Retail media networks (RMNs) and the ad industry are in the honeymoon phase.
RMNs are currently cresting the peak of inflated expectations, according to Gartner’s most recent hype cycle report focused on digital advertising, which was released over the summer.
And you know what comes next: a slip down into the trough of disillusionment.
It’s not surprising that RMNs are considered to be one of the shiniest of shiny objects right now. Just look at Kroger’s move last week to buy rival grocery chain Albertsons for $24.6 billion.
The consensus on ad tech Twitter is that the Kroger/Albertsons deal is more about a merger of retail media networks than it is about expanding their collective store footprint.
$25 Billion Ad Tech deal sees combination of two of the largest Retail Media Networks. The deal will also see a combination of the two grocery chains. https://t.co/tsbYUvvkSp
— Terence Kawaja (@tkawaja) October 14, 2022
Be that as it may, new relationship energy between the two mega grocers won’t automatically translate into value, utility or performance for advertisers.
From hot to not?
Consider the fact that each of the retail media networks coming out of the woodwork operates like a mini walled garden.
Even Dollar Tree has one, not to mention Walmart, Best Buy, The Home Depot, Macy’s, Ulta, CVS, Walgreens, Lowe’s, Target, Hy-Vee and, of course, Kroger and Albertsons. And that’s not even close to being a complete list.
“Suddenly every retailer under the sun has their own media network – but they’re not connected and you can’t really buy across all of them,” said Mike Froggatt, a senior director and lead analyst at Gartner.
There’s a reason why retailers are going so big on RMNs, of course. (Why, as Eric Seufert is fond of saying, it feels like “everything is an ad network.”) For any entity with ad inventory to sell, launching a media network is an opportunity to attract ad spend, collect first-party data and offer closed-loop attribution.
But fragmentation is a challenge, and it’s not the only one RMNs are facing.
For example, as Gartner points out in its hype cycle report, large brands typically split their marketing budgets between brand advertising and shopper marketing/trade promotions, which can lead to internal conflicts over who actually buys retail media.
Also, retail media networks, despite or perhaps as a result of the hype around them, aren’t yet as transparent as advertisers would like them to be.
On a recent episode of AdExchanger Talks, Heather Conneran, director of brand experience platforms at General Mills, said that although some retail media networks “have been around long enough that they’re likely getting there” in terms of transparency, many are “not quite at the same level” as more established media partners, where the CPMs are “reasonable” and you can track where your spend is going.
To be fair, General Mills does spend on retail media networks, but it’s not willing to do that blindly.
Conneran sums it up succinctly: “Hey, if you guys are a retail media network, if you’re selling media and you want more access to those brand dollars – ideally we would be able to hold you to the same standards as other partners.”
This buying blindness, along with other legit brand requests/concerns, will nudge retail media networks down into Gartner’s trough of disillusionment (which is where AI for marketing, location intelligence and identity resolution currently languish).
But Gartner predicts that RMNs will soon be on their way to the plateau of productivity, perhaps within two to five years, in large part because they have a playbook to follow. Media networks are not new under the sun.
And two to five years is a lot quicker than it’ll likely take for certain other technologies to be in a position to reach the plateau, which is what represents the beginning of more mainstream adoption.
For example, our hair might go gray (or grayer) as we wait for data clean rooms to mature.
According to Gartner, they won’t be widely implemented and well-understood for at least five to 10 years.
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