Amazon Dangles Retail Media in a Box - Will Any RMNs Be Tempted?
And why 2025 is the year of 'aggressiveness' in marketing (real men CMOs are back!)
For the past few years, as retail media ad spending has exploded, along with the number of companies rolling out retail media networks, many have been wondering:
Are we ever going to see consolidation?
Who, if anyone, would facilitate such a rollup?
Last week, amidst CES craziness, Amazon kindly volunteered. The big question is, whether any of the other established RMNs decide to marry the devil they know, or keep growing their own ad businesses along the way.
To review, last week Amazon announced Amazon Retail Ad Service, which lets retailers show ads on their sites and apps using Amazon’s tech. It’s basically an RMN in a box.
"This is Amazon saying ‘holy hell, we've got all the building blocks that a media network or an ad network would need. Why don't we just put these in a nice little box and sell it as that kind of toolkit or DIY [offering]?’” said Mark Wagman, partner at UTA who heads up Medialink’s data and tech practice on my podcast this week.
Theoretically Amazon’s move has the potential to seriously shake up the booming category (one that GroupM pegs as a $177.1 billion global market) - albeit with a lot of questions and caveats.
For example:
If you’re say a CVS or a Kroger, how crucial is it to run your own RMN versus just getting a check from Amazon each month?
On the one hand, most of the companies that have pushed into retail media love the high profit margins, and the potential for getting even more value out of their data.
On the other hand, these RMNs are investments, from people to tech to security. I suppose it depends on how strategic they view their RM businesses, and how much long term growth they see - versus simply handing operations over to a very skilled rival?
“If you listen to a lot of these companies talk about retail media, they like the margins, they don’t necessarily like advertising,” said digital ad veteran Jeremy Hlavacek. “So if this can deliver them the same or a similar margin without having to run a non-core business, I think it would be a no-brainer for RMNs 5 through 50.”
Ok, but here’s analyst Andrew Lipsman, who pens Media, Ads + Commerce, with an almost diametrically opposed take:
“Large retailers are extremely unlikely to share data with Amazon to let it power their RMNs,” he said. “Amazon has tried a similar strategy with licensing their in-store tech (Just Walk Out, Amazon One, etc.) with little traction. It’s a non-starter for bigger retailers.”
“It’s telling that Amazon went to market in the PR with SMBs. That’s the likely market for this offering.”
Fair enough. Now here’s another question:
If you’re a Kroger or Walgreens or whoever, don’t you worry about making Amazon stronger? Or are you big enough on your own to believe you can contend over the long haul?
“Amazon's argument here to some degree, is that the data and tech is largely or getting to a point of commoditization in terms of functionality and what it can do,” said Wagman. “If you look at these retail media networks, while some are extending onto CTV, some have built better shoppable units, largely these are e-commerce players with ads.”
“Again, with Amazon playing in this space, you always run that risk of, ‘do I want to be a retailer who competes with Amazon using Amazon's tech?’ I think that they have largely gotten over that, especially in the cloud cloud area.”
More questions:
If I’m a smaller retailer, or really any brand with solid data, and I haven’t pushed into retail media yet, wouldn’t it be easier to let Amazon run the show?
“I think the most important and the most valuable pieces of these technology platforms and tools are the integrations into the demand side because retail media is not something that if you build it, they will come,” added Wagman. “There are more impressions than marketers know what to do with. You need a sales team. You need a value prop. You need direct integrations, etc. Me spinning up ads on insert retailer website today without that plan, you're lost from day one.
If you’re a buyer seeking simplicity and consolidation, would you prefer your retail media budgets to flow through a third party ad tech company such as The Trade Desk or Criteo or Amazon? Do you want to further ‘walled gardenize’ the space, or are you less concerned about that because Amazon is so effective and technically proficient?
“If I run ecommerce and ads for a CPG like Crest, do I want to take meetings with 20 RMNs?” added Hlavacek.
Last few questions:
When do Walmart or Instacart roll out a similar offering, one that may seen less scary to brands wary of empowering Amazon?
Are regulators paying attention here? (Probably in 10 years).
2025 is the Year of Big Marketer Energy
A few more takes from my CES post mortem with Medialink’s Wags:
Let’s be men again!
CMOs, “are held to the fire,” Wagman said. “You need to show results today, whether you're selling cars or streaming downloads or apps or subscriptions, whatever it is, you, you are Mr. And Mrs. Head of growth for these organizations. So aggressiveness is maybe the word I like to use right now in terms of brands’ [strategies in 2025].”
AI is for winning
“I think if last year was, we were waiting for a recession, maybe it didn't come,” Wagman said. “We were waiting for what would happen in the election. A lot of people kind of waited to see how that would play out. We talked about AI again as a cost saver. That's where I think that like a lot of brands this year are tired of waiting, right? Like, yeah, like let's do something now. Maybe AI is for growth and competing.”