Retail Media's 'Through-Line'
As the business grows, so do category leaders' advantages
It’s becoming a lot harder to compete in retail media.
It’s true that the sector continues to boom, and only seems to be becoming more crowded. Yet Flywheel’s SVP of Commerce has written recently about a ‘retail media’ hangover during which:
“Retail media spend growth ≠ retail sales growth (and it's not close)”
“Brands are asking harder questions”
“Retailers are feeling the margin pressure”
Indeed, it seems that the level of investment needed, as well as the multimedia assets required to compete on a high level, would seem to make consolidation not only likely, but necessariy in this category. In other words, go big or get stomped.
And when you’re talking about hundreds of networks - surely that’s what buyers would like, right?
But as Sarah Hofstetter, chairwoman at the Publicis-owned Profitero put it, “There’s a difference between needs and wants,” she said.
Hofstetter was my guest this week on the Next in Media podcast. Given her role as a consultant not only to brands, buyers and many retail organizations, she has a bird’s-eye view of how the category has evolved.
To put it simply, the big players are only getting stronger. For instance, when a company like Amazon broadcasts both the NFL and soon the NBA and hosts a four-day Prime Day, or when a giant like Walmart owns access to millions of TV sets in people’s homes, “what does that mean for our Target? What does that mean for Kroger?” Hofstetter asked.
“And frankly, what happens when you get to the fourth, fifth or sixth retail media network, let alone the ridiculous long tail?”
Hofstetter compared the market to where social media was in its early days, when a slew of smaller competitors briefly deigned to compete with Facebook (Sisterwoman anyone?), before quickly going by the wayside. “It’s almost like, there's the tier one and there's everyone else.”
So that screams for a big retail media rollup, right? Isn’t this market getting too rich for many RMNs’ blood?
“There's a difference between needs and wants,” Hofstetter said. “Buyers would love consolidation. But here's the thing, the people buying media are not consistently the same people that are negotiating shelf space in store.”
Media buying today? Complicated. Fragmented. Risky.
That’s why EX․CO created Mastering the Multiscreen Mix—a field-tested playbook built for brands and agencies who want to make better decisions across screens. Learn where the waste is, what actually works, and how to maximize your ROI across CTV, DOOH, and digital video. It’s your cheat code for the multiscreen world—get the guide now.
Those shelf-space negotiator people have different motivations, and incentives, than media buyers. As Dentsu’s Brian Monahan put it in a recent Retail Media report I worked on with my partners at Triplelift, “Most brands don’t actually need retail media’s targeting data…What retail media networks really have is the relationship with the merchants—and that’s what’s powerful.”
When you talk to experts in the Retail Media space, you often hear how retail executives like to leverage their shelf space for more ad spending, and vice versa, and neither said wants to give up their power.
“CPG brands look at this space and say, ‘I only have so much money to spend and I don't really wanna get into the nitty gritty of the long tail at XYZ regional grocer,’” said Hofstetter. “But, if you're responsible for the end-to-end strategy at a retailer, in store and online, do you want a consolidator that's going to go horizontally across all different retailers [to buy ads]? How much does that make your life really easier?”
Still, at a recent conference, the talk was that running retail media businesses is only becoming more complicated and taxing, requiring heavy data management resources. In a world where some players are talking about employing “trillions of signals,’ or ‘petabytes of data,’ it’s not a game for the meek, which might seem to cause some players to bow out once things get tough.
“This isn’t the world where you push Sponsored Products and watch organic sales skyrocket anymore, wrote Feldman. “Those glory days are over. This is about mastering the brilliant basics across every omnichannel touchpoint to impact and drive actual business results.”
Omnichannel seems to be the key word. Over the past few days, I’ve been hearing more about the need for data “through-lines” or “through-funnel” measurement - meaning the most successful RMNs need to be able to identify and cater to a person in multiple stages of product discovery and shopping.
That seems like a tall order for Home Depot or 7-11.
“Retailers that are winning are the ones that are creating the most flexibility, both in the ability to buy, but also, you know, based on where you are on your journey,” said Hofstetter. “As a media buyer, I could say my top three places I'm gonna be spending are gonna be Walmart, Google, Meta, and Disney. That's the new normal, which is a little bananas, right?”
You might throw in the likes of a Chase, a Mastercard or a Paypal, which have that ‘through-line’ by seeing a whole range of a customers’ transactions. Yet again, they don’t have their own inventory, for the most part.
Which may or may not matter over the long haul, as more RMNs look to push their data ‘off network.’ How many can do that credibly? Well, one buyer, Rachel Dillon -Executive Vice President of Sales & Marketing at Strategus - thinks there is lots of room.
“I think there’s still a lot of progression to happen,” she said. “We did an internal assessment to determine what percentage of the retail media (RM) landscape we currently cover. It's still very fragmented in the programmatic space.”
“We reach about 75% of the shopper market, but only 25% of the retail media market—primarily because of limited reach. We're just at the very front end of this evolution.”