Retail media is everywhere right now. Everyone wants to have their say, everyone wants to be at the forefront, and one promise of salvation is hot on the heels of the next. CROSSMEDIA Managing Partner, Michael Schmitz, calls for a little more prudence, to ensure that great expectations don’t turn into great disappointments. His most important point: we have to differentiate more when it comes to this topic. And what would appear to be the most obvious solution is not without risk.
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The marketing industry has found its next hype. And, as is always the case, every hype comes with new, thick, and fast relayed messages of salvation. Just so you know: “Retail Media overtakes TV – as early as 2028”!*
But is this really true or are we moving very much toward the “peak of exaggerated expectations” of the Gartner hype cycle? As is almost always the case, things are more complicated than they seem, and it’s a good idea to take a closer look.
Right now, as has happened with other hypes and booms before – the older ones among us may still be familiar with the Metaverse – the media, agencies and retail providers are exaggerating everything in terms of its significance, lumping together things that may not necessarily correlate and then giving it a good stir. The advertising possibilities of strictly online stores such as Amazon, the broad online and offline offerings of chain stores, and the way endemic and non-endemic customers (i.e., advertisers who do not sell in the respective store) are viewed, and the potential they offer – everything is measured by the same yardstick.
As a result, the risk arises that a topic such as retail media, which is in itself very potent and relevant, will be unjustly buried again if developments do not meet the expectations. Spoiler alart: they won’t. Because, to exaggerate, you will not sell a single additional cup of yogurt simply because someone sees the product on the physical or data-driven advertising space of an electronics market. However, a rather unknown manufacturer will certainly sell more gym shorts through a sponsored product with good reviews in an online store if the visibility and trust in the product quality would have been rather low without this targeted advertising. Yet, how high the share of incremental sales actually is, will remain a mystery in many cases.
At an advantage: providers with a broad product range
Therefore, providers with the broadest possible product range have a very good chance of turning retail media into a success story. There are two reasons for this: first, there are many different companies with a listing in the respective store that could potentially advertise on that platform. Secondly, there are also many different customer profiles with which the platforms can differentiate themselves from monothematic retailers and also become more attractive for non-endemic customers, thanks to their treasure trove of data.
Due to the ever-advancing development towards a cookieless world, the targeting options for advertisers are growing increasingly slim. This is good news for those companies that have an easier time generating 1st-party data in sufficient quantities and harnessing it. However, this will probably not be sufficiently possible for the majority of companies, so they will have to rely on the data privacy-compliant use of valid data from external providers in closed systems.
Marketplaces such as Amazon are attractive, but come with new challenges
All of the above applies to Amazon, for example. The retail giant offers the right advertising opportunities and technologies, has an extremely broad customer base, and probably knows more about its clientele than many other companies. However, even though advertisers can certainly scale their sales on such a platform and have access to the appropriate data, these solved challenges are replaced by new problems.
One is a heavy reliance on new partners. Advertisers can do relatively little if Amazon decides to adjust its pricing structure for sales, changes data usage rules, increases tech fees, or simply “tweaks” its algorithms to adjust visibility and click pricing rules to Amazon’s liking. In addition, new work areas and tasks, such as store optimizations, etc. are added, which tie up staff that may not even be available in this way in times of a lack of skilled workers.
So what does all this mean for advertisers and retail media’s chances of success?
It is crucial to approach the customer incrementally, and for retailers not to promise more than they can currently deliver. That’s why it’s important to talk less, do more testing to see what works, research, gather experience, optimize step by step, and solve the new challenges together.
If we can succeed at not ruining retail media for market participants through exaggerated expectations and can generate coherent concepts for non-listed customers, then this topic will develop into a strong and important building block of marketing and have a very positive future. Whether it will, in the meantime, catch up to the significance TV has, though, it is rather doubtful. Admittedly, this is also due to developments in the TV market, but that’s another story, which is to be told at another time…
*Headline of W&V Magazine on June 13, 2023
This article was first published on horizont.net on 09/19/2023.