Retail media an effective marketing option

 

There is strong potential for the retail media industry to grow further in Malaysia especially now with the economy slowing, says retail media specialist MagiqADs Sdn Bhd.

This is because in times of a slowdown, companies usually re-evaluate how they spend their money and tend to opt for more cost-effective, tactical type of advertising strategies.

This is where the retail media or media space within a retail environment could work to their advantage, MagiqADs founder and executive director Sailendra Kanagasundram told Business Times in an interview.

Research has shown that instead of targeting consumers at large, it could be more effective for advertisers to zero in on shoppers at hypermarkets and shopping malls through in-store campaigns, he said.

This is an opportunity for them to touch consumers at the point when they are buying.

After all, in-store is where 75 per cent of brand decisions are made, he said, pointing to the findings of a study undertaken by the Point of Purchase Institute of America, better known as POPAI.

Kanagasundram noted that shoppers no longer come into stores looking to buy brands they have been loyal to. These days, they just go for what catches their eye at the store and factors like pricing, promotions, marketing collaterals and packaging play a big part.

"This being the case, the 'last mile' becomes increasingly important for brands to clinch market share, or lose out," he remarked.

Malaysian advertisers cannot afford to ignore the fact that hypermarkets are enjoying more shopper traffic amid the current economic slowdown, as they tend to offer better prices for essential goods.

A hypermarket outlet typically clocks between 3,000 and 8,000 shopping transactions per day in each store.

"At an average of two shoppers per transaction, and an estimated 85 hypermarket outlets between the main players (Tesco, Carrefour, Jusco and Giant), Malaysian advertisers have a point-of-sale hypermarket network reach of an estimated one million shoppers per day," Kanagasundram said.

This is huge, he pointed out, and is already similar to the reach of mainstream media.

"In view of the large shopping traffic, the hypermarkets have now also become an effective platform for non-FMCG (fast moving consumer goods) brands to advertise in these hypermarket mall areas.

"Banks, insurance companies and telecommunication advertisers are also keen to get a piece of the action," he said.

In Malaysia, retail media has been growing in recent years but still remains a small component of advertising expenditure (adex).

It was a RM57.8 million industry last year, accounting for only one per cent of a total adex of RM5.5 billion.

However, in the US and other mature markets, retail media accounts for five per cent of adex.

MagiqADs is one of only two players in the industry, the other being the market leader, Posad.

The two companies offer retail media opportunities within hypermarkets and the mall areas of these outlets.

Media formats include entire aisle sponsorships that create dominant zones, trolley advertising, floor ads, billboards in the mall areas, wall spaces and travelator ads.

MagiqADs manages media space exclusively at Tesco outlets, while at Carrefour it manages about 60 per cent of the space. It also manages the mall space of Jusco exclusively

Kanagasundram believes the retail media industry should be able to achieve at least five per cent of adex by 2010. He notes, however that the industry will have to work together to make this happen.

MagiqADs is working with a local university to prepare a cost-benefit analysis of all media opportunities, he said.

This is important as advertisers will find it easier to make that shift towards in-store advertising with solid facts to back up their decision.

"In a buoyant economy, it will be tough for things to change, but because we're going into a recession, it's actually exciting for us because people will be forced to look at other options," he said.