The AdExchanger Commerce Media Newsletter has been on a brief hiatus due to some in-court legal issues (Google’s, not my own) and the call of the conference circuit (Programmatic IO and Advertising Week).
But there’s been a great deal of commerce media news in the past week alone. Advertising Week itself seems to have been preempted as a kind of retail media festival of product announcements. Mastercard introduced Mastercard Commerce Media, and you can guess what that does. PayPal launched an ad network primarily for its small business merchants. Criteo and DoorDash synced up, as did Instacart and TikTok. And Microsoft announced it would shuttle its DSP customers to the Amazon DSP.
Retail media has broken through some critical threshold and is no longer the straightforward digitalization of shopper marketing budgets. Now, retail media isn’t just taking the ad spend that would have gone to coupons or cardboard cutouts and repurposing it as sponsored product listings for online grocery searches.
And there is a growing sense that whole new categories of spend might open to retail media as a channel, sometimes perhaps without the advertiser even realizing.
For example, last month, Criteo’s SSP business became the first third-party vendor to integrate with Google Search Ads 360 for on-site retail media. The integration alone isn’t a game changer for Criteo, revenue-wise. But it’s valuable, as Criteo’s president of retail media Sherry Smith told me at the time, because many search advertisers have the necessary assets to run a retail media ad (a product catalogue and live pricing feed) but don’t use the channel. They don’t think of retail trade marketing as part of their business. Now, via the Google search console, those advertisers might just slip sideways into retail media placements without being aware.
What’s causing the change?
There are many overall market trends helping retail media along as a category.
First and foremost, there’s Amazon. Its combination of consumer purchase data and advertising opportunities (like Prime Video and Fire TV, as well as the open web DSP), is a living, fire-breathing example of what a large retailer can create.
Also, the loss of online identity data has expanded the definition of what retail media can be. Any company with deterministic identity graphs to confirm purchases, downloads or other conversions can do retail media. It could be Uber, Marriott, Lowe’s, Klarna, United Airlines or even small mom-and-pop merchants via retail media offerings from PayPal and Shopify.
Another important factor is the price of retail or conversion data.
For years, retail media was essentially locked into its preexisting trade marketing budgets and nothing else. Major grocers and chains like Walmart and Target require brands they carry to re-spend a certain percent of their store sales (typically 5%-10%) with these types of trade and promo budgets. That’s contractual budget. A brand can’t just take it somewhere else. So retail media costs weren’t rational.
Does it make sense for Hershey’s to spend as much on a Kroger dot-com product listing ad as it might on, like, an ESPN homepage takeover?
No.
But Hershey’s and many other big grocery brands have done just that because their shopper marketing budgets are going to Kroger regardless.
Finally, though, the price of retail data is beginning to normalize, if just a smidge.
Two weeks ago, The Trade Desk launched a product called Audience Unlimited, which, not to put too fine a point on it, dramatically decreases the price for data from its marketplace sellers.
So why do data sellers agree?
“Because data providers realize that their data provides a lot of value, but they also want to be auto-applied or always-on marketing no matter the campaign,” TTD COO Samantha Jacobson told me after the announcement. “So from a data provider perspective, they would rather receive less revenue on a per impression basis and make it up in scale.”
The new Audience Unlimited marketplace also creates a new incentive structure, she noted. A data seller that offers a better discount for Audience Unlimited compared to its prices on the general data marketplace becomes more appealing on an ROI basis, especially for advertisers using The Trade Desk’s AI-based Kokai product. Those price reductions become ROI benefits attached to the data.
Index Exchange has also launched a data marketplace that aims to undercut demand-side marketplaces (which is to say, The Trade Desk) by removing its margin on data sales.
There is now a downward pressure on retail media data to perform in the normal programmatic ecosystem, in line with its cost. The data owners recognize that to expand beyond advertising for endemic products they carry in stores, as Amazon has effectively done, their prices must be more approachable.
Inside-out retail media
Another change propelling retail media could be called “inside-out retail media.”
It’s not just non-intuitive, non-grocery stores like Planet Fitness or RE/MAX launching their own ad networks. There are new startups and ecommerce players like Shopify and PayPal that are figuring out how to get hooks into retail media with budgets from brands that aren’t really thinking about shopper marketing.
One such startup is Rokt. It has cornered a strange little sub-market in retail media by targeting retailer post-purchase pages and receipt confirmations. Rather than the standard retail media model – where brands compete to get into the cart – Rokt gives follow-up offers, like a discounted trial subscription to Hulu after a purchase. Thus, Rokt can frame itself as the first “non-endemic” advertiser for many of its grocery clients, such as Albertsons.
Then there’s the startup Nift, which lets apps or publishers offer “gifts” to users. Marketers can offer promos like a large discount on a subscription service or a gift card after a user performs some type of action, like if they left a positive review or made a purchase in an app. Those offers are … retail media. Because anything with a price and a picture can be retail media.
Another example is M3 retail, a startup trying to align general media agency budgets with retailers by targeting their inventory based on age and audience demographics, as opposed to something that is for sale on that site. Why not treat retailer dot-com as web inventory?
All of these startups and more are figuring out ways to expand access to retail media impressions and data or even creating wholesale new inventory on a retail property. Sometimes, the advertiser and the retailer don’t even know they’re participating in a retail media campaign.
That, apparently, is how you grow a new category.
