Are Retail Media Networks, Addressable TV And Walled Gardens Worth The Investment?

On TV & Video” is a column exploring opportunities and challenges in advanced TV and video. 

Today’s column is by Cory Davis, VP of media and madtech at Infutor

Marketing typically depends on the thoughtful and strategic allocation of limited financial resources. Creative matters, but putting money behind the channels that will truly drive growth is the key to success. 

Yet it’s often tough to assess what’s a smart, data-driven buy versus just a hyped-up channel. Sure, it’s possible to try everything. After all, testing and learning could uncover a goldmine of opportunities. But as channels emerge at a dizzying pace, brand marketers need to analyze them closely before taking the plunge.

Let’s examine a few key categories.

Increasingly competitive retail media networks

Walmart Connect, Roundel from Target, Walgreens Advertising Group, CVS Media Exchange, Kroger Precision Marketing – retail media networks are a hot market nearing $50 billion a year. But do they have a sustainable audience?

Amazon certainly does. But the challenge for everyone else is consumer behavior. Retail media networks are fighting to convince key customer segments to change their ways while trying to convince new consumers to join the category. Neither avenue for growth looks likely.

It will be a hard road for Amazon’s competitors. The Amazon Ads business recently reported $31 billion revenue, while its fiercest rival, Walmart, reported just $2.1B. Still, the ROI across this diverse, niche list of players could be substantial.

Recommendation: Buy, but be cautious. It’s probably best to check back in a few quarters once the hype cycle slows down.

Booming addressable TV

Peacock, Paramount+, Disney Plus, Hulu, ESPN+, Discovery+, Fubo, Sling and Pluto are just some of today’s ad-supported streamers. Even Netflix is contemplating getting in on the game. As prices and choices skyrocket, many consumers are opting for free ad-supported TV (FAST). Whatever it’s called – CTV, advanced television or addressable TV – it’s a hot market.

Traditional media businesses are investing heavily in content, tech, people and marketing as they pivot the $70B/year linear TV business toward streaming. However, we will likely see consolidation. Consumers have shown that they’re comfortable paying for certain content and don’t mind advertising stitched into that content. 

Unlike the internet, TV doesn’t have a recent history of being completely free. That means TV players can monetize while delivering an excellent experience to the consumer. 

Recommendation: Addressable TV is exploding. Invest!

Lucrative walled gardens

Love ’em or hate ’em, Amazon, Facebook and Google deliver a very compelling offering for investors, advertisers and consumers alike. Being walled gardens has served these platforms well. Now, TikTok, Snapchat, Twitter, streaming players and retail media are taking notice, copying and gaining ground. It’s just a matter of time until we’re talking about 10 walled gardens with serious scale.

The internet is roughly 200 times the size it was two decades ago. This growth trajectory will remain exponential as mobile and connectivity grow into new markets. We spend more time online than ever. It’s logical for advertisers to allocate more capital to storytelling, brand building and selling through digital channels.

Recommendation: Don’t think twice: Invest. 

Trial and error

Marketers will have to continue testing, learning and adjusting to new channels as they grow their businesses. These channels will act as key accelerants to that work.

If marketers are willing to take risks and experiment, the future is bright.

Follow Infutor (@infutor) and AdExchanger (@adexchanger) on Twitter.

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