Retailers are exploring new opportunities for incremental revenues by opening new channels, with media and advertising very much on their radar.
Meanwhile, retail media is an area of potential expansion for ad tech companies whose business models have been challenged in the last five years by regulatory and policy trends. They need to offset their decline in other areas, and they are looking to retail media as their next meal ticket.
How retailers and ad tech interact will determine whether retail media can avoid the same predatory practices that have led to traditional media becoming commoditized.
The two types of ad tech companies
There are ad tech companies that have embraced change as a differentiator and an opportunity to reinvent their business, rather than being moved solely by the need for privacy compliance. They understand that old dynamics have highly imbalanced the digital advertising ecosystem, which caused media owners to struggle with self-sustainability.
This group includes companies that listen to the needs of their clients, understand their strategies and put themselves at their service. With their technology, they help media owners to preserve their assets. They don’t preach about strategies and outcomes that promote commoditization to their own advantage.
But then there are many other ad tech companies that are only adding compliance on top of the same old approaches in an attempt to preserve digital advertising’s status quo. Partnering with the latter would be dangerous for retailers.
To distinguish the good partners from the bad, media owners – and now retailers, too – must have clarity of vision and knowledge of technology. They can protect themselves by hiring (or partnering with) people who understand media and advertising and who are not just ad tech executives with ad tech-only perspectives following ad tech narratives.
At stake is the integrity of retailers’ assets, like trust, customer experience, brand reputation and, finally, data. If shady ad tech companies have their way, retailers risk the same commoditization that traditional media faced.
Lessons to learn
Should retailers stay away from digital advertising? Exactly the opposite.
There is an enormous wealth of experience in the industry for retailers: 20-plus years of traditional media involvement with digital advertising and all the lessons, trials and costly mistakes that have come with it. And there are some valuable potential synergies born from past mistakes, too.
Audience extensions were once a trendy tool used by traditional media companies, until they realized that inflating reach by following their own audience wherever they went on the internet didn’t actually correspond to a high-quality offering. It caused data leakage and brand safety issues. And it decoupled the powerful combination of media owners’ audiences, their data and their content, which combine to produce a high-quality, high-engagement, exclusive environment for advertisers to connect with consumers.
Today, retailers, alongside quality traditional media owners and/or a media alliance, can layer consented retail data on top of consented engaged audiences and high-quality inventory to create better advertising propositions. That approach could result in a common data platform where media owners and retailers bring together (and control) their best assets while protecting the privacy and experience of their users/customers.
It wouldn’t be a complete novelty. Some forward-thinking retailers and traditional media owners, including broadcasters, have already developed similar solutions. But they remain, so far, isolated pockets of excellence, rather than becoming wider trends.
The secret for a successful future for retailers as media owners lies in the direction they will look for help. Will they look to those who have a track record of commoditizing media owners? Or will they learn from companies that have lived through the ups, downs and broken promises of digital advertising and can show them how to avoid the same old mistakes?
“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
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