CMO Methods: Retail media’s rise — from Amazon to eBay

Over the past 12 months, retail media has surged in popularity, with many retailers investing extra closely within the channel and others venturing into retail media for the primary time. New retail media platforms have popped up from specialty retailers like luxurious division retailer chain Saks Fifth Avenue, journey firm Expedia and nationwide financial institution JPMorgan Chase. The big selection of latest entrants has marked a transparent rise for retail media networks (RMNs).

“[A challenge] has simply been the proliferation of retail media networks and the truth that there are such a lot of choices, and people choices are wildly totally different of their capabilities and maturity,” mentioned Laura Knebusch, svp of CPG advertising and marketing and client expertise at family merchandise producer Georgia-Pacific. “Understanding and navigating the place to take a position, learn how to make these choices and the way to consider that long-term roadmap is a complexity we cope with.”

Whereas retail media has a methods to go earlier than competing with No. 1 advertising and marketing channel social media, it’s making speedy strides as its strengths change into extra clear. For instance, retail media has an edge over different channels in the case of its entry to buy information by means of websites which might be constructed for commerce. With information privateness legal guidelines changing into stricter and Google continuing to inch closer toward the end of the third-party cookie, entry to networks with buyer buy information is a sexy potential cookie different.

Georgia-Pacific’s Knebusch agreed that the provision of first-party buy information is a selected benefit of RMNs. “I’d say the energy is actually the first-party information, and the power to establish when and the place [consumers] are in numerous parts of their buying cycle and [to] be capable to goal them with related messages,” she defined. “An instance could be a back-to-school program with our Sparkle paper towel model, the place we might discover individuals who have been on-line, looking for college provides, and who additionally had been taking a look at paper towels, [in order] to succeed in them with a particular message. … That capacity to layer in that information is the first profit. And to drive and shorten that buy cycle to conversion are the advantages.”

Group M reported in a 2023 recap report that the retail media advert market grew by greater than $10 billion in 2023, and was anticipated to finish the 12 months with an estimated $119.4 billion in income. Group M forecasts that it’ll enhance by 8.3% in 2024. Equally, eMarketer predicted that retail media will account for one-fifth of advert spending in 2025.

To map out entrepreneurs’ present digital playbooks, Digiday+ Analysis despatched out a survey asking 174 respondents about previous and upcoming investments, advertising and marketing channel techniques, preferences and enterprise challenges. 

Digiday+ Analysis additionally performed interviews with people and thru a spotlight group with advertising and marketing executives throughout industries.

Amongst retail media networks, Amazon holds nearly all of entrepreneurs’ budgets, with Walmart’s Walmart Join and Goal’s Roundel platforms coming in second and third. That’s to not say that Walmart and Goal aren’t build up their RMNs and even seeing better adoption amongst entrepreneurs. Digiday’s 2024 survey outcomes confirmed a rise in marketer respondents’ use of Walmart Join and Goal’s Roundel platform from 2023 to 2024, with Walmart Join particularly nearly doubling in proportion factors from 24% of marketer respondents who mentioned they used Walmart Join final 12 months to 46% who mentioned they use it this 12 months. An extra deep dive into the survey additionally indicated a excessive correlation between the proportion of respondents’ advertising and marketing budgets they allotted to Walmart Join and to Goal’s Roundel platform. The correlation signifies that the 2 platforms are probably rising in lockstep with one another.

Walmart particularly has ramped up its retail media efforts within the first half of the 12 months. In February, Walmart announced plans to acquire Vizio, an electronics firm that focuses on TVs and streaming information. Vizio collects information from 23 million opted-in gadgets, and 18 million of these are by means of SmartCast, the corporate’s sensible TV working system. The deal is presently below overview by the Federal Commerce Fee, but when it closes, Walmart will likely be set to extend its streaming capabilities in addition to add to its present client information, which might probably be engaging to advertisers. “I believe they’re going proper after Amazon, as they need to,” Vinny Rinaldi, head of media at The Hershey Firm, mentioned when requested if the deal could possibly be a part of a push by Walmart to compete with Amazon. “However Walmart has a leg up on particularly fast-moving client items the place we don’t personal the endgame.”

Katelyn Nugent, built-in advertising and marketing and communications director at fruit juice and snack maker Welch’s, mentioned in an e-mail interview with Digiday that retail media networks are an integral a part of the model’s paid media efforts. “Walmart Join is our greatest and most significant accomplice. Not solely are they the biggest U.S. grocery retailer and on-line grocer, they’ve low overlap with different grocers and, most significantly, their information and analysis capabilities are best-in-class,” Nugent mentioned. “We spend about 40-45% of our paid media finances on RMNs supporting all of our key retail companions (Publix, Kroger, Goal, Greenback Basic, Sam’s Membership, and many others.).”

