Brian Mandelbaum, CEO at Attain.
It’s no secret that retail media is reshaping the advertising space in a big way: The retail media sector is now a $50 billion market, up from $13 billion in 2019.
Large retailers like Amazon, Kroger, Walmart and Target have become their own data companies, where their owned retail media networks (RMNs) use consumers’ first-party data from transactions and receipts to target, deliver and measure ad campaigns for brand partners who buy in.
As CEO of an all-in-one consumer data platform, I’m constantly thinking about the explosive growth in the retail media space and how better data can improve media and measurement outcomes for brands and retailers alike.
RMNs help the advertising landscape.
RMNs provide brands with first-party data they need to not only reach consumers effectively through advertising but also measure that effectiveness while remaining compliant. As advertising technology evolves, understanding what drives a sale is much more valuable to marketers than receiving a proxy for the performance of their media spend.
In light of third-party cookie deprecation and the changing ad tech landscape, RMNs were immediately seen as a saving grace for brands. Initially, RMNs seemed to side-step many of the requirements in place for existing ad tech platforms to even be considered on a media plan. Though RMNs undoubtedly offer benefits to brands, they’re still nascent platforms and demand considerable budget and manpower to execute.
And while retail media networks aren’t going away, they can’t stay the way they are. Here are three truths about the state of RMNs today and what needs to change to make the ecosystem more fair for brands.
Truth 1: The retail media network landscape is fragmented.
For all its benefits, the current retail media network system is flawed in part because brands that buy in to an RMN can only see one slice of overall spending. This leads to fragmented strategies across retailers, instead of one comprehensive strategy.
If a brand works with one big retailer’s RMN, they can only receive data and performance from that single retailer. But most consumers don’t shop at just one store. The current RMN system is like trying to put together a jigsaw puzzle with only the red and blue pieces (or rather, the Target and the Walmart pieces). I believe brands need to piece together multiple data sets from RMNs to get a more accurate view of their customer.
Marketers also get strapped with inefficiencies when it comes to creative asset development and media buying. Each retailer network requires different asset specs and standards. To run the same creative asset on multiple platforms, media buyers often must duplicate their efforts to meet retailers specific and nuanced requirements.
Long-term, I believe this is an unsustainable situation for brands that can’t possibly buy into every RMN and whose already time-strapped media teams can’t handle workloads multiplied across several networks. Even with the performance efficiencies brands gain by working directly with retailers to target consumers, it seems that brands need access to a broader spectrum of retailers’ data to make their investments worthwhile.
Truth 2: Retail media lacks transparency and doesn’t measure up to industry standards.
As part of their buy-in, brands make deals to advertise within an RMN’s owned network of media, through digital advertising and marketing network opportunities. But many in the industry are unimpressed with how retailers report campaign results.
RMNs currently provide home-baked performance metrics and don’t typically measure incrementality that accounts for all ecosystem-wide media buys. As a result, brands don’t really know how their campaigns measure up to their other non-RMN strategies.
Industry groups, including the ANA and the IAB, have been called upon to help build standards of measurement and transparency around RMNs. Since these industry groups have yet to touch the retail media sector, I believe there exists plenty of opportunity to lay the groundwork on basic needs for brands, but it will take time to see meaningful change.
In the near term, I predict that brands will find it challenging to compare RMN performance to their other media strategies without measurement standardization.
Truth 3: Despite all their limitations, brands still pay a premium.
While the price for RMN partnerships varies, some industry experts have cited they charge three times above industry standard for access to their network. These pros have likened the cost of RMNs to “tithing to the church” to activate retail media and reach consumers more effectively.
At a premium cost, advertisers should expect premium performance. But I find that RMNs today cannot deliver transparently on even basic industry-standard metrics. Can brands justify the cost of engaging with RMNs long-term when retailers still hold all the cards?
The future lies in standardization and silo-breaking.
It’s clear from these truths that change needs to happen in the retail media ecosystem if brands want lasting, holistic benefits from their partnerships. Retailers have always had manufacturers in a chokehold when it comes to data access, but now brands can pick and choose the networks where they dedicate budget. The retailer that can develop advertising products and technology that’s on par with the best platforms in ad tech, while adhering to the same measurement and performance standards, will ultimately come out on top.
It’s time for brands to demand a more even playing field. The hope that industry groups implement measurement standard RMNs is a start—and this should be a relatively easy solution, considering measurement standards are upheld elsewhere in the advertising industry.
But brands should also be thinking ahead to a future where retail media isn’t just another walled garden to navigate. To start, brand leaders can step up to assist industry groups in developing RMN measurement standards and demand accountability from retailers when making RMN deals. While the industry awaits measurement standards, consider supplementing RMN insights with other consumer data alternatives that offer snapshots of more than one retailer’s ecosystem.
The future of retail media should be media-agnostic and retailer-agnostic, not just for the benefit of brands, but for better advertising outcomes that prioritize consumer preferences and privacy.
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