The In-Store Retail Media Flywheel

Resolving the Ads vs. CX Tension is the Key to the Next Major Media Channel

When Jeff Bezos famously sketched out Amazon’s retail flywheel—which looked something like the graphic below—it set the foundation for one of the most incredible runs of self-perpetuating value creation that’s ever occurred in business.

The basic idea was that, by building a marketplace, Amazon could ensure the greatest product selection, which drives the best customer experience, which attracts more shoppers, which in turn attracts more sellers. As the flywheel turns, this drives scale that lowers Amazon’s cost structure, enabling lower prices, which furthers the customer experience and accelerates the flywheel.

Now consider the same premise of this flywheel but applied to the context of in-store retail media. Then, substitute “advertisers” for “sellers” and here’s what you get.

With in-store ads, retailers can create a perception of better selection by introducing shoppers to new brands and products. This delivers a better customer experience, which increases basket sizes and shopping frequency, giving brands more incentive to advertise. This produces better margins and a lower cost structure, allowing retailers to pass that value on to shoppers in the form of lower prices, generating an even better customer experience.

Advertising in general—and in-store retail media, specifically—can be additive to the customer experience. That’s true as long as the advertising content is high-quality, contextually relevant, and doesn’t interfere with the shopping experience.