This is Allison Schiff, temporarily filling in on the commerce beat for our intrepid senior editor, James Hercher.
James is AdExchanger’s resident expert on all things commerce and retail media. That’s why this is his newsletter. But for the next number of weeks, James will be out on paternity leave – congratulations, James! – so a rogue cast of characters from the AdExchanger team, including myself, will be pinch-hitting in his absence.
You’ll still see James’s byline here and there on our website over the next few weeks, though. He’s just that kind of guy.
These walls can talk
Right before James headed out, he and I were talking about retail media networks and walled gardens, as one does.
A few years ago, when the RMN trend was taking off, James said he would have bet money that retailers would fully embrace the walled garden model. Who could imagine retailers wanting to commingle their data or make their precious audiences available off site – maybe even to their competitors?
But it turns out retailers are far more programmatically minded than you might think.
Putting Walmart aside, most retailers with media networks have been proving themselves to be open to third-party ad tech partnerships.
You could argue that the motivation here is as much about scrambling to generate enough supply to meet advertiser demand as it is an endorsement of the open web. There’s only so much content one can browse on a grocery store’s website.
But there also appears to be a willingness not to go the walled garden route. Guess advertisers may just get their way after all.
Fighting fragmentation
If you need evidence of this trend in action, look no further than Macy’s, which just this week selected The Trade Desk as its first demand-side platform partner.
Although The Trade Desk only manages offsite inventory for Macy’s – the department store chain’s O&O remains, well, O&O’d – advertisers can onboard their CRM data to the DSP to match it against Macy’s audiences.
Walgreens is doing much the same, also in partnership with The Trade Desk.
If allowing their IDs to be reconciled and used for targeting broader TTD campaigns isn’t a vote of confidence in open programmatic, what is?
Sure, this could just be a phase these retailers are going through, like experimenting with openness in college before settling down in a walled garden. But they’re also cognizant of what needs to happen to unlock more ad budgets.
As Melanie Zimmermann, who leads the Macy’s Media Network, noted to James earlier this week, advertisers have been very clear that they have no interest in data silos or being forced to log in to yet another white-labeled DSP.
Facing reality
Making concessions to advertisers hasn’t always worked out super well for publishers, though.
If shopper segments are available in a third-party DSP, that data becomes more valuable to advertisers. It could also be the first step down a slippery slope whereby retailers lose control of their data to a bunch of third parties.
There was an excellent conversation on Twitter in reaction to James’s story about the Macy’s/TTD deal. I recommend reading the whole thing, but these are some highlights:
Judy Shapiro (@judyshapiro): “Here’s what vexes me. Programmatic, at its core, is built to be opaque. So TTD could easily arbitrage the data in many many ways without Macy’s ever knowing or being able to know. Contracts notwithstanding, it seems that Macy’s took their most precious data and commoditized it.”
The Last Party Cookie (@humanpropensity): “A) pragmatic on the part of Macy’s: too many RMNs with a 2% market share are trying to be walled gardens, b) very unsurprising next step of inevitable TTD expansion into retail media.”
Aram Zucker-Scharff (@Chronotope): “I am sure that is Macy’s thinking too, but that is the exact logic and market pressure that eventually doomed the profits of news publishers. It’s hard not to see this as a solution with seriously bad long term consequences for Macy’s unless they go the other way about this.”
A very valid argument from Aram. With the benefit of hindsight, publishers no doubt regret not placing a premium on their first-party data until relatively recently.
But the reality is that first-party retailer data is already being commingled like crazy and sold to any competing retailer or brand looking for lookalikes.
Heard of Meta and Google, anyone?
