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Morrisons joins the fast-growing retail media movement

More retailers are becoming publishers as they realise the potential of their online assets, helping to fuel a new fast-growth segment of digital marketing – and Morrisons is no exception

Morrisons lost its place as part of “the big four” UK grocers in terms of market share in September, but it has since joined the top three supermarket chains – Tesco, Sainsbury’s and Asda – in launching its own retail media network.

In the same month, Kantar data showed that Aldi usurped Morrisons as the fourth biggest grocer in the UK, the Bradford-based retailer revealed it ambitions in digital marketing.

The new network, Morrisons Media Group, was unveiled at the retailer’s annual supplier conference. It comprises a full-service internal advertising agency team to enable suppliers to deliver “high-performing” marketing campaigns to Morrisons shoppers.

Working with SMG Group, which already works with Co-op and Boots, Morrisons says it will use creativity, data and technology to boost its partner brands’ exposure to consumers.

The ad activity will be conducted across all Morrisons-owned and external media platforms via one central function. The work will result in the production of insight-led campaigns that the retailer promises will resonate with its customer base.

Although Morrisons has offered its brand partners advertising opportunities in the past, the work with SMG will be more targeted. SMG and the new internal team will combine data from the MyMorrisons loyalty programme and the retailer’s e-commerce operations, and the tech used will enable the supermarket chain and its partners to track media investment back to sales.

Rachel Eyre, Morrisons chief customer and marketing officer, said at launch: “We want to work more closely with our suppliers on targeted, high-performing campaigns that will benefit both their businesses and our customers. The new dedicated internal agency team at Morrisons Media Group will do just that.”

With Tesco, Sainsbury’s, and Asda already offering their partner brands targeted and tech-driven advertising opportunities, Morrisons is slightly behind the curve compared to its rivals. The launch of the service comes after Morrisons poached Eyre from Sainsbury’s marketing team 18 months ago.

It also comes at a time when a growing number of retailers are looking at ways in which they can further monetise their digital assets in light of the growth in e-commerce since the pandemic.

Boots, B&Q, Made.com, Decathlon, and Superdrug are among the growing number of retailers developing their own marketplaces. The former two are also investing in retail media, as they look to sweat their assets.

JJ Van Oosten, chief customer and digital officer at B&Q parent Kingfisher, says a new retail era is upon us, with high-traffic retail websites now “migrating to a platform-based model”. He adds: “The question is, “What else can I do?’. You can monetise and use your infrastructure.”

He cites Next’s evolution, with its development and roll out of Total Platform – which allows digitally immature brands to pay Next to use its warehousing, delivery and e-commerce infrastructure – as a strong example of this movement in action.

For Morrisons, retail media is the chosen way forward. The grocer has promised brands connected campaigns across third-party channels, including digital and social, as well as account management and performance measurement – and brands are interested.

Amazon leads a growing market – again

Media investment company Group M’s in-depth report, This year next year: 2022 e-commerce & retail media forecast, predicts a boom period for retail media.

It estimates that global ad revenue for retail-based companies was $88bn in 2021 and will reach $101bn this year, which amounts to 18% of global digital advertising and 11% of total advertising. The expectation is that retail media advertising will increase by around 60% by 2027, exceeding the growth rate expected for all digital advertising. In short, retail media will take an increasing share of digital ad revenue over the next five years.

James Chandler, chief marketing officer for digital advertising trade association IAB UK, says: “All the prevailing headwinds are pointing at retail media being a real plus for digital advertising.

“We know that once third-party cookies go away and Google makes that decision and finally gives a deadline, first-party data is going to become incredibly important. As we lurch into rising inflation, the pound at an all-time low and the cost-of-living crisis, we know scrutiny will be on marketing plans.

“CFOs and non-digital ad people will start to pore over investments, saying things need to prove their worth. And [there’s no-one better for] first-party data than the businesses actually selling the things – the retailers.”

Just like e-commerce as a whole, as well as rapid delivery, subscription services and marketplace development, it looks like a case of where Amazon leads in retail media, others follow.

