“The Sell Sider” is a column written by the sell side of the digital media community.
As third-party cookies and mobile identifiers disappear due to privacy changes, brands without scalable first-party data are turning to retailers to connect directly with customers.
At the same time, retailers are seeking ways to combat margin pressure, emulate Amazon’s extraordinary advertising success, deepen relationships with brand partners, and better understand their customers. Cue the retail media boom.
This new era where retailers act as publishers has swiftly taken hold. Retail media networks are expected to account for nearly 20% of digital ad spend by next year. But in building their own media businesses, they are encountering challenges that stem from a lack of control over advertising technology.
To thrive, they’ll need to build out their own media buying platforms. In doing so, they will not only bring in more revenue, but also improve the shopping experience and maintain customer data privacy.
The problem with the middleman
Some of the same insidious dynamics that plague other media sellers now threaten retailers. Ad tech intermediaries have become a costly fixture of the digital advertising business. Publishers are so beholden to these intermediaries, they sometimes forfeit as much as 98% of the revenue generated by media. Retailers should be wary of this tax.
In most cases, when a shopper goes to a retailer’s site and sees brand ads, those ads will not have been negotiated directly with the retailer. The third-party technology provider negotiates the ads and matches them to retailer sites. As a result, the technology provider takes a cut and also plasters the same ads on competing retailers’ properties.
Third-party technology providers can also undermine the shopping experience. Many retailers are setting up media businesses via platforms that are not built to integrate seamlessly into ecommerce. Rather, these platforms foist a one-size-fits-all aesthetic, feature set, and vendor list on the retailer, endangering the trust between retailer and end customer.
As a result, shoppers can start to feel as though they’re wading through a sea of ads to find the products they’re seeking. They might even experience slow load times and poor image quality due to ad overload.
Privacy can become a concern, too. If retailers hand over personal shopper information to intermediaries to fuel audience targeting, they risk replicating the very state of affairs that precipitated digital advertising’s current privacy reckoning. This could create regulatory and reputational liabilities for retailers.
Taking back ownership over retail advertising
Retailers can do better. By developing a custom technology platform and becoming sellers themselves, they can not only keep 100% of the revenue they generate, but also ensure a positive shopping experience that ensures privacy for their customers.
With proprietary media networks, retailers can maintain complete control over which brands are advertising on their sites, preserving and strengthening the direct relationships with customers that form the foundation of the retail business.
Building owned media networks also ensures that shoppers – and their private, personal data – are only exposed to sellers that align with the retailer’s identity, not third-party ad tech intermediaries.
And, ultimately, by controlling the advertisers and third-party sellers with whom they do deals, they can build a media experience that feels native to their existing site and prevents slow load times or brand safety issues.
Better for sellers, better for shoppers
The digital advertising industry as a whole is grappling with privacy infractions, costly intermediaries, and brand safety issues that are years in the making. As retailers become the vanguard of the media business, they have the opportunity to do things right.
That starts with owning the technology that underpins the media business. And it won’t just be retailers who benefit from the media boom but their shoppers, too.
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