A Sneak Peak Into The Future of Retail Media

Today’s guest was an early hire at DraftKings, led Staple’s Media Network, and NOW is the Head of Retail Media @ Sephora. Yes, THAT Sephora—my wife Ari‘s favorite brand!

Meet Marco Steinsieck, I was STOKED to sit down with him on the pod to talk everything retail media.

What cool data he’s collecting, the highest performing ads, and the fundamentals of retail media, we dive into it all.

Let’s see what he had to say in his own liiiiiiiightly edited words.

1) What is Retail Media? 

“You hear a lot of abstractions about what retail media is, it’s the future of media, it’s digital advertising, it’s the third big wave after search and social. 

Those are all true but let’s define it clearly.

When you’re watching love is blind on Netflix and there’s an Elton John Charlotte Tilbury ad on your CTV, THAT’S retail media.  

You’re watching your favorite influencers do their makeup routine on TikTok and they’re using Rare Beauty eye shadow.

That’s retail media (BOOM).

Let’s say you need to search for a new eyeliner and instead of searching for eyeliner on Google, like you did 5 years ago, you now go to a retail site like Sephora and search for eyeliner. That’s all retail media. 

It has quickly become the hottest thing in media and Marketing. Retail media is changing search, social, and TV. 

Baseline it’s the process by which brands are developing closer relationships with customers. Hands down.

And to me that’s the hottest form of Marketing on the planet. (Hot takes, I’m here for it!)

2) How to Start a Retail Media Campaign:

What does a really good retail media campaign look like? What does a campaign look like if you’re just getting started? Good Q’s.

The first thing to know is that anybody can do a retail media campaign in Marketing. (Yes, even you.)

The way that I would start is by thinking about specific products you want to promote, what’s the audience that you want to reach, which can then help you identify a retailer that would make sense to work with. (Like for any campaign ever!)

The biggest retail media network in the United States is Amazon. They account for 70% of all retail media spend, Amazon invented retail media. 

They realized they can get brands to invest in promoting their products on Amazon, that’s how they make money, and then they can reinvest that margin from the media back into traffic driving activities. 

That way they have lower prices than everybody else, (there’s the Amazon flywheel).

What the retailer has that’s so valuable to Marketer is the audience, they have that direct relationship with their customers. 

Retailers own so much more than just the point of purchase. At Sephora, we can tell you what your customers have been searching for on our sites, we can tell you what they purchased in the past, we can tell you what our predicted LTV for them is.

That’s a bit of a rambling answer, but start with what products you want to promote and then think about the audience you want to reach, and then select your retailer from there. 

3) Full Funnel Phenomenon: 

Retail media is very much a full funnel phenomenon. 

Initially for a lot of retailers you’re going to see sponsored products on the website or you’re going to see a banner on the website.

We’re way past that now. 

At Sephora what we do is have packages and partner with brands on these packages where they’re getting a full funnel Marketing campaign that includes sponsored products in the search and browse pages of Sephora, they’re getting display banners on Sephora.com and in the app. 

Then they’re also getting offsite campaigns that span social, CTV, and audio. AND INFLUENCERS.

One of our great differentiators as a retail media network is that we have something called the Sephora Squad. Which is our own group of influencers that we have direct relationships with that have been hand selected by Sephora.

So a brand can now insert itself within this network of influencers to seed their product and reach younger generations on socials.

The conversion funnel is collapsing and we need to pivot. There’s a convergence happening between content and commerce so that consumers now are going to start transacting in traditionally upper funnel channels.

That’s where retail media steps in big time.

4) Best Performing Ads: 

You don’t want to be shouting in your customer’s face. You want your ads to feel native.

They don’t care if it’s paid for on a CPM or CPC basis, they just want it to be relevant to them. 

SO MAKE YOUR ADS FEEL NATIVE. Performance will skyrocket.

5) Their Loyalty Program: 

Our crown jewel is our loyalty program, we call it the beauty insider program. We have 40 million beauty insiders, they represent 98% of our transactions. 

We have a ton of data on our loyalty program, so it creates this very strong foundation upon which to build a business.

We have that purchase data, we have all their search data on our site, we have a strong profile about these clients, what they like and what they don’t like. 

But it gets even cooler than that, especially when it comes to advertising through our platforms.

Let’s say you show an ad to a customer and then they purchase. You can draw that straight line, everyone can do that. But what we know thanks to our loyalty program is whether or not you’re new to that brand. 

Why does this matter?

We’re able to go beyond return on ad spend (ROAS).

If you spend $50k on a campaign and you generate $250k in sales from 5,000 customers, that’s great. You have a 5:1 ROAS.

With retail media we’re able to see that of those 5,000 customers, 4,000 of those customers have never purchased this product or this brand before at Sephora. 

Now you know as a Marketer, you’re not only driving return, you’re driving customer acquisition, which is really powerful. 

What we’re trying to demonstrate to our brands is to think about retail media not just as a direct response performance for ROAS sake channel, this is a customer acquisition channel that is much more efficient.”