The Supermarkets are Coming for Your Brand Engagement - The Real Impact of CPG Advertising on Sales & How to Improve In-Store Purchasing

The retail media boom is benefiting supermarkets - at the expense of CPG brand growth. Here’s how CMOs can reclaim customer engagement.

The oft-forgotten ‘p’ of the marketing mix has become more valued than ever before. Shopping chains have rapidly shifted from purchasing advertising spaces across press, OOH and digital channels to creating these promotion opportunities for themselves. The Boston Consulting Group predicts that owned advertising platforms will deliver retailers with profit margins of up to 90% by 2026.

Retail media’s vast margins represent a phenomenal gift to complement the traditionally low margin core business of retail chains. However, where supermarkets are gaining unprecedented access to the customer journey through new technologies, CPG brands are losing the data that powers conversions and brand growth.

Here’s how CPG brands can reclaim the vital consumer insights needed for better ROAS and increasing long-term sales. 

From Frenemies to Friends With Benefits: The Changing Relationship Between Retailers and Advertisers

Retailers are rapidly transforming from transactional suppliers into more equal partners, bringing to the table a wealth of consumer behaviour insights. This shift is in some ways welcome at the same time as the customer journey becomes increasingly complex and consumers of all demographics become more demanding. 

CPG brands without a retail media partner plan would do well to act quickly, as competitors are fast taking advantage. In 2024, 20% of all digital ad spend was driven through retail media, and advertising investment in onsite and offsite retail media is set to surpass £1billion in the UK alone next year (excluding spend on Amazon). 

The retail/advertiser shift presents a plethora of opportunities - and challenges - for CPG brands across the UK. 

The Positives: Retail Media Opportunities for CPG Brands

• High Intent Shopper Reach - High in-store foot traffic means supermarkets (and advertisers) can reach high-intent shoppers near the point of purchase. Audience demographics are significantly wider than those across most other channels, with diverse customer bases spanning families to young professionals, all backgrounds, groups and ranges of need.

  
  

• Customer Experience - Shoppable ads remove several touchpoints, reducing overall buying friction, by taking consumers directly to a specific product in-store or on a retailer’s website. A faster, easier and more direct customer experience also shortens the buying cycle and encourages repeat purchases. Digital screens placed at key points in supermarkets can also be used to improve the shopping experience itself, helping customers navigate around a store and providing nutrition information for products, recipes, how-to guidance and cooking tips, genuinely adding value to customers as well as selling to them directly.  

  
  

• In-Flight Experimentation - Real-time content updates in the form of responsive in-store digital advertising are more accurately able to target browsing audiences with timely and relevant promotions. Advertisers can test and learn different messaging, creative and pricing at different touchpoints at any time, gaining real-time insights and optimising testing for greater return.

  
  

• More Accurate Targeting & Personalisation - Like all industries, retail is increasingly investing in emerging technologies, with autonomous inventory scanning robots, AI-powered shopping carts and electronic labels providing unprecedented methods of customer data gathering for advertisers and supermarkets alike. 50% of supermarket customers report that digital screens encourage them to make a purchase “right there and then” in the moment of viewing targeted advertising, with an overwhelming 77% reporting this form of technology as either “very” or “quite” informative. Combining this with customer purchase behaviour from loyalty cards, and direct intent monitoring with smart cameras that measure customers picking up and viewing items but not selecting for purchase, delivers more consumer behaviour insights than could ever be imagined until recent years. FMCG marketers can harness this information to create tailored offers with AI-powered product suggestions both online and in-store, constantly targeting promotional messages by intent behaviour, location, time and date, with impact measurable both at and well before point of purchase. 

  
  
  
  

  

  
  
  
  

• Influencing Purchase Decisions - Paul Wright, Head of International at Uber Advertising shares, ‘We know that our users often start the point of purchase unsure of what they are looking for. 60% of consumers do not know what they want to order when they go online: their choices can be influenced by what they see in their feeds. Advertisers have a significant opportunity to influence those choices by sign posting at that key decision-making moment. All these ”in the moment” behaviours are important to recognise and up-end traditional views of advertising’s role.’ CPG advertisers can capitalise on this same consumer willingness and ability to be influenced on food and drink purchases by informing and guiding buying behaviours at key in-store supermarket purchase points.

  
  

• Brand Awareness - Advertisers can leverage the insights from supermarkets’ wealth of first party data to drive immediate brand recognition and influence purchase decisions as soon as consumers enter the store. Repeated exposure during regular shopping trips enhances brand recall and reinforces brand awareness to build consumer relationships, loyalty and future purchases.

  
  

• Optimising Campaigns - Real-time data from modern DSPs means responding in-flight to weather changes, sports, news and live events to reach loyal fan bases and specific audiences with targeted advertising and personalised offers. DOOH campaigns can be created and implemented much more quickly, increasing efficiencies and providing continuously insightful post-campaign data and analysis capabilities. Proximity to point of purchase also drives a much higher ROI. ROAS will become easier to demonstrate, measure and consistently improve.

