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3 Jul, 2024

Rethinking Retail Media Spend: Test new strategies and invest in new opportunities

With each new announcement of a new retail media network and capability, brands are continually seeking ways to maximize their advertising spend while maintaining, or even increasing, sales. A compelling example of how this can be achieved comes from our team’s recent strategic adjustments in our approach to Retail Media. By reevaluating our bid strategies and leveraging different types of auctions, we have managed to reduce our spending by 31% while maintaining the same level of sales. Here's how your brand can apply these insights to optimize retail media spending for better profitability.

Tom Wollan, Chief Marketing Officer at The Bluebird Group explains, “It's all about understanding the uniqueness of each retailer platform and not assuming Walmart Connect is the same as Amazon Ads, Amazon Ads are not the same as Roundel,  BestBuy Ads, etc. I remain bullish that finding a real expert is important vs. someone's side job.”

Here’s his advice on how to go from overpaying to optimizing:

Understanding the Auction Dynamics

Retail Media Networks (RMNs) like Target’s Roundel and Best Buy’s advertising platform utilize a first-price auction system. This means the highest bid submitted is the price paid. In contrast, giants like Amazon and Walmart operate on a second-price auction basis, where the winning bidder pays just one cent more than the next highest bid. The distinction might seem subtle, but it has profound implications for bidding strategies.

Strategic Bidding: More Than Just Setting and Forgetting

Our experience underscores the importance of not just setting a bid and walking away. Without a nuanced understanding of these platforms and a dynamic approach to bidding, brands risk overpaying for their media placements. For instance, we've observed that by refining our bids and choosing more judiciously our targets in first-price auction environments, we've been able to achieve the same results—be it in terms of sales, reach, or engagement—at significantly reduced costs.

Case in Point: Real-World Application

Over the last month, we applied these refined bidding strategies to a client’s campaign targeting non-branded keywords across RMNs not managed by Amazon or Walmart. The outcome was a 31% decrease in ad spend without sacrificing sales volume or market presence. This successful strategy allowed for reallocating funds to explore new opportunities within the same retail media networks, thus optimizing overall marketing spend and ROI.

The Need for Expertise

It's important to recognize that each RMN is distinct. Platforms like Walmart Connect, Amazon Ads, Roundel, and Best Buy Ads each have their own idiosyncrasies and advantages. Mastery of these nuances is crucial. For brands, this means either developing in-house expertise – which requires significant headcount or partnering with agency specialists who understand the complex landscape of retail media. At Bluebird Group, we emphasize the importance of deep expertise, treating retail media strategy as a specialized skill rather than a sideline.

Forward-Thinking Strategies

As we look ahead Tom suggests, brands should consider several forward-thinking strategies:

Continual Learning and Adaptation: Stay updated with the latest changes in Retail Media Network policies and technologies. Retail giants are continually evolving their platforms; what worked yesterday might not be as effective tomorrow.

Data-Driven Decision Making: Leverage analytics to make informed bidding decisions. Understanding the data not only helps in optimizing current campaigns but also in forecasting trends and preparing for future shifts.

Holistic View of Spend: Consider the total impact of your advertising spend across all platforms. An approach that integrates all aspects of retail media ensures that each dollar spent is working as hard as possible.

Experimentation: Use savings from efficient bidding strategies to test new markets and advertising approaches within these networks. This not only diversifies your presence but also uncovers potentially untapped areas for growth.

By understanding the specific dynamics of different RMNs and implementing strategic bidding practices, brands can significantly enhance their profitability. Our experience at Bluebird Group has shown that with the right expertise and strategies, substantial efficiencies and sales retention are achievable even with reduced ad spend. Tom advises, “Remember, the goal is to turn every advertising dollar into a strategic investment, not just an expense.”