HMV has appointed a new digital marketing agency to help it reach niche audiences online.

R.O.EYE specialises in performance marketing and will help HMV target online fan communities. By targeting niche audiences, including fans of Harry Potter and Star Wars, the music and film retailer hopes to promote its 'Steelbook' exclusives – brand new releases and re-released classic films on Blu-Ray in commemorative tins, featuring bonuses such as extra footage.

The agency will target the fans in dedicated online hubs as well as via Twitter and Facebook in hopes to improve sales. Last week, the retailer posted a pre-tax loss of £8.8 million for the year to 2 January 2016.

Steve Partridge, head of eCommerce at HMV, said: "R.O.EYE is helping HMV reach niche online communities to drive DVD sales. We're using a lot of social channels to educate appropriate audiences about new, exclusive and relevant releases."

HMV is also using Facebook to engage with customers who browse its website but abandon their baskets. R.O.EYE's technology allows retailers to ensure their product databases are correctly formatted for Facebook for retargeting.

Mark Kuhillow, founder of R.O.EYE, added: "Agencies usually rely on retailers to reformat their data for use with social media channels, but the technology we’ve developed takes that barrier away – improving efficiency and helping them see sales uplifts far sooner. Being able to plug your catalogue in opens up new opportunities. HMV is also using Facebook to drill down demographically and put relevant releases in front of people."

Last week, HMV recorded a decline in revenue and profits. Operating profit dropped from £15.2 million to £11.7 million, while revenue declined from £366 million to £325 million.

Zoe Mills, analyst at Verdict Retail, said the retailer's troubles are far from over.

"The popularity of Spotify and Apple music show no sign of slowing, and this does not bode well for HMV over the coming years, as it will struggle to find its place in the digitised sector," she said. "Yet, it has the potential to benefit from the popularity of streaming services rather than oppose change - with its good standing in the sector, it could create or link up with a music streaming service, allowing it to effectively boost sales and rejuvenate its proposition."

Mills described how to date, HMV has ploughed investment into its 128 stores in the UK and Ireland, improving layouts and offering live performances to try and improve footfall.

"While its main threat to market share comes from online pureplays such as Amazon, the convenience of grocers is also a threat, with retailers such as Asda and Sainsbury’s still offering broad instore ranges of physical music & video at competitive prices," she added.

"It will need to do more than make do in the future, if it is to return to the glory days of its past, it must drive profitable sales of physical media at its stores – a tough ask – while simultaneously creating a viable online streaming proposition."