The big dogs of retail media would like more money from CPG marketers, please.
Take Walmart, for instance. In April, Adweek reported that the retail giant is asking some brands “to increase their annual retail media spend by approximately 25% compared with the year before.”
This is not exactly surprising. As part of their joint business plans (JBPs) with advertisers, retail media networks (RMNs) “routinely ask brands to increase their annual retail media ad spend,” as Adweek notes — and Walmart, of course, has massive leverage. Plus, Walmart needs to keep up with itself. As Marketing Dive reported, “the retailer’s global advertising business grew 29% [in Q4 2024], including 24% for Walmart Connect in the U.S. and grew 27% to $4.4 billion on the year.”
But is what’s good for the RMN giants the best thing for CPG brands — and shoppers? Not necessarily.
At Quad, we’re seeing rising traction for mid-market and local/regional grocers in the retail media space. Here are three reasons why:
1. CPG marketers are increasingly recognizing the importance of diversifying budgets
Especially in an unpredictable economy, smart CPGs need to remain nimble when it comes to partnerships. Overreliance on any one channel or vendor can close off opportunities to reach audiences in new ways that may be more relevant to target consumers. The old “Don’t put all your eggs in one basket” proverb is more relevant than ever — especially given that nobody knows what eggs (or baskets!) are going to cost next week.
At Quad, we’ve been building an audience network of local/regional grocers with In-Store Connect, which positions dynamic advertising in-store through durable digital signage installed at the point of purchase. It gives retailers and CPG companies the opportunity to serve relevant promotions, share key product information and direct shoppers to adjacent product options.
The CPGs investing in this media are excited that Quad is quickly scaling the opportunity for brands to digitally advertise in the store environment — offering a chance to capture new audiences beyond those already delivered by the big RMN incumbents (more on that below).
2. Local/regional grocers offer CPGs a flexible, varied and more affordable test-and-learn environment
The retail media phenomenon has gotten so big — and so central to conversations about CPG marketing — that it’s easy to forget that RMNs are still relatively new. (Amazon launched the first major RMN in 2012; Walmart and Target followed in, respectively, 2015 and 2016.)
Smart CPGs are looking for RMN opportunities that still allow them to test and learn. (The Adweek report linked above mentions a CPG brand executive who “cited a lack of flexibility in the deals” as a reason for not reupping with a mass-market RMN.) Simply put, the budget commitments and level of competition when investing with mass-market retailers can be daunting for many CPGs — particularly when it comes to go-to-market strategies surrounding new product launches and other experimental activations that may require course corrections along the way.
In-Store Connect was built from the ground up to enable CPGs to test and learn — supported by real-time content updates, near real-time analytics reporting and A/B testing support.
3. Taken together, local and regional grocers can give CPGs access to a massive audience of highly engaged consumers
Local and regional grocers are rarely top sales drivers for national CPGs but, when part of a broader retail media network, their power is amplified and they can drive significant revenue growth. Mass-market retailers are no longer the only path to scale when it comes to RMNs.
Grocery Dive reports that a 2024 analysis of U.S. retail foot traffic by Placer.ai found that while national supermarket companies continue to loom large in the grocery sector, regional and specialty stores are drawing a “commanding” share of the marketplace. That’s because consumers across the country remain devoted to their favorite local/regional grocers, which are often regarded as pillars of their communities.
And the latest edition of the Dunnhumby Annual Retailer Preference Index shows that regional players are incredibly competitive with the grocery giants when it comes to consumer perceptions of quality of merchandise assortment, promotions, convenience and more.
Quad’s In-Store Connect is a pioneer in bringing the devoted audience of local/regional grocers together to give CPGs access to a critical mass of highly engaged shoppers. Among our partners: The Save Mart Companies, a grocery store operator with nearly 200 locations across California and Nevada.
Helping CPG marketers master the local/regional grocery audience
In-Store Connect came to life, in part, through Quad’s early 2024 acquisition of DART (Digital Advertising Retail Technology) Innovation, an in-store digital media solutions provider. But it also leverages the fact that as a marketing experience (MX) company that works with thousands of brands across every conceivable sector, Quad has been working closely with retailers and CPG marketers for decades. For instance, as part of our MX suite of solutions, Quad serves more than 20,000 retail locations nationwide with custom in-store materials. And our MX: Intelligence solutions help both national and regional marketers leverage data and insights from 250 million consumers across 121 million U.S. households.
Want to dive deeper and continue the conversation? Find out more about In-Store Connect here.