only marketing tactic. In turn, many seem to pigeonhole retail media at the bottom of the marketing funnel – something that’s great for conversion, but not much else.

That perception is troublesome for two reasons. Firstly, it’s very clearly untrue, as I’ll demonstrate momentarily. Secondly, it means that marketing teams that might otherwise be using retail media to great effect can end up deterred from doing so because they believe it’s incapable of supporting their specific objectives. Left unaddressed, that can limit a retailer’s ability to monetise its media as effectively as it could.

Dispelling the myth of retail media as a digital marketing or conversion-only practice is critical to the industry’s future. That’s why, in this post, I want to look at exactly what a full-funnel approach to retail media entails.

A scientific approach to audiences

First of all, we need to talk about audiences. If you want to give brands the ability to deliver results at every stage of the marketing funnel, after all, you also need to give them the ability to target those shoppers most likely to help them accomplish their goals. That means segmenting shoppers into different audiences.

There are numerous ways to accomplish that, many of which will already be abundantly familiar to the vast majority of marketers. Some of the most common include:

• Demographic audiences

Here, segments are identified by looking at the attributes of audience members – criteria like age, gender, education level, incomes, marital status, and occupation.

• Psychographic audiences

Sometimes referred to as “interest-based”, psychographic audiences are segmented based on interest, activities, opinions, values, personality traits, and lifestyle choices.

• Behavioural audiences

“Observed behaviours” are the focus here, with segments created based on actions taken. That could include the websites someone has visited, ads they’ve clicked on, or items that they’ve purchased before.

Each of these audiences has its strengths, with demographic and behavioural combining to create something particularly powerful. Using those, we can understand who shoppers are, and how they’ve acted in the past. Naturally, that combination also begs a much bigger (and arguably more important) question – “how might they behave in the future?”.

This question is one that can only be answered through advanced analytics and data science. To create “predictive” audiences, we use machine learning algorithms to analyse thousands of signals from each customer. When we bring these individual signals together, we end up with a very solid understanding of potential future intent, one that has significant implications across multiple marketing disciplines.

The right audiences for the right goals

Predictive audiences complement demographic and behavioural ones perfectly. Now, as well as knowing who shoppers are and what their past behaviours were, we have a good idea of what they’ll do in the future as well. Clearly, that sounds useful, but how exactly does it relate to a full-funnel approach to retail media?

When we look at the different characteristics of shoppers within our base of demographic, behavioural, and predictive audiences, we can start to segment them into even smaller clusters.

To bring this to life, let’s look at some of the audiences currently available within dunnhumby Sphere, our end-to-end self-serve retail media platform. More specifically, let’s look at them in terms of what they tell a CPG…

• Brand Buyers: your existing customers.
• Brand Lapsers: customers who have bought your product before, but haven’t done so recently.
• Competitor Buyers: shoppers who buy from one of your competitors.
• Brand Cross Shoppers: shoppers that buy multiple products from your brand portfolio.
• Category Buyers: people who shop your brand’s relevant categories.
• Category Lapsers: people who used to shop that category, but haven’t done so recently.
• Highly Relevant Buyers: those shoppers most likely to buy your brand’s products in the next purchase cycle.
• Acquisition within Category: people who already shop the category and show signs of being willing to switch to a different product in the next purchase cycle.
• Acquisition out of Category: people who don’t shop the category, but show signs of buying your product in the next purchase cycle.

As well as providing some useful insights generally, these smaller groups are the reason that retail media makes for such a compelling, full-funnel proposition. That’s because their behaviours – whether current or future – map perfectly on to very specific CPG marketing objectives. And, equipped with this information, it becomes much easier for brands to focus their retail media investments around those shoppers that best match their objectives.

An audience for every need

This isn’t just some hypothetical promise, either. Users of dunnhumby Sphere have been able to achieve amazing results by focusing their marketing investments around highly specific audiences. For instance…

• One household toiletries brand needed to drive awareness and conversion. Using Sphere to identify and engage with both Category & Brand Lapsers and Category & Brand Shoppers, the company achieved more than 11m impressions and a 3.88:1 return on advertising spend (ROAS).
• A leading soft drinks brand used Sphere to raise awareness of one of their products. Targeting Competitor Buyers, Highly Relevant Buyers, and Acquisition out of Category shoppers, 1.4m households were reached in just four days, delivering a ROAS ratio of 2.20:1.

While audiences aren’t the only factor at play here – retailers also need the right media products in order to engage shoppers effectively – they are undoubtedly the most important when it comes to retail media as a full-funnel proposition. Powerful though it may be as a way to drive conversions, there’s a lot more to retail media than just what happens at the checkout.

Find out more about dunnhumby Sphere and its predefined catalogue of audiences.

[1] Retail media in 2023: What do the experts predict? – Econsultancy, 23 December 2022
[2] Retail Media Is Now 11% Of Total Ad Spend. Here Are 5 Factors Driving That Figure – Forbes, 7 October 2022
[3] Retail media networks are set to transform the advertising landscape – Raconteur, 10 November 2022