  
  

• Collaborative Learning - Like many retailers, supermarkets are increasingly looking to drive efficiencies and make savings to divert spend into the customer experience, emerging technologies and product innovation. UK Big Four supermarket Sainsbury’s is expanding its in-house agency to recruit for over 30 roles across creative planning, graphic design and video production and cross-channel promotion. The new team will take advertising creative, strategy and analysis in-house for the retailer’s own brands including Argos, Habitat, Tu and Nectar, with the aim of delivering more efficient marketing spend and greater marketing ROI. Retailers will help to play a much more prominent role in shaping brands, with a consistent stream of insights, ideas and experiments to bring to advertising partners for truly original and revolutionary collaboration, delivering unprecedented experiences and value to customers.

The Potential Pitfalls: Retail Media Challenges for CPG Brands

• Lack of Customer Journey Visibility - Paradoxically, as more customer journey data than ever before is generated and available for use, brands themselves will lack transparency over large chunks of the journeys of their own customer bases. Combining the execution and measurement of advertising through one third-party provider prevents clear visibility of the funnel for the advertiser. Brands cannot see which impressions they are buying, the margins the retailer is earning, or the attribution algorithm that is used to measure performance. Like social media giants, most retail media networks are operated as walled gardens. Some retailers have still not yet connected in-store media with their larger networks to enable advertisers to target audiences at the point of purchase, missing out on vast opportunities within their own open ecosystems. Without integrating into programmatic marketplaces, advertisers are unable to incorporate retail media into their own omnichannel strategies.

  
  

• Incomplete Purchasing Behaviour Data - RMNs appear to provide the holy grail of consumer point of purchase data, but huge oversights in shopping behaviour will deliver inaccuracies in reporting. In 2023, 19% of purchases in the UK were made with cash, up from 15% the previous year, marking the first time in a decade that cash use has actually increased. Cash is still king for specific demographics: 53% of people aged 75 and over - 5.4 million UK citizens - choose cash as their preferred payment method. Shoppers with lower incomes also use cash much more regularly than card transactions, in order to better track and stick to a tighter groceries and essentials budget. The inability to track purchase data from cash transactions creates an immediate and significant data bias towards specific demographics and against others, misinforming brands about vital influences and preferences of their target audiences.

  
  
  
  

  

  
  
  
  

• Bias Towards Existing Customers - 77% of regular grocery shoppers are signed up to a Tesco Clubcard and 57% are signed up to a Sainsbury's Nectar Card. The ultra-targeted insights provided by both schemes are highly valuable when considered in this light, however, these supermarkets alone are missing the same data on almost one quarter of Tesco shoppers and almost one half of Sainsbury's shoppers. Supermarkets automatically gather and use greater volumes of data and more detailed insights from loyalty card customers than other buyers. This audience imbalance skews data and therefore advertising messaging, creative and distribution towards existing frequent customers and away from groups where greater opportunities for growth may lie.

  
  

• Partnership ROI - The shift from transactional to key strategic advertising partner presents the usual difficulties that plague brands and agencies: the time and communication invested to ensure clear briefing, setting and agreeing expectations and measuring tangible short-term ROAS and long-term ROI. The biggest problem created from the power imbalance over third-party data is the inherent lack of access - and the continuous presumption of trust and transparent communication - concerning the brand’s own customer data. Because advertisers cannot see exactly where and when retailers are actually delivering on their promises, supermarkets are not held accountable for missed conversions and purchase opportunities. 

  
  

• Efficiencies - Without access to data that clearly demonstrates ROAS and opportunities to improve advertising ROI, brand marketing teams hold less bargaining power when asking for more budget from their own finance teams. Fewer resources allocated from more nervous CFOs mean fewer opportunities to experiment with creative advertising, delivering less opportunity for innovation and ROI from undiscovered approaches. Supermarkets’ investment in building in-house marketing teams means advertising brands will work with greater numbers of stakeholders within different supermarket departments, from their own marketing teams to finance and customer loyalty. For CPG manufacturers with large brand portfolios, each individual brand will require multiple touchpoints with each supermarket partner, demanding both significant time investment and a major redesign of the manufacturer branding house’s internal processes to communicate and collaborate optimally with the retailers in question.

  
  

• Incomplete Customer Journey Tracking - In addition to preventing advertisers from visibility into the full funnel, retailers are still unable to track the full customer journey, whether they decide to share their data with brand partners or not - due to overreliance on last-touch attribution methods. 

