Retail media was a hot topic at NRF 2023, one of the largest retail conferences of the year.
Retailers have a treasure trove of consumer data, and marketers tapping into those audiences are achieving strong return on investment while closing the loop between ad impressions and sales. As a result, budgets are rising quickly. Retail media will attract $61 billion in ad spending by 2024, according to eMarketer, nearly doubling its 2021 numbers.
Here at Roku, we’ve seen the power of retail media first-hand through our close partnership with popular grocery chain Kroger. Through this relationship, which leverages Kroger Precision Marketing’s customer purchase data, we’ve given advertisers the ability to build high-performing audiences and to directly attribute conversions from their Roku advertising.¹ Brands that leverage our joint technology are seeing uplifts in sales, household penetration, and return on ad spend (ROAS).
To discuss the partnership and the power of retail media, Jake Piasecki, Roku’s U.S. head of verticals for CPG, health & wellness, joined Elizabeth Cotogno, group director of agency partnerships at Kroger Precision Marketing, for a fireside chat at Brand Innovators during NRF. They examined the importance of first-party data, ever-changing privacy rules, and how brands can combine retail media with streaming video.
“Retail media is hot because it works,” said Cotogno. “It’s really important for brands to prove performance and closed-loop media is a capability of retail media, and shows if an exposure results in a sale in-store or online. It removes the guessing games and holds media more accountable.”
Here are three takeaways from their discussion.
1. Increased scrutiny on privacy makes first-party data even more valuable
As privacy evolves, it will be harder than ever for brands to access consumer data. For example, Google is phasing out third-party cookies on Google Chrome in 2024.² Apple allowed consumers to easily opt-out of allowing apps to track them in recent years, presenting challenges for companies that relied on that data.³ With these sweeping changes like these (and increased government pressure to protect privacy) first-party data will become even more valuable. Retailers, by dint of their direct relationships with shoppers, are well positioned in this environment.
“Consumer tracking and having a deterministic and persistent identifier for households is going to be much more difficult in the future,” said Piasecki. “That’s troubling for a lot of advertisers, marketers, and ad sales teams who will need to find that data someplace else.”
2. Retail media works best at scale
Brands should partner with retailers that have enough scale to truly impact sales. Kroger’s loyalty program, for example, is connected to 96% of its purchases in-store and online. This results in first-party transaction data for 60 million households — half the households in the United States.⁴ Those consumers shop week-after-week and buy from a wide variety of product categories — from food to consumer product goods to pet supplies. Kroger’s team of data scientists and engineers have built machine learning models to help brands use all that data effectively. With Roku reaching more than 70 million households in the US, together, Roku and Kroger provide advertisers better performance and more meaningful scale.⁵
“Large grocers have the advantage of people coming week-after-week. We have a lot of frequent data. If you are shopping at a single category store, the data is going to be limited,” said Cotogno. “Large grocers have a lot of items in their basket from plenty of different categories. We have a ton of variables that help us ensure we are putting forward the best information for all of our brand partners.”
3. Combining retail media with streaming video is powerful
Three years ago, Roku partnered with Kroger Precision Marketing to feed shopper data from Kroger’s 60 million households and 2,700+ grocery store locations into our platform. Since then we’ve helped many brands uplevel their marketing. Here are some examples:
Neutrogena used KPM’s customer purchase data to engage with light, lapsed, current brand buyers, and cleansing product category buyers with Roku streaming ads. The campaign helped Neutrogena get an 8% uplift in household penetration and a 5.5% uplift in sales. Also, streamers exposed to the video ad spent 4.2x more on Neutrogena makeup remover wipes than the average Kroger household.⁶
Home Chef, a direct-to-consumer meal kit company, wanted to reactivate lapsed users, engage with new customers, and understand how advertising impacts in-store sales. Using KPM data and Roku streaming ads, Home Chef achieved a nearly 2.5x ROAS, increased purchasing households almost 10%, and delivered a nearly 21% sales lift among new buyers exposed to the campaign. The brand also recaptured lapsed buyers.⁷
A leading cereal brand partnered with Roku and utilized Kroger’s shopper data to more precisely deliver streaming ads to key audiences. The brand leveraged KPM’s first-party segments to reach current and lapsed brand shoppers with video ads on Roku — leading to a 13% lift in sales from the brand’s lapsed buyers and a 27% lift in sales from cereal category buyers. Households exposed to the TV streaming ads spent 5.3x more than the average Kroger household.⁸
“Marrying Roku and Kroger, you are marrying the best of the best. You have wonderful video content with sight, sound, and motion with advanced audiences with closed-loop measurement,” said Cotogno. “We can really tell you if a business outcome is impacted as a result of this partnership. That is super powerful.”
Watch the full fireside chat here to learn more and subscribe to our newsletter for regular updates from Roku Advertising.
¹ Roku Expands Kroger Integration with Data-Enabled Private Marketplaces
² Bloomberg: Google Delays Phasing Out Ad Cookies on Chrome Until 2024
³ CNBC: Apple’s ad privacy change impact shows the power it wields over other industries
⁴ Kroger Precision Marketing Data
⁵ Internal Roku Data, Q4 2022
⁶ Neutrogena Achieves TV Streaming Success with Roku
⁷ Home Chef Drives +20% Increase in Sales Among New In-Store Buyers
⁸ Leading cereal brand reaches new buyers with Roku
