Retail media is exploding, set to take up a fifth of all US ad spend in 2024, according to new Advertiser Perceptions research. But that doesn’t mean it is its own special new category.

“People think about sometimes retail media as this own separate channel,” says Jill Smith, VP of Sales at Kroger Precision Marketing, in this video interview with Beet.TV editorial director Lisa Granatstein. “But the reality is, when we think about Kroger’s owned and operated channels and sites, that could be a channel where we offer search and onsite display.”

However, when it comes to offsite placements powered by retail data, Smith believes this is where retail media should be considered a layer.

“That’s where we start to talk more around retail data versus retail media,” she says. “It all falls within the retail media landscape, but we’re starting to distinctly talk differently around owned and operated offerings, and offsite.”

Education is key to overcoming friction

Kroger Precision Marketing (KPM) is a retail media arm of the Kroger Company. By utilizing purchase-based data, KPM helps brands to tailor their advertising to specific consumer segments across Kroger’s digital assets and off-platform media. It recently struck a data deal in which Yahoo DSP customers can target KPM audiences.

But Smith believes this channel-versus-layer disconnect originated as retailers began striking interesting offsite partnerships, such as with Roku. “Early on in retail media, everything was more lower funnel, bottom of the funnel, working with shopper marketing teams,” she says.

But as the performance and impact of retail data became apparent, the industry started exploring how to leverage it in offsite environments. “As brand teams started to learn about retail data and how to layer it into their national campaigns, they’re starting to see really strong results,” Smith says. “And so it’s this education, I would say, that is really on all of us.”

She believes the onus is on retailers, agencies and clients alike to align on business objectives upfront and explore how retail data can be leveraged to achieve those goals.

Relevance trumps personalization

When it comes to driving results, Smith says relevance is proving to be even more impactful than personalization. “What we have found is, when you use retail data as compared to third-party data, you can use 51% fewer ad impressions to achieve the same sales results,” she says. “That is an example of how relevance is really driving the industry forward.”

By contrast, simply targeting based on demographics can result in significant ad waste. “You’re reaching consumers where that ad might not be relevant to that household,” Smith says. “And that is where, I think, retail data can drive the industry forward in ensuring that, for all of us, our advertising experiences – whether that’s on a connected TV device, whether that’s on an app – are relevant and they’re effective.”

Planning early for holiday success

As the holiday season approaches, Smith says her team at Kroger Precision Marketing is engaging with clients earlier than ever to leverage retail data for success. “We’re working with our clients and understanding, for holiday this season, who do you need to win with? What are those households that you need to be talking to in order to ensure you have a successful holiday season?” she says.

This process starts with identifying target households and personas, then working with Kroger’s data science team to translate those into purchase-based audiences for activation. Smith says these discussions should be happening well in advance to inform elements like creative and ensure all touchpoints are aligned to drive success.

“If you’re reaching a household where it’s not relevant, it’s a wasted ad impression,” she says. “I think we’ll see enormous growth with e-commerce as that continues to grow. We as Kroger are really working to grow e-commerce business. We know that’s the future.”

You’re watching “Why Relevance Rules in Ecommerce,” a Beet.TV Leadership Series presented by Rokt. For more videos from this series, please visit this page.