Blink and you’ll miss yet another huge development coming from the retail media network space.
Walmart Connect is aggressively expanding its ad business into Walmart stores by offering third-party ads on screens in Walmart self-checkout lanes and TV aisles; spots over the store’s radio; and product samples. Kroger Precision Marketing Disney Advertising are launching a beta test with PepsiCo that will let packaged-goods marketers use shopper data to reach target audiences across select Disney advertising inventory, starting with Hulu.
With innovation comes expansion. By one reckoning, there are more than 160 such networks offering targeted advertising for an increasingly diverse variety of audiences. This is good news for advertisers because they have more choices to create relevant content based on first-party data owned by retail media networks. But there’s also a secret downside: retail media networks are very vulnerable. Many are relying on retrofitted placeholder AdTech platforms that are just good enough to manage ad inventory. But a “just good enough” platform creates a false sense of accomplishment. In fact, the ugly reality is that placeholder AdTech platforms are creating inefficiencies, errors, and lost revenue for retailers.
The industry has rapidly gotten to the point where it needs a more efficient technology platform to corral all the complex moving parts that every retail media network needs to manage.
A consumer electronics company like Samsung can place a targeted and relevant ad to a Best Buy shopper when they’re actively shopping in store, on Best Buy’s website, or mobile app. When that happens, an ad for a 4K 85” TV spot feels like highly relevant content, not an intrusive ad.
A Time of Phenomenal Growth
Without question, retail media networks are experiencing a time of phenomenal growth. Spend on retail media networks is growing at a healthy pace even as other types of advertising such as search face choppy waters. Meanwhile, Operative’s benchmarking data shows that traditional digital advertisers have been under CPM pressures for the first half of 2023. It’s easy to see why retail media networks are receiving more spend. With the reach of their physical stores, digital presence, and loyalty programs, top retailers like Lowe’s, Instacart, and ULTA collect a vast treasure trove of data about their customers’ shopping habits. Their in-house retail media networks use their reach and data to sell highly targeted ad inventory to businesses that want to find and influence relevant customers. A consumer electronics company like Samsung can place a targeted and relevant ad to a Best Buy shopper when they’re actively shopping in store, on Best Buy’s website, or mobile app. When that happens, an ad for a 4K 85” TV spot feels like highly relevant content, not an intrusive ad.
These networks have become even more important as advertisers lose access to third-party data to target ads thanks to privacy measures enacted by Apple and Google. First-party data has always been the most valuable data to any marketer – now it’s essential. And retail media networks are happy to put their own first-party data to work for advertisers. As a result, everyone wins. The retailer enjoys a profitable revenue stream. Advertisers connect with the right consumers at the right time. And consumers benefit from more relevant and timely content. This has always been the promise of advertising. Now it’s being delivered.
Now consider what happens with the proliferation of retail media networks. Brands can refine their advertising campaigns for highly segmented audiences. Do you want to reach home improvement enthusiasts? Home Depot’s Retail Media+ and Lowe’s One Roof Media Network have you covered. How about grocery shoppers? The Albertsons Media Collective and Kroger Precision Marketing are among the many grocery stores that give you immediate entrée. Best Buy can tap into a national network of consumer electronics enthusiasts. Dollar General Media Networks give you incredible scale and reach into almost 20,000 stores. The list goes on and on.
But there’s also a downside. More choice does not always mean better results. In fact, retail media networks are straining to manage the rapid growth of their businesses.
The Not-So-Good News
Not a day goes by without an executive at a retail media network telling me that they are struggling to manage the complexity of running a network. Here are just a few of the problems that their ad operations are facing – and I’m just scratching the surface:
- Integration and technical challenges: integrating with different systems, platforms, and APIs can create an enormous headache. Advertisers may need to align their systems with the retail media network’s infrastructure for seamless ad delivery. And guess what? The retail media network’s infrastructure is, well, often messy. A typical manager of a retail media network needs to coordinate multiple platforms to synchronize an advertiser’s campaign, ranging from LiveRamp to Google Suite to social media. Just logging into each one of these systems is time consuming — managing each one can be maddeningly difficult.
- Inventory management: managing ad inventory across multiple channels, locations, and devices can be complex. Ad operations (AdOps) teams need to optimize ad placements and ensure they are reaching the right audience at the right time. And although they’ve done a good job of doing all this, they could do a better one (much more quickly!) if only they could solve the integration and technical challenges cited above.
- Performance measurement: AdOps teams need to provide advertisers with detailed performance metrics and insights to demonstrate the effectiveness of their ad campaigns. But here’s an inconvenient truth: due to messy technology integrations, they’re not delivering the best data they could – which means potentially lost revenue opportunities associated with incomplete or delayed data.
These are just some of the challenges faced by the ad operations teams that manage the day-to-day needs of a network. As we say on our blog, these teams are held together with duct tape.
Why is all this happening? One big reason: each network operates its own unique AdTech stack mix, leveraging home-grown systems, and third-party platforms and data feeds. Oftentimes, retailers have retrofitted legacy platforms to manage their retail media networks. This makes it harder for their own AdOps teams to manage campaigns across their own network (and the advertiser to manage campaigns from one network to the next).
On top of all this, retailers typically take a “just good enough” approach to managing their AdTech stack. If the AdTech stack isn’t falling apart and is doing its job just good enough, retailers are content with the results – without realizing that they’re missing out on better margins and more efficient operations. And make no mistake, AdTech stacks are not good enough. The increasingly inefficient technology stacks create risks for retail media networks such as:
- Lost revenue for everyone because of sloppy ad inventory management.
- A degradation of performance measurement.
- Missed opportunities to deliver targeted content faster and more efficiently because of increasingly clumsy
- AdTech stacks being managed by each retail media network.
- Costly errors resulting from manual processes.
- A lack of visibility into ad campaign optimizations resulting from a fragmented view of data.
So, what’s the solution? Answer: simplify AdTech through a single platform.
Simplify Operations with a Single Platform
It’s time for retail media networks to stop wrestling with complicated workflows and processes across their unique combination of AdTech. It’s time for simplification with one platform.
The industry is quickly seeing that a comprehensive advertising order management platform can help them scale their operations more cost effectively. If used correctly, an order management solution gives retail media networks a single point of access to manage advertising workflows across the full tech stack. This helps retailers and brands save time and money, and improve the efficiency in managing, reconciling, and invoicing of their ad campaigns. Order management solutions are catching on also because an effective one manages all aspects of operations, such as automating their workflows and deliver better insights into the performance of their campaigns.
For example, less switching and bouncing between platforms reduces errors while it creates efficiencies, and automated workflows can replace manual tasks involved in managing retail media networks. This frees up time for retailers and brands to focus on other tasks, and it helps to improve the accuracy and efficiency of ad operations. And a solution that provides cross-platform, analytics-drive insights helps both the retail media network and brand understand the performance of their ad campaigns. This information can be used to improve the targeting of ads, to optimize the performance of campaigns, and to make better decisions about future ad campaigns that help improve revenue.
By investing in an order management solution, retail media networks do something they’re struggling with right now: scale operations profitably and efficiently. Are you ready to stop leaving money on the table and be a better partner to advertisers? Contact us. Operative can help.