Can retailers grab more CPG ad dollars without repeating digital media's mistakes?
A new article on Marketing Dive reports that while firmly in a boom time -- U.S. spending on retail media doubled between 2020-21 -- the category increasingly contends with saturation and bumpy transitions.
Retailers building their own platforms to sell and place ads for marketers is a business firmly in its boom period, with the looming deprecation of third-party cookies and demand for alternatives to digital's old guard fueling a surge in interest. With a proliferation of retail media networks from big names like Walmart, Target, Home Depot and Macy's -- and some offerings hitting new levels of maturity -- consumer packaged goods marketers are expected to shift more budgets to platforms that can closely tie advertising messages to the point of sale and tap into a wellspring of first-party data.
Despite that promise, retailers already threaten to repeat some of digital's past mistakes, particularly in regards to ad volume. At the same time, companies with historical specialties in bricks and mortar face pressure to build out complex technical infrastructure on a compressed timeline. The upshot will be a period defined by a surfeit of activity as retailers try to avoid leaving money on the table, and accompanying that gold rush, a lot of trial and error.
The race to find a proper replacement for cookies, which are expected to be phased out sometime in 2023, will push brands to seek other outlets to reach shoppers, with retail media primed to benefit. In response, the list of retailers standing up some form of ad network that weds physical and e-commerce shopper data has grown long: Walmart, Target, Kroger, CVS, Best Buy, Home Depot, Lowe's, Macy's and Dollar Tree are among the many vying for a piece of the pie. That's leaving out Amazon -- still the model many are following -- which itself is realigning its advertising priorities to chase larger brands as ad sales continue to be a top-performing segment, as Insider reported. Services are also quickly evolving to incorporate cutting-edge features like data clean rooms or cloud-based management.
There are plenty of gaps that need to be closed as mastering digital marketing remains a tall order for internet natives, let alone companies with little tech backbone and the need to demonstrate true omnichannel finesse and the much-ballyhooed "closed-loop measurement." The pandemic forcing retailers to jump to e-commerce has clearly demonstrated the pitfalls of falling short on the customer experience end. As retailers make the uneasy transition, solutions providers see an opportunity. Dunnhumby just introduced a solution called Dunnhumby Sphere that tries to streamline retail media functions like audience targeting, media booking, forecasting and measurement. The idea is that retail media is too fragmented and carries too much disconnect between platforms and their partners -- a familiar story to emergent pockets of digital marketing. Deeper integrations with tech providers could be in the cards for brands chasing the structure of established advertising heavyweights.
Walmart made waves last year when it teamed with The Trade Desk, a leading independent ad-tech firm, to develop its own demand-side platform. Walmart DSP, which went live around the holiday season for select partners, provides access to The Trade Desk's inventory across display, streaming, mobile, audio and connected TV and draws on shopper data from Walmart's website, mobile app and 4,700 brick-and-mortar locations. It serves as a significant test of whether a retailer can scale an ad-tech stack to rival the triopoly of Amazon, Facebook and Google -- and may serve as a model for rivals to follow in casting a wider advertising net.
CPGs have already voiced concerns that retailers could be propping up new walled gardens even as they promote themselves as averse to the old ones. Though it's an increasingly crowded field, retail media could end up dominated by a select few that have both the physical footprint and digital savvy to match the scale large marketers require. While reservations persist, it will be hard for CPGs to ignore the pull of retail media. Cookies and other changes to identifiers will weigh heavier on performance and measurement during a period where improving those skills is paramount. And retail media, when based on quality data, ultimately promises something that the murkier areas of the digital world frequently struggle to prove: Someone at the other end is actually searching for something to buy.
Retailers building their own platforms to sell and place ads for marketers is a business firmly in its boom period, with the looming deprecation of third-party cookies and demand for alternatives to digital's old guard fueling a surge in interest. With a proliferation of retail media networks from big names like Walmart, Target, Home Depot and Macy's -- and some offerings hitting new levels of maturity -- consumer packaged goods marketers are expected to shift more budgets to platforms that can closely tie advertising messages to the point of sale and tap into a wellspring of first-party data.
Despite that promise, retailers already threaten to repeat some of digital's past mistakes, particularly in regards to ad volume. At the same time, companies with historical specialties in bricks and mortar face pressure to build out complex technical infrastructure on a compressed timeline. The upshot will be a period defined by a surfeit of activity as retailers try to avoid leaving money on the table, and accompanying that gold rush, a lot of trial and error.
The race to find a proper replacement for cookies, which are expected to be phased out sometime in 2023, will push brands to seek other outlets to reach shoppers, with retail media primed to benefit. In response, the list of retailers standing up some form of ad network that weds physical and e-commerce shopper data has grown long: Walmart, Target, Kroger, CVS, Best Buy, Home Depot, Lowe's, Macy's and Dollar Tree are among the many vying for a piece of the pie. That's leaving out Amazon -- still the model many are following -- which itself is realigning its advertising priorities to chase larger brands as ad sales continue to be a top-performing segment, as Insider reported. Services are also quickly evolving to incorporate cutting-edge features like data clean rooms or cloud-based management.
There are plenty of gaps that need to be closed as mastering digital marketing remains a tall order for internet natives, let alone companies with little tech backbone and the need to demonstrate true omnichannel finesse and the much-ballyhooed "closed-loop measurement." The pandemic forcing retailers to jump to e-commerce has clearly demonstrated the pitfalls of falling short on the customer experience end. As retailers make the uneasy transition, solutions providers see an opportunity. Dunnhumby just introduced a solution called Dunnhumby Sphere that tries to streamline retail media functions like audience targeting, media booking, forecasting and measurement. The idea is that retail media is too fragmented and carries too much disconnect between platforms and their partners -- a familiar story to emergent pockets of digital marketing. Deeper integrations with tech providers could be in the cards for brands chasing the structure of established advertising heavyweights.
Walmart made waves last year when it teamed with The Trade Desk, a leading independent ad-tech firm, to develop its own demand-side platform. Walmart DSP, which went live around the holiday season for select partners, provides access to The Trade Desk's inventory across display, streaming, mobile, audio and connected TV and draws on shopper data from Walmart's website, mobile app and 4,700 brick-and-mortar locations. It serves as a significant test of whether a retailer can scale an ad-tech stack to rival the triopoly of Amazon, Facebook and Google -- and may serve as a model for rivals to follow in casting a wider advertising net.
CPGs have already voiced concerns that retailers could be propping up new walled gardens even as they promote themselves as averse to the old ones. Though it's an increasingly crowded field, retail media could end up dominated by a select few that have both the physical footprint and digital savvy to match the scale large marketers require. While reservations persist, it will be hard for CPGs to ignore the pull of retail media. Cookies and other changes to identifiers will weigh heavier on performance and measurement during a period where improving those skills is paramount. And retail media, when based on quality data, ultimately promises something that the murkier areas of the digital world frequently struggle to prove: Someone at the other end is actually searching for something to buy.