Amazon does not break down how much of its total advertising revenue comes from commerce-related activity compared to what it generates from sports programming, for example, but Group M makes an assumption the vast majority of that ad revenue is directly attributable to e-commerce or informed by its first-party retail data. It estimates the ad revenue is around 5% of e-commerce gross merchandise value, and argues that is a reasonable figure for other retailers to target.

“Retail media, considered a test-and-learn environment not so long ago, has more recently become a growing line item on many marketer budgets,” the Group M report states.

“There remain significant disparities in capability depth, data quality and partnerships across global markets and within retail channels, but the promise of retailer first-party data, albeit residing in yet another walled garden, is tantalising – enabling purchase-based targeting and closed loop measurement.”

There will be challenges, of course, and Group M says scalability, differentiation and staying power during a tough economic environment is set to present “a battleground for many of the newer networks and their supporting technologies”.

It adds that retailers with highly adopted loyalty programmes are likely to be in a stronger position than those without, reinforcing why the supermarket chains and Boots – with its 10 million-plus Advantage Card users – are among those with retail media plans.

Tech-led ecosystem

The technology ecosystem behind retail media continues to develop. As well as SMG, companies such as Criteo and Epsilon are prominent players in this space, supporting retailers with their plans.

Publicis Groupe, a global advertising and PR conglomerate which owns Epsilon, announced the launch of CitrusAd, powered by Epsilon, in June, which it described as an “industry-first self-serve retail media platform” uniting the former’s on-site and Epsilon’s off-site capabilities in one place.

The platform promises brands a transparent measurement tool, tying digital campaigns to on-site and in-store sales, as well as evaluating campaign performance in real time and at the stock keeping unit (SKU) level.

It’s a noteworthy move by Publicis, with Brad Moran, co-founder and CEO of CitrusAd, saying: “No-one else can provide retailers with more monetisation opportunities across on-site, off-site and in-store.”

Ocado Retail expanded its partnership with CitrusAd in 2021, with the two companies promising to build technology together that can help brands to buy and optimise their media campaigns on the grocery website. Initially, as part of the new arrangement, Ocado allowed brands to launch self-managed sponsored product directly into the Ocado website while also measuring campaign results more efficiently than before. There was a focus on personalisation of ads, and all suppliers on Ocado are being invited to join the media platform.

Using CitrusAd’s tech alongside Ocado’s own Crunch insights platform “will ultimately make it easier for our suppliers to put their products in front of more customers and build their business with Ocado”, Christina Hawley, Ocado’s chief commercial officer, said last year.

Meanwhile, Chandler says retail media is not the preserve of a small section of the industry, suggesting there is potential for it to work “from Harrods to Aldi and everyone in-between”.

But that is not to say that it won’t come without its challenges for retailers. They are now playing in “a different pond”, according to Chandler, with all the social media networks, adtech firms, and traditional publishers seeking a share of brands’ ad budgets.

And if it’s not useful and they don’t get it right in terms of the consumer experience of the adverts, shoppers will be put off.

“With all new things, I often joke that if product people get hold of it first and are more influential, you end up with a really good product that has consumers at its heart and is really useful,” says Chandler. “If the commercial team get hold of it first, then you’re going to end up with something that has lots of ads – probably ads that look like they belong somewhere else.”

He also suggests that stock management is going to be key, with the best retail media proponents linking stock to media spend. If there are shortages of products, then retailers will have to be wise to shut the media part off, he says, detailing the need for sophisticated systems and stock transparency.

But ultimately, the retail media story is one of opportunity. In grocery, there will be a battle for the ad money from the big brands such as the Coca Colas, Unilevers, and P&Gs of this world where strong relationships already exist, but there is an opportunity for new non-traditional brand partnerships.

“The real key will be finding non-endemic brands,” says Chandler. “Auto brands have a lot of money. If you can convince them to target people through your platform, that’s incremental money.”

He paints a picture of the retailer battleground “redrawn”, adding: “Amazon will be the biggest and is definitely going to grow. But what we like about it is that it’s not a winner-takes-all market. Amazon won’t clear up, because all the others have points of difference and different data sets.”

Morrisons, it seems, has identified that. It may have lost market share in terms of spend at the checkout, but its got its eyes on another big revenue stream.

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