Retail Media's Next Level May Not Be For Everyone

And where should media agencies put creators?

It still feels sometimes as though retail media came out of nowhere, even though it’s poised to become a $165 billion global category by next year.

I heard recently at a conference there are between 300 and 400 retail media networks out there. Michael Krans vice president, Macy's Media Network, told me he’d heard there are 600!

That is a whole lot of ‘media companies’ that didn’t exist until a few years ago - and most of them are within companies with little history of being in ad sales, ad tech, ad measurement, etc.

Still, the early playbook has seemed pretty simple to most. Following Amazon’s enormous lead, many retailers have said, ‘what if we started selling ads to companies that already sell stuff with us?’ Or, ‘what if we make it so if you want to sell stuff with us, you pretty much had to advertise?’

Cue the easy money, and instant revenue stream.

However - it’s taking that revenue to another level - and turning retail media into a true strategic business - that will be much harder, and will sort of how many of those 400 or 600 RMNs are in if for the long haul.

According to Krans, who I had on my podcast this week, that will require a few things:

1)Convincing the world, and your industry that you are a full-fledged media company

“We're evolving and trying to shift the mindset a bit amongst our vendor community to think of us more as a strategic media partner, and not just as sort of a cost to the business or tax on the business.” (that’s how many feel about Amazon’s ad business).

“We want to be considered [the same way as they] work with a social media network, like they would work with any other publisher, like they would work with Google.”

2)Get your company fully on board

“I hear from my peers in the industry that there is often friction right between the retail media organization and other parts of a company across merchandising, marketing, site, et cetera,” said Krans, who recently jumped from Macy’s from Walmart Connect.

Indeed, it seems as though every retail company goes through an evolution when they start selling ads, including figuring out where to put its media business, how much to invest in it, how not to piss of other teams with different KPIs, etc. Macy’s already has 70 people working in it’s media business, per Krans, and the big game changer has been integrating the group into the website/ecommerce team.

“We sit within the customer and digital organization,” he said. “That's a huge difference between, where I came from… you I didn't have exposure directly into the e -comm organization here. It's merged into one. So I have view into everything that's happening on an hourly basis with the business… there's much more collaboration between site merge, site editorial, the customer team, personalization, loyalty, CRM.”

3)You have to go bigger than just selling text ads to shoppers

Macy’s Media Network has deals with Meta, Snap, TikTok, Pinterest (which could get potentially complicated, because Macy’s is also a big advertiser on those platforms). Plus, they are working to integrate their RMN data into CTV buys and even audio - knowing those are not going to drive conversions the same way that ‘classic’ retail media buys will.

“When a vendor is using the full suite of our onsite tactics plus social plus programmatic display plus CTV, you see a halo effect across all tactics,” said Krans, who added that right now, “CTV is a upper funnel tactic., but [the more you] can measure back, it is in a way a performance vehicle.”

4)Brands are going to want to tie everything together

“You see the dollars starting to shift,” said Krans. “I think there is a consolidation of media budgets coming together. It's not just shopper marketing, media. It's coming together. It's coming together and you see more and more of the big brands bringing their retail media planning and buying business into their AORs.”

The winning RMNs need to get ready for that shift. “I think inside companies, there's a lot of collaboration that still has to happen. You know, the salespeople over here with their shop or marketing budgets, and then you've got the marketing team. And it's just about those two teams inside of a company coming together and looking at the media spend holistically, what's the best thing for the company?”

So far so good for Macy’s, which inQ1 of this year, generated $37 million worth of revenue for the company, up about 20 % from last year. My question is, how many other retailers will have the resources, the commitment from the top, the revenue growth potential, the ability to hire and bring in the right tech, to go all in?

Check out the full interview here.

The Creator Economy vs The Media Agency Economy

One of the narratives YouTube has been pushing this year is that top creators are the new media moguls, and should be treated as such by Hollywood and advertisers. And based on some of the audience numbers for top YouTubers - they make a really good point.

But where do creators fit in the media allocation hierarchy? After all, it’s hard for some streaming companies to get considered as ‘real TV’ versus the incumbents.

As for individual media creators/franchises - do they belong in - and draw budgets from - TV dollars, influencer dollars, social media cash? And can media agencies even level these creators up if they wanted to, given the apple and oranges metrics that TV and creators rely on?

As part of my ongoing series (in partnership with the folks at VuePlanner) I chatted recently with Kevin Blazaitis, President, Creo at Omnicom Media Group about these topics and more.

Some highlights:

• On the planning process - “[Top creators] don't plug into the same kind of buckets as easily as the traditional 30s in TV. It's a different strategy. But I think that's part of the message of really what we've been talking with our brand partners about is how to get influencers moved upstream in the planning process… moving it up in the funnel and understanding at planning [stages that] we will actually have influencer assets to inform the brand strategy in a way that previously was related reserved only for full production shoots.. and now that's very different."

• On metrics: “I'll say measurement is the biggest challenge right now.” For example, “how do you treat a view on YouTube TV versus how do you treat a view on YouTube? Like, those are two different metrics. So, measurement and bringing that to the level of what you normally see in media, that's a big, big challenge and a big emphasis for us right now as well."