The retail industry faces a number of challenges in the 21st century as store closures are on the rise while foot traffic in brick and mortar stores is dropping, according to CNBC, foot traffic peaked in August 2018 but has been steadily declining since.

These factors combined with the changes in shopping behaviors, customer demands, the evolution of digitalization and new technological possibilities can present a number of challenges for retail advertising operations. Although they can present challenges for retailers, they can also deliver solutions to retail brands that are willing and able to adapt to the constantly evolving industry in order to take advantage.

Advertising in the retail industry is highly important as it is crucial to:

  • Build brand awareness and trust
  • Inform customer research
  • Drive in-store sales
  • Boost online sales
  • Provide an additional revenue stream

Taking the importance of retail media into consideration, we have identified key advertising operation challenges currently facing retailers in today’s society. By understanding the challenges, retailers can have the ability to be adaptive in order to stay relevant to ensure they gain a competitive advantage and maximize their advertising revenue across multiple revenue streams.

Advertising Operations Challenges Facing Retailers

1. Multi-channel Buying Knowledge

With customer buying habits and approaches constantly evolving, research processes has become a huge aspect of the buying journey. 96% of Americans shop online as part of the search process but this does not mean that they are buying online. With more than 65% of consumers still going to brick and mortar stores to buy after they have completed their research online. Therefore advertisers need to understand that consumers partake multi-channel buying experience and advertise accordingly. Retailers much ensure that their advertisements are accurate and adaptable as consumers constantly research and

2. Seamless Customer Shopping Experience

When transitioning between online and in-store experiences, customers do not only want the same products to be available but they also want their experience to be seamless. This ultimately means that if they are regular online customers that they want and should be treated like regular customers when they visit brick and mortar store locations therefore if they made a purchase online this should also be recorded in the in-store system.

Creating this type of fluidity in their customer’s online and offline experiences can be challenging but if managed correctly can cease pitting their channels against one another. Centralized customer data is crucial in order to help retailers build a seamless experience. Utilizing this customer data is a key aspect of advertising to succeed.

Advertising operations collect all relevant information and put it to use as they gather intel on their customers in order to ensure the delivery of content and integrating data across all interaction points including online interactions, in-store sales, customer service technicians can create a seamlessly integrated customer experience.

3. Consumer Personalization & Customization

Personalization and customization are crucial in order for advertising campaigns to succeed. The trick to breaking through is not with creative, perfectly placed media spots or witty ads but one unifying element which is personalization. The key to personalization is the collection and the use of first-party consumer data to create a 1:1 customer experience in which retailers can increase loyalty, retention, and revenue. But, while every retailer wants to deliver personalization at scale for customers they often face one main challenge, data collection.

Personalization and customization in advertising operations depend on a very deep understanding of your customer including their needs, preferences, behavior, demographics and socio-economic information. It is crucial that disconnected channels and applications must be combined in order to create a reliable source of customer data in order for retailers to deliver personalized advertisements.

Gathering this information regarding customers and prospects is never going to be perfect, making customization a challenge from the beginning. By understanding the importance of gathering accurate and consistent data in a compliant way retailers can ensure personalized and customized advertisements for their target audience.

4. The Effect of Ad Blockers

A big part of the retail advertising is the use of advertisements online in order to get brands in front of customers. However, ad blockers have become increasingly popular as consumers tire of their web experience constantly being interrupted with constant pop-ups, with approximately 40% of Americans have an ad blocker on their web browser.

With ad blocking being one of the fastest-growing phenomena in internet usage, this software that removes or alters advertising content on a webpage can be a huge challenge for advertisers. Although ad blocking has existed for over 15 years, there has been a growing adoption of ad blockers. With its increase in popularity, retailer advertisers have attempted to fight back.

It is easy to see why consumers resort to ad blockers as they offer improvements in performance, speed, and security but in order to address the challenge of ad blocking, advertisers must invest time and effort into providing their customers with an uncluttered and quality user experience. Advertisements should be an enhancement of content on a retail site and users must only see ads relevant to their interests. Retailers can use incentives to encourage visitors to turn off their ad blocking my employing ad-block detective software to communicate the effects of using it on their shopping experience.

In order to reduce the effect of ad blocking on advertising operations, the use of a simple reminder to consumers that ads fund the content they enjoy, stating a commitment to their personal experience and asking them to turn off their ad-block can be enough sometimes.

5. Privacy

Finding a balance between reaching out to consumers and being a pest can be difficult for retailers. Advertisers are well aware that there are numerous techniques on how to create successful targeted advertising campaigns most of which are constantly evolving due to changing customer demands and trends. Updated privacy standards are present among the top factors and challenges that must be considered by advertisers.

With privacy as a top concern, targeted advertising has been the subject of ongoing debate within the privacy arena as there are constant revelations of privacy violations in targeted advertisements. The responsibility to protect the privacy of users does not only fall on the platforms aggregating the mass of user data but also advertisers need to incorporate and transition to more prudent approaches regarding the analysis and the use of consumer personal data. In order to overcome these challenges, providing transparency while deliberately moderating the use of sensitive information can be an excellent way to reduce the possibility and instances of privacy violations.

With the evolution of online advertising, there has been an increased emphasis on protecting private consumer data, although this is a challenge it should serve as a calling for advertisers to take a forward-thinking approach to personal data.

Overcoming the Retail Advertising Challenges

Retail advertising is a complex and difficult medium to master, although it does not have to be impossible. In order to succeed, retailers need to understand the customer journey from discovery and research to the purchasing decision. Seamless, personalized experiences, multichannel challenges, and privacy concerns are not insurmountable challenges.

Being aware of the evolving nature of the retail advertising industry and the ability to be adaptive to stay relevant is crucial to ensure the maximization of advertising revenue. Therefore by having a better understanding of how these challenges impact the business and its advertising, retailers can remain agile and seek to gain a competitive edge.