Retail media networks and their role in omnichannel strategy
Last week, I was at the WPP Commerce conference with several retail thought leaders discussing the trends and important strategic plans taking shape in the shopper and commerce categories. The Miami sun and the (un)conference format of brainstorming sessions resulted in the exchange of great ideas.
One of the most important topics discussed during the conference was retail media networks. Multiple sessions and product demonstrations centered around the topic illustrated the increasing role these networks play in media strategies and budgeting. Retail media networks are the self-service advertising platforms that span individual retailers or a multitude of retailers. The industry expected that retail media networks would be on the rise in 2020, but in regard to their popularity among retailers, we’re now seeing increased prominence in shaping agency discourse as creative and strategic tools.
In the conventional supply chain model, the retailer does not create the demand, but the supplier (brand) does. But, as retailers have become aware of the shortcomings of third-party networks to create demand in general and sell ads in particular, the ‘retailverse’ has decided to go to market with a compelling in-house media offering for brands. They increasingly started to leverage the value of the media and data assets they have: thus, the rise of retail media networks.
These networks enable and empower retailers to build a media business. Amazon introduced its media business in 2012. Growing it to be nearly a $5 billion advertising business, Amazon challenged the big players in the ad space like Google and Facebook. Walmart and Target followed suit in 2019, and more retailers are expected to follow in 2020. In January 2020, Microsoft launched a self-service platform, Microsoft Promote IQ, to help brands advertise directly on big retailers’ websites.
What’s the benefit of retail media networks?
- Help retailers generate additional revenue.
- Empower retailers to curate and execute more agile marketing and creative strategies, particularly in the ebbs and flows of the market.
- Satisfy the key brands that retailers have.
- Give more control and insights to retailers and brands.
- Help retailers blend paid placements with the website experience.
- Optimize the retail footprint.
- Provide better overall experiences for the consumer.
- Facilitate deeper relationships between retailers and brands, and retailers and category leaders.
- Help brands control the look and feel of the products online.
- Help brands better manage their campaigns and measure ROI.
What does it mean for omnichannel strategy?
The APIs on retail media networks provide a deeper understanding of the customer. Amazon, Walmart, and Microsoft all provide API connections that allow users to “dig deeply into campaign performance, set up automated actions, such as campaign scheduling, and bid-rule-based optimization or identify out-of-stock products.” But, these new networks pose strategic questions about their use, management, and measurement by the brands or the retailers. Are these networks another touchpoint on omnichannel or brand collaboration platforms? How do brands strategize and measure these new networks within omnichannel strategies? How much control should the brands (advertisers) have on the platform? How would the platform integrate with the search engine on the website (e.g., How many sponsored ads per search?)
From the retail perspective, this intermediation of media business looks and sounds very attractive. Yet, it is not as easy to build a media business or an ad platform. Most of the bigger players like Google, Amazon, and Facebook have spent years perfecting their brand ad platform, managing very demanding requests. So, is implementing a retail media network a realistic strategy for all retailers? What are some other business models in this space similar to Microsoft Promote IQ? Other strategic questions and tactical decisions these new networks create for marketers and advertisers include:
- Own or license retail media networks?
- Retailer media campaign or brand campaign?
- Shopper media or national media?
I’m continuing to watch this space as the landscape evolves in an effort to answer these questions and more. So stay tuned!