In comparison with final 12 months’s CMO Strategies retail media report, Digiday’s 2024 information reveals that some entrepreneurs are shifting their RMN investments to different retailers outdoors of Amazon. “The funding chips, at the least from our purchasers, are beginning to move into Walmart, Instacart, Kroger, Chewy, Ulta and extra,” said Jared Belsky, CEO of digital company Acadia. “Walmart for us grew 104% [in 2023], Goal was 56% after which the smaller retail media companies collectively grew round 200%.”

What didn’t shift a lot from final 12 months have been the principle success metrics entrepreneurs contemplate for retail media. The vast majority of marketer respondents mentioned that they measure retail media success through commerce or gross sales fairly than consciousness metrics like impressions or engagement — 86% of respondents mentioned commerce or gross sales is their major measurement of success throughout all platforms in 2024, versus 9% who mentioned the identical of engagement and 1% who mentioned impressions is their prime success metric. This result’s probably as a result of retail media sits a lot nearer to the purpose of checkout than different advertising and marketing channels. The passive scrolling of social media is best for constructing model consciousness and engagement, whereas extra purposive habits on RMNs drives lower-funnel gross sales on owned platforms.

“[Retail media is] extra bottom-funnel since you are so near that transaction. You could have the chance to shut the deal and be capable to present very tight suggestions to the advertiser by way of the metrics,” Alex Kazim, vp and normal supervisor of world promoting at eBay and lead of eBay’s RMN, mentioned about retail media’s positioning. “It’s basically deterministic attribution — the merchandise transacted with [the ad], you drove the customer, after which advertisers perceive the return they’re getting from their {dollars} on the platform. That’s one of many the explanation why [retail media] has benefited a lot from the entire privateness modifications.”

Although retail media has demonstrated energy as a bottom-of-the-funnel advertising and marketing technique, the channel has began displaying indicators of breaking into the highest of the funnel. Joe Milano, chief information officer and advertising and marketing lead at Tapestry, a luxurious trend holding firm that owns Coach and Kate Spade New York, mentioned he sees the potential for utilizing RMNs for top-of-funnel advertising and marketing. “Amazon is the biggest as a result of it has change into extra usually a search engine, in some instances, for Gen Z, millennials, and many others. Even if you happen to’re not essentially purchasing, you’re changing into conscious of some manufacturers on these platforms,” Milano mentioned.

Equally, eBay’s Kazim additionally famous the top-of-funnel potential for RMNs. “Usually, retail media networks have been decrease down within the funnel. I believe there is a chance for them to get increased up within the funnel. Due to the first-party information, you’ll be able to tightly goal what customers you are attempting to seek out,” Kazim mentioned. 

“For instance, if [a marketer is] searching for individuals who love golf and purchased a golf membership within the final 90 days, we’ve that information. If that’s your viewers, we are able to goal that viewers,” he added. “That’s very laborious to do outdoors of a market. Contained in the 3-P promoting world, you’ll be able to attempt to goal somebody on social media who likes golf. Positive, they’ve checked out some golf movies, however did they purchase one thing? A part of what we are able to do is present that degree of very tight focusing on.” 

With the rising variety of retail media networks, particularly these from specialty retailers, this top-of-funnel technique will probably change into extra related for area of interest manufacturers. These manufacturers will be capable to handle their particular audiences with out having to depend on segmenting options at bigger retailers, reminiscent of Amazon. 

To that time, Athletic Brewing, a non-alcoholic beer model and brewery, appears past Amazon to meals and beverage-specific retailers to raised match the corporate’s area of interest product advertising and marketing wants. “We do use extra than simply Amazon,” mentioned Kate Breen, media strategist at Athletic Brewing. “We’ve invested in different networks reminiscent of Instacart and Drizly — now Uber Eats — in addition to nationwide chains like Walmart and grocery retailers like Kroger.” 

Chris Furnari, senior communications supervisor at Athletic Brewing, additional emphasised this level. “We need to convey better consciousness to Athletic and the non-alcoholic beer class on a variety of platforms,” he mentioned in an e-mail. “Usually talking, totally different retail media platforms can outperform each other relying on the business. As a brewing firm, we’ve discovered platforms like Instacart — which is hyper-focused on meals and beverage — to be very efficient and comparable in quantity to Amazon lately.”

Just like the dearth of change in success metrics, the challenges entrepreneurs face on RMNs didn’t change a lot from final 12 months to this 12 months both. This 12 months’s survey included new responses to gauge entrepreneurs’ challenges concerning RMNs, reminiscent of lack of client curiosity and lack of know-how. Nonetheless, even with the brand new choices factored in, price of media remained the largest problem entrepreneurs mentioned they face with retail media networks. Some respondents did observe one new problem this 12 months — lack of finances. 

When wanting on the advertising and marketing combine as an entire, together with social media and show advertisements, Digiday’s survey discovered that price of media is the most typical problem throughout all advertising and marketing channels. Whereas price is commonly related to finances, for entrepreneurs working with retail media, the 2 challenges will be considered individually. Entrepreneurs’ retail media finances considerations are distinctive in that the problem they face is probably going stemming from the speedy progress of RMNs. As new platforms are launched, entrepreneurs have needed to stretch their budgets with a purpose to balance their platform mix.

