Will Retail Ad Revenue Match The Hype?; Help Us, Shopify Ads, You’re Our Only Hope

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Working Their Retails Off

Retail media is in growth-stage limbo. Retailers have flooded the category with no guarantee advertising will pay off. 

The latest is the craft store Michaels, which launched a retail media platform on Wednesday in partnership with Criteo.

Amazon sets the bar very high. Earlier this month, Amazon disclosed its ad revenue for the first time – to the tune of nearly $32 billion in 2021. Walmart likewise broke out ad revenue for the first time this past quarter, clocking in at $2 billion. 

Target Roundel and Kroger Precision Marketing both have sophisticated platforms and lucrative CTV deals. (Target’s got Disney, for instance, and Kroger has Roku.) 

The question is whether the next 20 chains entering the ring have viable ad businesses – although they’re not necessarily having to go it alone.

Many retailers lean on vendors, although, eventually, they usually in-house their media efforts, as happened with Walmart. Last November, the grocery chain Albertsons in-housed its ad biz, which was previously backed by Quotient.

But don’t cry for Quotient. In 2021, Quotient added multiple new chains, including AutoZone and Hy-Vee, a regional grocer. CitrusAd added Petco and Lowe’s, which also works with Criteo. Best Buy’s in-house media net, announced last month, relies on Criteo, too. 

How much can you make, though, if you’re not Amazon or Walmart? Last December, the CEO of Macy’s said the Macy’s Media Network, which uses Criteo (sensing a theme here) and Pacvue, brought in tens of millions of dollars last year. That’s chump change for Macy’s and a rare moment of honesty about the retail media trend. Few retailers disclose actual ad revenue as opposed to selling optimism.

Setting Up Shop

Speaking of retail advertising, is it time for Shopify to launch an ad network yet?

Shopify is already part of the way there, writes Ben Thompson at Stratechery. The company will invest a billion dollars in warehousing and fulfillment over the next two years. Even Walmart needs ad revenue to offset those costs. But Shopify collects payment info and can act as a customer aggregator, similar to how Facebook was the go-to aggregator for ecommerce and app downloads … prior to Apple throwing a wrench in its ad platform, of course. 

Shopify has taken a partnership-first approach by plugging into other platforms, including Facebook, YouTube, Snapchat and TikTok.

The fact is, advertising is uncomfortable for Shopify, so it stays at one remove. Why so? Well, Shopify would have to decide which merchant “gets” a potential customer based on data aggregated from across merchants. Or can one merchant pay to get in front of customers belonging to another? Advertisers expect those types of shenanigans from Amazon or Instacart. But from Shopify, not so much.

That dynamic might flip soon, though, if indie merchants and ecommerce brands need Shopify to reaggregate customers with ad targeting capabilities that Apple can’t disintermediate.

“Now that Facebook is handicapped by Apple, Shopify should step up to provide substitute functionality and build its own advertising network,” Thompson writes.

Bad News

News in 2020 and 2021 was filled to the brim with COVID, politics and, well, depression. But one can only mope for so long.

The publisher Salon noticed, for example, that visitors reading up on its COVID news were more likely to read something comforting or lighthearted afterward, Digiday reports.

This is an industry-wide trend. Newspapers are starting to attract fewer readers while non-news verticals, such as lifestyle and hobbies, are gaining – especially food content. Guess nothing gets the mind off a global catastrophe like good grub.

Salon now has a deputy food editor and CMS widgets to render formats for recipes. It’s also rolling out content landing pages and hiring food and recipe staff. The idea is to get return readers to transform into subscribers, which doom-and-gloom doesn’t seem to do.

The New York Times is big on food content and word or number games to onboard subscribers. Gannett likewise now has subscription verticals for sports and puzzles. 

Salon says that its food content generates 30% more revenue than political news. Although that could be a result of getting hit by brand safety tools that block political news even when it’s important reporting.

But Wait, There’s More!

Capitalizing on user experience is key to a sustainable video and growth strategy. [AdMonsters]

Two Denver-based agencies merge as Booyah Advertising acquires the programmatic specialist FiveFifty. [release]

Roku creates a watermark to protect against ad spoofing. [release]

Inspired by its new TV series “All American: Homecoming,” Warner Bros. Television Group established a scholarship to support students at HBCUs. [Variety]

BrightEdge acquires fellow search and content optimization service Oncrawl. [release]

CHEQ, which has tech to detect malicious website visitors, raises $150 million. [VentureBeat]

TikTok promotes safety-first features in Europe. [TechCrunch]

Vizio partners with TransUnion to sync up TV and mobile ads. [release]

You’re Hired!

CafeMedia hires former Tumblr CEO Jeff D’Onofrio as its financial chief. [release]

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