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We recently spoke to some media experts about measurement in retail media. We’ve been talking to them again this week, about the nature of retail media networks – are they walled gardens? Or do new partnerships and integrations make retail media an integrated part of wider campaigns?

How to achieve scale and efficiency is a hot topic, as the use of data clean rooms increases, with retailer first-party data in some cases being used to target consumers in other channels, even by non-endemic brands (i.e. ones that don’t sell via the retailer itself).

We ask our experts, how does retail media compare to other walled gardens? And to what extent is retail media now integrated with other digital ad channels?

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How does retail media compare to other walled gardens?

Transactional data is a differentiator

Nicole Kivel, Managing Director Northern Europe, Criteo:

“The most important discrepancy is the transactional data. Most walled gardens can only tell you what people consume from a media perspective in the form of clicks and views, whereas retail media network empires like Amazon and Walmart offer advertisers a glimpse into which campaigns truly move the needle when it comes to purchases.

“The rapid rise of retail media has led many to try and follow in the footsteps of these siloed, walled garden media offerings. The reality is only a select few retailers have the resources to build and staff their platforms from the ground up and the gravitas to attract advertisers directly in volume. To scale, many rely on programmatic vendors to pipe data and demand between their walled garden and the open ecosystem.”

Partnerships increasingly important for scale

Prateek Gupta, Managing Director of Transact, OMG UK:

“Whilst retailers have created guarding ‘walls’ around their shopper and loyalty data, they’re increasingly reliant on partnerships with other ‘walled garden’ players and pipe audience data to fuel closed-loop activations on channels such as social, CTV and digital out-of-home. As such the market has returned to a more sophisticated version of walled gardens across the full media and retail landscape.

“This is necessary to enable retailers to capture a decent share of large performance and brand programmatic budgets. Hence, both retailers and brands must view retail media and data as a fresh, new, cookie-independent mechanism to improve media efficiency, across full-funnel activations, rather than as just another ‘walled garden’ opportunity.”

Some smaller retailers are marginalized but may join aggregated networks

Jeff Williams, Chief Retail Officer, Quotient:

“In this analogy, the garden is walled off mostly to protect the retailers’ proprietary consumer and purchase data. The walls protect the data, but the resulting fragmentation of networks makes it impossible for brands to invest in every network. Furthermore, different networks mean less consistency in planning, activation and measurement, so there’s a lot of inefficiency and incremental cost if you try to do the same thing several ways. What happens is that brands choose a few retail media networks to invest in, and the other (usually smaller) retailers are marginalized.

“The solution for retailers is an aggregated network where all data is fully protected in a clean room, but the datasets are combined to build scale and attract brand investment. This empowers those formerly marginalized retailers to earn their fair share of ad dollars and increase the value that the participating retailers can deliver to their respective shoppers. Brands can achieve scale and efficiency through multi-retailer campaigns and benefit from consistent planning and measurement across all activations.”

As retail media continues to grow, FMCGs need to break down their silos and upskill their teams to take advantage

To what extent is retail media integrated with other digital ad channels?

Halo effect shows value as omnichannel tactic

Kevin O’Farrell, Associate Vice President, Analytic Partners:

“No customer lives and acts in a retail media silo – or any other channel for that matter – and they frankly don’t care what department oversaw a certain campaign or execution. Hence, looking for integration with other channels is a key to its success. Our ROI Genome data indicates that as we increase the number of media channels, ROI increases. Each additional channel drives an additional 11% ROI improvement. More is more.

“When looking at one of the pioneers of retail media, we can also prove the channel’s synergistic impact and halo effects. On average, 45% of the overall sales driven by Amazon Display Ads are non-Amazon sales, and 23% of the sales driven by Amazon Sponsored Ads are non-Amazon sales. In other words, retail media ads can be a highly effective omnichannel tactic. As well as driving sales on platform, they have a significant halo impact on non-platform sales.

“Among our customers leveraging retail media, we have seen that the ROI can be up to 4X when integrated into broader campaigns vs. non-integrated. However, a lot of the time retail media planning is still coordinated by separate teams and lacks the integration into full above-the-line campaigns. There is huge opportunity for brands to think and measure holistically.”

New formats and integrations will be a key theme in the next year

Prateek Gupta, OMG UK:

“A recent primary research study conducted by Skai (a leading omnichannel marketing platform), highlighted that over the past year, the largest shift in budgets to retail media have come from paid search, paid social and offline spends (Skai Report, The State of Retail Media 2023). As retail media adoption is maturing within brands and agencies, we are increasingly seeing retail media products alongside other key digital channels throughout the campaign planning process.

“Interestingly, a lot is happening in this space and there have been some new retail media ad formats coming out of partnerships between retailer media networks and other digital channels, including CTV, digital out-of-home, social or open-internet programmatic. A great example of this is Nectar360 (which enables retail media products for Sainsbury’s and Argos in the UK), which now offers tactical audience targeting based on shopper purchasing activity and demographic data, across partners such as Meta, Google DV360, Sky, Channel 4 and YouTube. This space is rapidly evolving and such integrations between retail media networks and other digital ad channels will be a key theme in 2023/24.”

Integration key once ‘quick wins’ are gone

Nicole Kivel, Criteo:

“Since many retail media networks are still set up as their own mini fiefdoms, integration with other ad channels has so far been minimal. This will change as the ‘quick wins’ of retail media are gone. Now it’s about scaling these businesses and that means being more open to off-site opportunities with formats such as open web, streaming TV and social. The beauty of retail media is the rich first-party data which can be used to target customers on other ad networks and measure the impact of that media in delivering outcomes through closed loop reporting.”

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