Why retail media’s growth spurt could be stunted by unaddressed data and competition challenges

By Antoinette Siu

Increased spending in retail media is bringing tremendous growth, but it also means more challenges — both old and new — in data standardization, competition and partnerships.

WARC’s Marketer’s Toolkit 2023 listed retail media as the fourth-largest advertising medium with an ad forecast of $121.9 billion globally in 2023, up 10.1% from the previous year. In the U.S., eMarketer projects digital retail media ad spending will grow 25.8% to reach $51.36 billion this year and $61.15 billion in 2024. But with greater fragmentation and competition, not all stakeholders will succeed in retail media.

“The rise of retail media mirrors in many ways the rise of digital in the late 90s,” said Brian Gleason, chief revenue officer of commerce media platform Criteo. In January, Criteo and Magnite partnered to extend retail audiences into CTV advertising.

“Many have a split revenue model where they offer inventory to outside partners to monetize and sell, and after a massive amount of fragmentation in the beginning — with different technology, measurement, and sales partners — only a few emerged in each category,” Gleason explained.

The global pandemic contributed to an acceleration in retail and an explosion of shopping channels. Some growth in retail is also spurred by privacy changes to third-party cookies. Yet in a new Association of National Advertisers retail media report in January, marketers expressed having “mixed feelings” and concerns with RMNs despite the continued spending.

Some of those concerns have been present across the industry, particularly in measurement. In a survey of 138 ANA members (of which 80 say they use RMNs), advertisers said their RMN activations were not fully optimized to deliver expected KPIs. However, 73% of respondents said they expect to be spending somewhat or significantly more on RMNs in the future compared to their current level of spending. As the ANA report notes, “RMNs are here to stay.”

Platform competition and fragmentation

With retailers and non-retailers building their own retail media platforms, greater fragmentation is inevitable. Even Uber and DoorDash have their own traffic and purchase data, and retail giants from CVS to Target are turning their websites into ad platforms.

This is similarly happening in CTV, said Hunter Terry, vp solutions consulting and CTV commercial lead of Lotame. Every streamer is creating its own unique platform like RMNs, simply because “networks are the ones with the data,” Terry said. “Anyone who has customer data is going to package it and sell it.”

Based on ANA’s research, most advertisers use between five and nine different RMNs in their overall marketing programs — resulting in a “lack of standardization across platforms,” respondents said. The survey found 57% of marketers said this was a big challenge in managing RMNs due to the lack of quality and consistency in data and reporting from each RMN and different retailer offerings. This makes it difficult to compare results cross-platform.

Jacob Harrison, director of e-commerce investment strategy at CMI Media Group, a WPP-owned agency, said this competition in the marketplace will increase rapidly. From …read more

Source:: Digiday