Monday, June 17, 2024

Other Stories

Related Posts

Retail Media Networks: Still Not Ready for Prime Time (But Huge Potential Looms)

Retail Media Networks (RMNs) have been hyped as the advertising messiah, promising brands a golden ticket of rich consumer data and prime ad real estate right at the point of purchase. It’s like being promised a unicorn that poops rainbows and cash. But let’s cut through the PR fluff and take a hard look at why RMNs are still more of a mirage in the desert than an oasis right now.

Sure, RMNs come with some pretty shiny stats. According to DoubleVerify, they outperform traditional digital environments in key areas like brand suitability and fraud prevention. Fraud rates in RMNs are nearly one-third lower than the overall industry average, and brand suitability violations are 10% less frequent. On paper, this sounds like a dream come true.

But let’s be real—this is more like the part of the dream where you realize you’re naked in public.

One of the biggest issues with RMNs is viewability, and it’s a whopper. DoubleVerify’s report reveals that viewability in RMNs’ Owned & Operated (O&O) inventory is a pathetic 36%. Yeah, you read that right—barely over a third of ads are actually seen. Meanwhile, their audience extension inventory scores a more respectable 73%, but this glaring discrepancy shows that retailers are more concerned with the shopping experience than ensuring your ads are actually seen.

If no one sees your ad, it’s basically like shouting into the void.

Then there’s the nightmare of measurement and ROI. Econsultancy points out that the lack of standardized measurement across RMNs is a significant roadblock. Brands need solid metrics to understand the impact of their ad spend, but the industry is still in the stone age here. Incrementality measurement, or proving the actual business impact of ad spend, remains as elusive as Bigfoot. Without reliable metrics, brands are gambling with their budgets, hoping for the best while preparing for the worst.

Engaging with RMNs isn’t just complicated; it’s expensive. The Path to Purchase Institute’s survey found that over a quarter of brands cited increased costs, minimum spend requirements, and budget constraints as major challenges. And it’s not just about the cash—it’s about the complexity. Many brands are juggling relationships with multiple RMNs, some working with over ten networks at once. This complexity can dilute the effectiveness of marketing strategies and spread resources thinner than a hipster’s avocado toast.

With third-party cookies going the way of the dodo, RMNs’ reliance on first-party data is both a strength and a potential catastrophe. Bain & Company notes that while first-party data is valuable, it also raises significant privacy and data security concerns. Retailers need to ensure robust data security and gain user consent at every stage, which requires substantial investment. Consumers are getting savvier about how their data is used, and any misstep can lead to a PR disaster faster than you can say “Cambridge Analytica.”

There’s also a lot of buzz about the potential of in-store media to bridge the online-offline gap. However, this area is still crawling when it should be sprinting. Econsultancy highlights that strategies successful online don’t always translate well in physical stores. Investments in in-store digital screens and programmatic buying are necessary but fraught with risks. Retailers must tread carefully to avoid sinking capital into initiatives without clear, measurable returns.

Finally, there’s the issue of integration. Retailers need to integrate their media networks with broader marketing and sales strategies to fully unlock their potential. This means moving beyond siloed operations to create cohesive, omnichannel experiences that connect online and offline interactions. However, as MarTech.org notes, achieving this level of integration requires significant technological advancements and collaboration across the retail ecosystem. It’s like trying to assemble IKEA furniture without the manual—frustrating and often ending in disaster.

According to Nicole Kivel of Criteo, fragmentation is another major issue: “The increased attention means increased pressure to demonstrate impact, which will be a heavy burden on all those involved. Advertisers are becoming increasingly concerned about… the difficulty of accurately measuring the impact of marketing efforts”​ (Econsultancy)​. Frost Prioleau from Simpli.fi predicts that “Retail media will continue its strong growth, as retailers continue to leverage their first-party data to build out ad networks and/or data businesses, both of which provide high-margin revenue”​ (MarTech)​.

Now, let’s talk about the big dog in the yard—Walmart. The retail behemoth is poised to dominate the RMN space, especially after its acquisition of Vizio for $2.3 billion. This move isn’t just Walmart dipping its toes in the water; it’s cannonballing into the deep end. Vizio’s SmartCast Operating System, with over 18 million active accounts, provides Walmart with a powerful platform to integrate ads into connected TVs, expanding its advertising reach significantly.

This acquisition is more than just a play for more ad space; it positions Walmart to directly compete with giants like Amazon in the connected TV and streaming ad market. By leveraging Vizio’s existing relationships with advertisers and its robust platform, Walmart can offer highly targeted, data-driven ad placements that could redefine the retail media landscape. “We believe Vizio’s customer-centric operating system provides great viewing experiences at attractive price points,” said Seth Dallaire, Walmart’s EVP and chief revenue officer, highlighting the strategic importance of this deal.

Walmart’s vast physical footprint, combined with Vizio’s technology, means the potential for seamless integration of in-store and digital advertising is enormous. Imagine walking into a Walmart and seeing tailored ads on in-store screens, then going home to find related ads on your Vizio Smart TV. This creates a continuous, omnichannel advertising experience that’s hard for competitors to match. However, not everyone can play in Walmart’s league. This acquisition underscores Walmart’s commitment to becoming a dominant force in retail media, leveraging its scale and technological integration to create a formidable advertising ecosystem.

Oliver Banks, a retail transformation consultant, raises an important point: “But in the stampede to chase profits, are we being customer-centric? And do retail media networks create complexity in what it even means to be customer-centric?” His insights underscore the need for RMNs to focus on delivering value and a positive experience to their paying customers—brands—who are currently left dissatisfied with the status quo.

Banks also highlights a startling statistic: “Over 80% of retailers are offering an NPS of below zero. This would be a tragic score if presented as a B2C NPS score and would likely elicit an immediate CX recovery programme and investment.” The low NPS scores indicate a significant gap between the promise and the reality of RMNs, which retailers must address to avoid alienating brands.

Retail Media Networks offer exciting possibilities, but the current reality is far from the polished sales pitch. Brands and retailers must navigate a minefield of high costs, measurement challenges, and privacy concerns to harness the potential of RMNs. Until these hurdles are addressed, RMNs will remain more of a glittering promise than a fully realized solution. But don’t write them off just yet—once these kinks are ironed out, RMNs will be a force to be reckoned with.

Pesach Lattin
Pesach Lattinhttp://www.adotat.com
Pesach "Pace" Lattin is one of the top experts in interactive advertising, affiliate marketing. Pesach Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

What's your opinion?

Popular Articles

Don't Miss