Amazon expands in-store advertising with digital signage in grocery stores

Amazon Ads this week announced the launch of a new in-store digital signage advertising program for its physical retail locations, including Whole Foods Market and Amazon Fresh stores across the United States. This development, revealed in an episode of Amazon Ads' "In the Know" series, marks a significant expansion of Amazon's advertising offerings, bridging the gap between digital and physical retail spaces. Patrick McCormack, Head of Business Development for Physical Stores Advertising at Amazon, shared insights on why, how, and where this new advertising medium is being implemented, as well as its potential impact on both brands and shoppers.

The introduction of in-store digital signage represents Amazon's strategic move to capitalize on the growing trend of retail media networks. As traditional advertising channels face challenges, retailers with physical stores are increasingly leveraging their spaces and customer data to create new revenue streams through advertising. Amazon's entry into this space is particularly noteworthy given the company's vast e-commerce presence and sophisticated advertising technology.

According to McCormack, the decision to invest in in-store digital signage was driven by extensive research and consumer behavior insights. A study conducted by Ipsos in 2022 revealed that 61% of grocery shoppers made spontaneous purchase decisions in the last month. This statistic underscores the potential impact of in-store advertising on consumer behavior at the point of purchase.

Furthermore, research from the Path to Purchase Institute in 2022 indicated that a majority of shoppers notice messaging delivered through brand displays mounted on store shelves and in-store TV screens. These findings suggest that in-store digital signage could be an effective medium for reaching consumers during their shopping journey.

Amazon's in-store digital signage network consists of TV monitors and other digital screens installed in high-traffic areas of their grocery and convenience stores. These screens are designed to engage shoppers as they explore the store, providing an opportunity for brands to connect with consumers at crucial decision-making moments.

One of the key advantages of Amazon's in-store digital signage offering is its integration with Amazon's Demand Side Platform (DSP). As of April 1, 2024, all digital signage inventory at both Whole Foods Market and Amazon Fresh became available through Amazon DSP, including support for all self-service entities. This integration allows advertisers to activate in-store ad campaigns in the same way they manage other media types across Amazon's ecosystem.

The availability of in-store digital signage through Amazon DSP is particularly significant for the Amazon Ads Partner Network. These partners play a crucial role in scaling Amazon's offerings, especially to CPG and grocery brands that distribute their products through Amazon's physical stores. The company is actively engaging with partners to expand brand activation within the signage network.

McCormack emphasized the importance of measurement capabilities in Amazon's in-store digital signage offering. The company has established what it calls a "best in class" measurement methodology to help brands understand the benefits of running in-store signage campaigns. Post-campaign reporting includes key performance indicators (KPIs) such as unique reach, sales uplift percentage, test vs. control comparisons, return on ad spend (ROAS), and new-to-brand customer acquisition.

Amazon's ownership and operation of the physical stores where these digital signs are deployed provide the company with access to valuable data signals. These signals enable accurate measurement of shopper responses to digital signage campaigns. For example, Amazon can track the volume of shoppers in stores each day and the products they purchase during their visits. This data allows the company to estimate the number of times an in-store shopper had the opportunity to see a digital signage ad campaign.

The measurement capabilities extend beyond basic metrics. Amazon has begun the work required to service in-store ad view events in Amazon Marketing Cloud (AMC). This development is the first step towards enabling partners to build unique omnichannel measurement solutions using physical store data. The company expects to make further announcements regarding AMC support later in the year.

For advertisers, Amazon's in-store digital signage offers several potential benefits. CPG and grocery brands sold in Amazon's physical stores can use these ads to reach customers at the shelf, potentially driving mid-to-lower funnel benefits, including sales uplift. Non-grocery brands can also leverage this platform to reach valuable in-store audiences. For instance, an entertainment company could promote a new movie release to families shopping at Whole Foods Market.

Research conducted by Amazon found that this type of advertising can boost brand awareness by 16% and increase purchase intent by 12%. The company reports that its typical in-store shoppers possess characteristics that many marketers seek to target, including diversity, high household income, and an age range of 18 to 54.

The launch of in-store digital signage ads also presents new opportunities for Amazon's advertising partners. The company is offering incentives for brands to get started with in-store digital signage, particularly for first-time buyers. While the offering is technically in a closed beta phase for DSP self-service advertisers, all brands are welcome to participate after completing a simple registration process.

The introduction of in-store digital signage by Amazon represents a significant development in the retail media landscape. It reflects the growing convergence of digital and physical retail experiences and the increasing sophistication of retail media networks. As consumers continue to shop across both online and offline channels, retailers with strong omnichannel presences like Amazon are well-positioned to offer advertisers unique ways to reach and engage with shoppers.

However, the success of this new advertising medium will depend on several factors. Consumer reception and the impact on the overall shopping experience will be crucial. While digital signage can provide helpful information and promotions to shoppers, there is also the risk of creating visual clutter or negatively impacting the store ambiance if not implemented thoughtfully.

Privacy considerations will also be important as Amazon leverages its vast data resources to target and measure these in-store advertisements. The company will need to navigate consumer expectations and regulatory requirements regarding data usage in physical retail environments.

From an advertiser perspective, the effectiveness and return on investment of in-store digital signage compared to other advertising channels will be closely watched. The ability to accurately measure the impact of these ads and tie them to actual purchase behavior could make them an attractive option for many brands, particularly those in the CPG and grocery categories.

The launch of in-store digital signage also raises questions about the future of retail media and Amazon's role in shaping it. As the lines between e-commerce and physical retail continue to blur, Amazon's ability to offer seamless advertising experiences across its various platforms could give it a significant advantage in the increasingly competitive retail media space.

In conclusion, Amazon's introduction of in-store digital signage represents a significant step in the evolution of retail media. By bridging the gap between digital advertising capabilities and physical retail environments, Amazon is creating new opportunities for brands to reach consumers and for shoppers to discover products. As this new advertising medium rolls out across Amazon's physical store network, its impact on consumer behavior, brand strategies, and the broader retail landscape will be closely watched by industry observers and participants alike.

The success of this initiative could potentially influence how other retailers approach in-store advertising and shape the future of omnichannel marketing strategies. As Amazon continues to innovate in this space, it will be crucial for brands, advertisers, and consumers to stay informed about these developments and their potential implications for the retail experience.