With C-suite leaders from iconic brands keynoting sessions, leading workshops and attending networking events, Brandweek is the place to be for marketing innovation and problem-solving. Register to attend September 23–26 in Phoenix, Arizona.
As retail media soars to the top of every industry event’s agenda—and list of most-used buzzwords—developments are less settled behind the scenes at many retail media networks.
Based on conversations with six sources—including industry analysts, media buyers and retail media executives—three major pain points have emerged that RMNs and their partners grapple with as the category grows: internal silos, measurement and product investment.
As global retail media ad spend is forecast to reach $165.94 billion by 2025 (per eMarketer), how retailers navigate these challenges will define how much of that is theirs and their place in the race to catch up, or reach second place, behind Amazon.
Challenge 1: Internal tensions
Retailers’ merchandising teams—which have historically worked with brands to negotiate in-store product placement and allocate shopper marketing dollars—are operating independently from retail media teams, which are responsible for setting up a new revenue stream associated with using data to sell ads and audiences onsite, offsite and in-store. Often they are talking to those very same brands.
“We want to bring a ‘One Target’ approach to any brand that we’re working with,” Sarah Travis, president of Roundel, told ADWEEK ahead of Cannes Lions. “To do that, the team that’s covering Procter & Gamble at Roundel needs to be in lockstep with the teams in merchandising working with P&G to go out to market and work with P&G on one approach for their business with Target.”
The negative impacts of that siloed environment mean that brand marketers, who have the data telling them what works and what doesn’t, are struggling to holistically talk with both of these teams at their retail partners to quickly pivot and capitalize on what’s working.
This sends mixed messages to advertising partners, according to one buyer who spoke with ADWEEK on condition of anonymity.
Some retailers believe that “if you want to keep your products on the shelf, you should play nice here,” the first ad buyer said. From the brand perspective, that layers retail media onto the slotting fees that retailers charge for prime shelf space.
Retailers are working to bridge the gap between merchandising and media by building cross-functional teams, but it’s a process that media buyers say isn’t complete at most RMNs.
Challenge 2: What to measure, and how
As commerce—a performance-driven action—becomes more embedded into brand marketing through products like shoppable ads, the best way to measure what’s working also needs a facelift
While return on ad spend is still the main measure in retail media, different marketing goals require different kinds of measurement, regardless of whether media has a shoppable component.
“I would edit the statement that retail media collapses the purchase funnel,” said Kristi Argyilan, senior vice president of retail media at Albertsons Media Collective. “It has the potential to. Until we do better content, until we really move up the brand chain and can publish these really rich brand messages that then lead to an option to buy, I don’t think that we have a right to say that we’ve collapsed the purchase funnel.”
Still, that kind of measurement is challenging, especially for companies that are early in their journey into commerce media.
And, go figure, it can take the brands pulling back on spend to spur that measurement change within growing RMNs.
“When I have helped build these capabilities in my career, I often knew where I needed to invest to keep pace with the big RMNs. But it wasn’t until an advertiser showed up with a scorecard and told marketing leaders that we were behind—and that it could limit their ability to invest in our network—that the development investment was unlocked,” said Derek Nelson, senior director of retail media consulting at media and measurement firm Ovative Group. “Partner feedback is truly a gift.”
Challenge 3: It’ll cost ya
To attract more advertisers, retailers need a different way of thinking about media—and they need to invest in the kind of tools that media buyers want to use.
This means listening to buyers, building out more programmatic and measurement capabilities and investing in the media product itself so that onsite ads are ones that brands want to buy. U.S. retail media spending will grow 30% in 2024, largely driven by offsite programmatic retail media platforms, according to Advertiser Perceptions data from March.
Several major RMNs are still operating without simple measurement tools, the first buyer said. This can make it hard to understand, say, how product listing ads are performing on a retailer’s website.
Ways to help retail media compete across channels include offering features like page ranking analysis by keyword over time, access to affinity data, audience insights tied to loyalty programs and data insights tied to the register, inventory and store sets, they explained.
Retailers also need to invest within their stores to take advantage of much-hyped in-store digital ad placements. And TV walls are just one element.
In-store “will be in high demand from advertisers [over the next couple of years],” said Steve Baxter, executive vp of retail media at Ovative Group. “Scaling in-store opportunities will be capital-intensive, so be confident that your future in-store ad revenue projects will be incremental versus cannibalizing your existing onsite and offsite digital ad revenues.”