The Dangers of Relying on Last-Click Attribution to Measure In-Store Purchase Behaviour

Ryan Mayward, Senior VP of Retail Media Sales at Walmart shares, ‘We capture the click and we know that the customer checked out and bought those specific things after they were exposed to or interacted with the brand’s advertising. But after an individual clicks on an ad at a general-purpose search engine, we don’t know what they did in response. The core value proposition of retail media is limited versus other types of media.’

Whereas supermarkets will tell their brand advertisers that stores sold a certain volume of products in a certain month and quarter, and brands may correlate this with timely and location-focused campaigns, in reality the retailer has no evidence of when, where or why the sales occurred. RMNs’ consumer behaviour tracking all rely on last-click methods and last-touch attribution such as in-store banners. Supermarkets can point at a particular instance of interaction that was made just before a purchase, but their last-click models fail to account for the multitude of touchpoints along the entire buying journey, which could in fact have been far more influential.

The huge financial incentive for retailers in controlling the whole advertising cycle - executing the advertising, iterating and reporting on its performance - encourages supermarkets to maximise advertising sales and claim advertising influences purchases even when this is disputable or supported by no evidence. If purchase influence is not measured correctly, retail media will encourage brands to take ill-informed and often completely wrong decisions. Without access to consumer behaviour and purchase data itself, advertisers cannot ensure their approach and messaging are consistently targeted and effective across the supermarket shopping journey. Customer experience, consumer satisfaction, sales and brand growth, in addition to advertising ROI, could suffer significantly. 

Most marketing attribution methods don’t show CMOs where their advertising budget is working and where it’s not. Even multi-touch models are often wildly inaccurate when measuring advertising impact on customer acquisition. Discover The Myths, Truths and CMO-Proven Strategies Behind Every Single and Multi-Touch Attribution Model.

How Retailers & Advertisers Can Work Together Better

CPG brands can harness real-life examples of mutually beneficial collaborations between supermarkets and advertising agencies to inform their own changing status as advertisers and forge stronger, more open relationships with supermarkets. Tesco’s nine-year relationship with advertising BBH is one such case. Tesco’s Marketing and Communications Director Emma Botton reveals, ‘Quality and consistency of delivery is most important. Supermarkets and advertisers must truly serve as business partners: not just sharing a brief, but bringing each other in to have strategic conversations on positioning and branding, rather than just individual products and campaigns. 

‘We operate with brutal honesty: sharing the problem we need to solve for customers today and tomorrow, and solving it together. Demonstrating the vulnerability that’s required with all relationships for trust, we’re open about where we’re vulnerable or lacking understanding on customer purchase decisions. We take a ‘couples counsellor’ approach with consistent communication about where we are, to truly understand the challenge facing us and prioritise tackling it together.’

Although the lack of consumer behaviour data transparency will require brands to develop alternative reporting systems to evaluate the return on ad spending independently, data sharing must be prioritised at the start of every supermarket/brand advertising partnership. Agreeing the same KPIs and goals, focused around tangible ROI, is paramount to true retail media collaboration. Reporting must be coordinated to ensure both advertisers and supermarkets are receiving the necessary data to deliver helpful insights that inform continuous improvement. 

Jack Johnson, Ocado’s Head of Retail Media and Data advises, ‘Data clean rooms will become a key cornerstone in retail media offerings to meet growing pressure on brands and retailers to collaborate whilst respecting market privacy regulations. Secure data sharing and analysis must be developed, without compromising consumer privacy and trust. This shift will foster stronger partnerships, unlock deeper personalisation, and ultimately, fuel more effective and impactful advertising campaigns.’

How to Get the Insights You Need from Supermarket Consumer Behaviour Data

CPG CMOs can’t immediately break through supermarket walled gardens. But they can immediately access real-time, accurate consumer behaviour and purchase influence data across the entire funnel - by working with the right partners. 

Single-Source data tracks every individual customer, across every offline and online channel, throughout their purchase journey. CPG brands can access visibility of every in-store supermarket touchpoint to:

• View the full-funnel customer journey to measure individual buyer journeys over time 

• Reach customers in the moments that matter through receptive advertising

• Hyper-personalise campaigns to enhance brand engagement and customer experience

• Uncover which channels and messaging are directly influencing sales with post-event analysis of a unique data set that proves impact of advertising on purchase behaviour

• Eliminate wasted ad spend and resources, optimising both performance effectiveness and sales activation.

Ryvita increased advertising effectiveness and purchase rates with single-source data. New understanding of Ryvita consumer behaviour revealed:

• Which TV campaigns increased purchase rates by 20%

• Media preferences across Crispbread, Crackers & Thins products

• Exactly how combined advertising and promotion drove purchase growth by 300%.

Ryvita, Mars, Twinings and Noom are improving shopping behaviour understanding and advertising performance through single source media measurement from ViewersLogic. Find out how your CPG brand can access unprecedented consumer purchase insights and drive customer acquisition.