Media platforms

The future of retail media platforms will separate from walled gardens, says IRI’s Pelino – AdExchanger

The retail media craze has accelerated over the past year.

Due to the pandemic, the number of people ordering groceries online for the first time skyrocketed, but the trend was already underway.

The rush of retailers into the programmatic platform business meant they tended to follow the playbook set by the large walled gardens. What works for Amazon and Instagram and Google has to work for us, right?

Well, not so fast. As retailers’ media networks mature, they are testing ways to open up, a break from the walled garden approach, said Jennifer Pelin, executive vice president of global media for IRI, the company advertising and retail analytics company that collects sales data from retailers’ loyalty programs.

For example, Walmart Connect, the most advanced advertising platform after Amazon, uses The Trade Desk as its technology, a partnership that could be a significant step if other retailers follow suit and allow outside platforms to bid on their media using third parties. IDs, says Pelino.

Attribution may also require an open approach. Brands may not accept retailer networks grading their assignments, even if they reluctantly tolerate self-attribution by Google, Amazon and Meta. To prevent self-attribution from taking hold in retail media, they are taking stronger stances with retailers to influence them toward open measurement. Brands are now collecting more data, and if retailers won’t let them use that hard-earned data on their networks, they’ll find someone else who will.

AdExchanger caught up with Pelino on the state of retail media in 2022.

AdExchanger: What should retailers do to break customer marketing deals and get broader digital and programmatic budgets?

JENNIFER PELINO: Retailer media programs need to evolve. They need to find a way for brands to leverage retailer data to measure campaigns holistically and independently. They can’t lock themselves in.

Some are in their infancy and, in your opinion, are still mostly stuck in the old ways of working with clients, where brands would either provide a predefined retail media budget or reinvest a certain percentage of sales.

But it’s not just retailers. Brands are also driving this change if they think more clearly about their food funnel, right? Marketers are thinking more about how they drive awareness and consideration.

The walled garden approach has worked for social platforms, however, and seems to be the model for most retail advertising platforms.

Yes I know.

Retailers started with this [approach] because the big platforms make it seem like that’s the only approach. But if they continue in this way, the brands will make more efforts not to reproduce this model.

Brands will become more demanding within the media programs of retailers. Brands want to choose their ad formats and placements. They want to choose their audience targeting and then standardize that against the national brand campaign.

There are already examples. Walmart Connect has begun to align with The Trade Desk, which provides a much wider range of opportunities to activate and measure campaigns alongside other media and platforms.

Why is this important for the brand?

This is important not only for controlling campaign frequency, but also for brands to understand their customers over time.

If they have between 200,000 and 500,000 customer records – basically accounts in their CRM – they want to be able to add data to those records and understand customers over time. What is the demographics? How often do they buy your product and what else do they buy? What kinds of other media do they interact with before buying?

These are questions you could begin to answer with an open platform approach.

What can brands do to bring more data to their retail media campaigns?

Factors such as the cost of production and transportation and the costs of inflation have reduced the CPG’s margins. And with that, CPGs need to look at where they can cut expenses to help hit revenue and bottom line numbers.

So advertising is starting to come into play in these supply chain issues. Questions about raising awareness up the funnel and driving consumers to the shelf with a bottom-of-the-funnel retail media campaign are important now.

How do we integrate supply chain data that tells us where we don’t have the supply? You can save that markup on advertising, but does that potentially lose the customer to someone else?

These are important considerations that we see within CPGs at all levels. And that’s where I think there’s a balance between retailer media programs, national brand campaign programs, and supply chain data.

Retail media programs are very supply chain related, as they target where specific inventory exists, and therefore can be leverage more directly tied to data and margin performance.

Will retailers sell their data to other ad platforms for attribution?

I believe it is under consideration. Kroger and Target’s Roundel have metering agreements with a CTV service, for example. [Kroger has a partnership with Roku to attribute sales, as do Target and Disney.]

Not all retailers will have the same level of quality media programs, technology and resources to invest in an advertising platform. But retailers that won’t become full-fledged media network-like platforms still have valuable data. [Those] retailers can push data to where advertisers are already buying media. What is holding this option back are privacy and regulatory issues, but the technology and processes for this already exist.

This interview has been edited and condensed.

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