By James Avery, Founder and CEO, Kevel
Retail media is in the early stages of a natural evolution: the commoditized, cookie-cutter retail media networks proliferating the market are no longer serving media buyers and multi-channel retailers. Advertisers are looking for unique formats and audiences to target, and with limited ad budgets, they will need to spend their dollars on differentiated retail media networks that promise the best ROI.
The new wave of retail media will see the industry move towards a pure form of performance media driven by unique data sets and robust end-to-end attribution. Retail media networks need to innovate towards leveraging their unique first-party data, OpenRTB standardization, flexible ad tech infrastructure, and combined on-site and off-site media for full-scale attribution.
Industry leaders have been sounding the alarm bell on first-party data for nearly five years now. Retailers know they need to start using their first-party data to boost targeting offerings and increase performance metrics, but often, they don’t know what the opportunity is and why it matters. As many are beginning to come face to face with the big players like Amazon and Google, the pressure to regain control and compete on a more level playing field is mounting.
Leveraging unique first-party data to enhance RMN offerings
One of the greatest challenges that still plagues the retail media space is the inability for multi-channel retailers to utilize their own sophisticated data models, algorithms, and machine learning capabilities within ad serving environments. We need to take steps to allow retailers to leverage their unique customer data and take control of that data’s utilization – to be more strategic about how they use their first-party data to enhance their RMN offerings. Having the data isn’t enough – retailers need to use it for targetable segments like new to brand, recently churned, and likely to buy. Offering these segments for advertisers to target makes their platform more appealing. Advertisers can target groups of customers to enhance their “new to brand” metric, which is exactly the type of incrementality they are hoping to see from retail media networks.
First-party data can lead to better pricing models and drive real ROAS
For retailers to build upon their unique offerings, they’ll need not just specialty first-party data segments, but also a flexible ad tech infrastructure to scale their platform with differentiated ad units all in one place. The problem with commodified ad tech is its rigid structures, not just with the setup and data, but also with the potential to scale diverse ad unit offerings. To stand out on media plans and drive performance, retailers will need to launch cutting-edge ad formats that can help advertisers clearly see ROI.
For example, sponsored brands is a new unit that Amazon and Walmart are offering to enhance advertisers’ incrementality. Advertisers have the option to take up an entire “aisle” of a digital storefront, which can help capture more attention and lead to higher conversion rates. Inflexible ad tech structures won’t satisfy this need for diversified ad formats at scale, all in one centralized tech platform.
OpenRTB will fuel holistic media buying and true performance media
While unique segments and ad units are appealing to advertisers for their media spend, we are also seeing advertisers grow weary of having to go from publisher to publisher, each with their own walled garden and unique standards for ad creatives, copy, metadata, and more. For advertisers to be able to buy at scale, thereby maximizing a retailer’s potential to end up on a media budget, retailers will need to adopt OpenRTB standardization for sponsored listings. With the IAB working group working to tackle this issue currently, we hope to see this standardization coming soon so that advertisers can have a diversified and holistic buying strategy across retail media networks, allowing RMN’s to capture more ad spend than ever before.
While off-site media is becoming a less-effective buying strategy for advertisers, they still will want to see full-scale attribution modeling from their campaigns. If advertisers are limited within the walled garden from identifying how their offsite campaigns impact their onsite performance, they won’t be inclined to keep spending. Retail media networks will need to offer this full-scale attribution to stay relevant to ad budgets.
Despite the massive growth in retail media right now, much of this spend is still going to the big players, like Amazon, due to their massive audience, unique formats, and clear performance-driving reporting to advertisers. Retailers will need to stand out to advertisers in a similar fashion if they want to compete for ad spend.
The retail giants of the ad world will keep eating away at more and more of the retail media market if retailers don’t step up and start differentiating themselves with unique data segments, ad formants, scalable ad buying, and full-funnel attribution. And the longer they wait, the harder it will be to catch up.