Some specialists have mentioned that the boom in new retail media options is not sustainable and harms all events. “There’s not sufficient cash to go round for this to be sustainable,” mentioned Ethan Goodman, evp of digital commerce at The Mars Company. “When you get previous a sure level, the choices begin to blur collectively and the query turns into, ‘Why don’t I simply put money into the [major players, like Amazon, Walmart, Target and Kroger].’” 

Nonetheless, with extra retail media choices changing into out there, marketers are able to better decide what mix is best for their brands. Tom Spaven, vp of promoting at sustainable model Scale back and former vp of promoting at Good Wipes, mentioned unbiased company Acadia helped Good Wipes with its retail media technique. “You can provide them a complete finances after which ask them to return again with a advice on optimum cut up fairly than giving them the finances by channel to play with” Spaven mentioned. “Primarily, they’re coming in upstream and serving to you construct a retail media technique versus simply spending your cash for you within the locations you inform them to. They simply know all of the methods — they’re very embedded with the retailers themselves.”

A notable change that occurred on this 12 months’s survey in contrast with final 12 months’s is that scale has change into much less of a problem for entrepreneurs than it was a 12 months in the past — 8% of entrepreneurs on common mentioned scalability is a matter in 2024 versus 29% in 2023. This lower might point out that retail media networks have began to construct up their focusing on capabilities with first-party information and product choices, notably pushed forward by the rise in competitors within the retail media house. Nonetheless, whereas it appears simpler to scale RMNs because of the elevated choices and first-party buyer information, many business professionals have voiced considerations about information attribution to measure that scalability. Natalie Sexton, vp of promoting at Natalie’s Juice, outlined the corporate’s prime considerations in an e-mail to Digiday. “The principle challenges we’ve confronted with retailer platforms have been prices and tracked conversions,” Sexton mentioned.

Equally, Katie Williams, U.S. CMO at client well being care firm Haleon, mentioned in an e-mail that Haleon’s greatest problem is measurement. “Particularly difficult is the dearth of standardization in measurement pointers throughout networks,” Williams mentioned. “Even with constant metrics like ROAS and attribution, the methodology varies throughout RMNs. We’ve been artistic in how we overcome this type of problem, reminiscent of growing our personal customized KPI framework that aligns to Haleon and our portfolio of name goals to increase past ROAS-only measurement. [The goal is] to be inclusive of extra indicators of success given the stage within the shopper journey and the function media is taking part in.”

Georgia-Pacific’s Knebusch mentioned the largest problem with retail media is the inconsistency of measurement throughout platforms. “We attempt to make the precise funding choices for our manufacturers throughout all of the totally different channels. I believe there at the moment are about 200 retail media networks, and it has grown simply over the past couple of years. And we have to have a approach to constantly measure efficiency,” she mentioned. 

Knebusch summed up the connection between the necessity to unfold advertising and marketing budgets throughout RMNs and measurement challenges. “That, I believe, goes to proceed to be the largest problem, particularly as retail media networks develop their capabilities and need to be a much bigger a part of your advertising and marketing combine. If the measurement isn’t there, it’s going to be more difficult for us to have the ability to do this [make the right investment decisions] general,” Knebusch mentioned.

• Amazon holds nearly all of advertising and marketing budgets inside retail media. Nonetheless, opponents are making strides within the house. Walmart Join and Goal’s Roundel platform noticed elevated adoption from 2023 to 2024, with Walmart particularly nearly doubling in proportion factors from 24% of marketer respondents who mentioned they used Walmart Join final 12 months to 46% who mentioned they use it this 12 months.
• There’s a excessive correlation between the proportion of promoting budgets allotted to Walmart Join and Goal’s Roundel platform, indicating that the 2 could possibly be rising in lockstep with one another.
• The vast majority of marketer respondents to Digiday’s survey mentioned that they measure retail media success through commerce or gross sales fairly than consciousness metrics like impressions or engagement — 86% of respondents mentioned commerce or gross sales is their major measurement of promoting success throughout all retail media platforms in 2024, versus 9% who mentioned the identical of engagement and 1% who mentioned impressions is their prime success metric.
• Although retail media has strengths as a bottom-funnel advertising and marketing technique, the channel has began displaying indicators of breaking into the highest of the funnel.
• As extra retailers introduce their very own RMNs, entrepreneurs have needed to stretch their budgets with a purpose to steadiness their platform combine. Some specialists have even mentioned that this inflow of latest RMNs isn’t sustainable and might hurt retailers and advertisers.
• Scalability turned much less of a problem this 12 months for RMNs. Eight p.c of entrepreneurs on common mentioned scalability is a matter in 2024 versus 29% in 2023.
• Whereas scalability has change into much less of a problem in 2024, standardization of knowledge attribution and measurement within the channel have change into more difficult as entrepreneurs search to grasp the affect of their investments.