Retail Media and the Influencer Revolution

Change is the Norm

Retail leaders have always been adept at understanding and adapting to rapidly shifting markets. For example, the inception of Amazon and the global pandemic massively impacted the ways by which retail organizations operated. Moreover, retail leaders are gifted in the art of pivoting, capable of garnering internal buy-in for new initiatives that would have been unthinkable just five or ten years ago. Ultimately, change is the norm in retail, and an incredibly recent innovation and driver of change is the invention of retail media networks.

Retail Media Networks

According to eMarketer, a retail media network is an “advertising business run by a retailer that enables marketers to buy advertising space across the retailer’s owned and operated digital properties, as well as physical stores.”

This type of network represents a massive shift in thinking for the retail industry. For most in the industry, retail media networks represent a 15% increase in conversion rates and 66% of brands are shifting budget from other channels to retail media (Google, Amazon, BCG). Ultimately, this evolution of “sold shelf space” into the digital world is one of the most important revenue drivers in for modern retailers. As customers have embraced digital-first experiences, retailers that have positioned loyalty apps as the “digital shelf,” providing screen space to CPGs willing to pay or provide a deal to a shared targeted customer.

In addition to the clear financial upside, retail leaders no longer need to operate in isolation when generating interest, loyalty, and share of wallet. Instead, they can partner with manufacturers, complementary retailers, and the right media partners to drive purchases from the right consumers at the right time.

What does this have to do with Influencers?

The rise of social media has blurred the lines between passive and active brand engagement, and nowhere is this more relevant than in influencer marketing. An influencer or celebrity’s social media following represents a targeted, curated audience ready-made to drive interest. Moreover, the access of the audience to the influencer through social media often creates the type of relationship that the most effective brands want to generate. A wholehearted endorsement of a product by an influencer is often more than enough social proof to generate significant upticks in eCommerce purchases.

The big unlock yet to be fully discovered by retailers is this: Retail media networks, when integrated correctly, are a primary vehicle to deliver influencer messaging. Consider these examples:

1. A takeover of your favorite grocery app the Wednesday before Halloween by Wednesday Addams (of Netflix’s “Wednesday” fame) promoting a special pumpkin deal.
2. An eCommerce promoted outfit with a special “Kim’s take” caption that highlights a Kardashian’s opinion on the ensemble, as well as the right bundled product (also available on the site or for half-off in-store).
3. A website with an Aaron Judge promoted baseball bat that includes embedded videos of him hitting home runs off the bat as well as one of the leading competitors (i.e. a comparison)

This unique value proposition, once only accessible to the richest media agencies with the largest budgets, is now a potential enormous creative value driver. With the right strategy, it can differentiate retailers who may be struggling to find effective ways to reach new buyers.

How does any of this relate to AI?

More than any other initiative in retail that came before it, the adoption of retail media means an additional ocean of data is about to pour into retail organizations. The ability to predict the right celebrity or influencer to partner with that aligns with the retail brand is non-trivial. Furthermore, forecasting the results of any given retail media campaign is difficult but necessary to quantify. Experimentation, data-driven optimization, and AI-driven analyses are critical, as betting big on a particular retail media campaign should (and can) be done with all the predictive indicators aligning on that effort.

Artificial Intelligence is the best answer we have to maximize return on retail media efforts, as the number of ever-changing variables and the dynamic nature of retail media can create a perfect storm of unknown or hidden variables. In other words, injecting data-driven rigor into retail media efforts and building predictive models to optimize outcomes is imperative to select the best influencers with whom to partner, and the right offers and incentives to drive maximum ROI.

There will always be unknown variables in this ever-changing space, but leveraging the correct AI models can help retailers:

1. Identify the most suitable influencers for their brand and target audience
2. Predict the potential impact of influencer partnerships on sales and brand awareness
3. Optimize content and messaging for maximum engagement
4. Analyze real-time data to adjust campaigns on the fly
5. Measure and report on the ROI of influencer marketing initiatives

In conclusion, the convergence of retail media, influencer marketing, and AI presents an unprecedented opportunity for retailers to revolutionize their marketing strategies. By embracing these technologies and approaches, retailers can create more personalized, engaging, and effective campaigns that resonate with their target audience and drive tangible business results. As we move further into this new era of retail marketing, those who can effectively harness the power of AI to optimize their retail media and influencer partnerships will likely emerge as industry leaders.

The Future of Retail Media and Influencer Marketing

As we look ahead, several trends are likely to shape the future of retail media and influencer marketing:

1. Hyper-personalization: AI will enable retailers to create highly personalized experiences for each customer, tailoring influencer partnerships and product recommendations based on individual preferences and behaviors.
2. Micro and nano-influencers: While celebrity endorsements will remain valuable, there will be a growing focus on partnering with micro and nano-influencers who have smaller but highly engaged audiences in specific niches.
3. Augmented Reality (AR) integration: Influencers will increasingly use AR technology to showcase products in immersive ways, allowing customers to virtually try on clothes or visualize furniture in their homes.
4. Real-time campaign optimization: AI-powered tools will enable retailers to adjust their influencer campaigns in real-time based on performance data, maximizing ROI and engagement.
5. Cross-channel integration: Retail media networks will become more sophisticated in integrating influencer content across multiple channels, creating seamless customer experiences from social media to in-store displays.

Challenges and Considerations

While the potential of AI-driven retail media and influencer marketing is enormous, retailers must also be aware of potential challenges:

1. 1. Data privacy concerns: As retailers collect more data to power their AI models, they must ensure compliance with data protection regulations and maintain customer trust.
   2. Authenticity and transparency: As influencer marketing becomes more prevalent, maintaining authenticity and clearly disclosing sponsored content will be crucial to preserving consumer trust.
   3. AI bias: Retailers must be vigilant in monitoring and addressing potential biases in their AI models to ensure fair and inclusive marketing practices.
   4. Keeping pace with technological advancements: The rapid evolution of AI and marketing technologies will require ongoing investment in training and infrastructure.

Conclusion

The influencer revolution in retail, powered by AI and retail media networks, represents a paradigm shift in how brands connect with consumers. By leveraging these technologies, retailers can create more engaging, personalized, and effective marketing campaigns that drive real business results.

As the industry moves forward, the most successful retailers will be those who can effectively blend the art of influencer partnerships with the science of AI-driven optimization. They will create seamless, omni-channel experiences that resonate with consumers on a personal level, while continuously adapting to the ever-changing retail landscape.

The age of AI in retail media and influencer marketing is just beginning, and the possibilities are boundless for those willing to embrace this new frontier. As retail leaders continue to innovate and push boundaries, we can expect to see even more exciting developments in the years to come, forever changing the way brands and consumers interact in the retail space.