As retail media networks have grown and diversified, so have the problems in adtech. Ad fraud, made-for-arbitrage, and AI-generated content farms are multiplying, riddling the once “easy” task of programmatic buying with brand safety pitfalls. Retail owned and operated properties like displays in a Walgreens, audio broadcast in a Walmart store, or a banner ad on Amazon.com offer a welcome respite from the messy open internet, where unsafe and fraudulent content can slip past defenses in unknown quantities.
Retail Media Signals Power Better Advertising Experiences
For users, a good experience means fewer irrelevant ads, fewer third parties recklessly tracking and sharing personal data, and less redundant clickbait. Retailers hold vast repositories of consented first-party data — data on audiences that can be tested, confirmed, and augmented against each purchase at a SKU level.
Take, for instance, a retail media platform like Amazon. It knows what I majored in, the make and model of my car (and the likely condition of its wiper blades), and approximately when I went from reading about parenting to ordering diapers for same-day delivery. There’s a good chance that Whole Foods could calculate how much Cabot Sharp Cheddar is in my fridge right now and when I will need more. Moreover, I consented to sharing this data with them — even opting in to a paid loyalty program in the form of Prime membership. I share this attribute with 167 million American households.
Advertising Off Site Remains An Untapped Opportunity For Retail Media Growth
Even with all this consented data, heavily laden with intent, Amazon can only reach me, and my household, with a couple of dozen impressions across its retail properties in a given week — less than five cents worth of advertising revenue. It will need to think beyond the SKUs it carries and the app/web experiences it owns to form a complete picture of each retail consumer. This means not only finding digital placements and programmatic real estate to place ads for CPG brands retailers carry, but also using those powerful retail signals to support non-endemic categories. Reaching consumers off site means more opportunities to reach customers, more available media buying opportunities for existing advertisers, and more advertiser verticals to serve.
Publishers And SSPs Can Benefit From Getting Off The Sidelines
Throughout the growth of retail media, publishers and supply-side platforms (SSPs) have largely stood on the sidelines. They have warily eyed retail media as a competitive threat for advertiser dollars. Yet, retail media networks and publishers are mutually locked into the existential quest to drive higher CPMs with better measurement, less fraud, and a more rewarding user experience that isn’t piled high with clickbait and poor quality ads.
Users would be both better served and less annoyed by ads featuring products they already buy, genuinely need, or are likely to be interested in, with a simple and identifiable way to manage consent (opt-out of Kroger is likely easier and stickier than Outbrain). The benefit for Kroger is an increasing share of the transaction’s value, amplifying margins beyond a meager 10% of media spend. A fair exchange when one considers the potential of well-used shopper data.
By 2025, winners and losers of retail media will begin to emerge. Retailers comfortable with a small, endemic, onsite business will book steady revenue with little growth. Others are announcing new offsite offerings, in many cases bolstered by vast troves of shopper data. Their growth will hinge on their ability to turn shopper behavior models into verticalized, intent-based solutions with ROAS that compete favorably against existing media buys and measurement models. Likewise, many publishers are reeling from lackluster financial performance or facing M&A, searching in earnest for ways to capitalize on data deprecation while continuing to maximize yield. Retail media’s data and ads are key to driving incremental ad revenue with quality over quantity.
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