Retail media advertising: E-commerce as AdTech’s next frontier

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The deprecation of advertising IDs and third-party cookies has disrupted the digital advertising market. Leading AdTech vendors, publishers, and advertisers are exploring alternative ways to build addressable user profiles without violating privacy regulations. With the wealth of first-party consumer data, retailers have become key players in helping businesses maintain connections with increasingly anonymized audiences.

For instance, media agency Publicis Groupe acquired the CitrusAd retail media platform and integrated its proprietary identity solution Epsilon’s CORE ID, which is available for activation through the TradeDesk DSP. The integration didn’t just allow Publicis’ clients to reach their audiences on a retailer’s e-commerce sites but also helped to find them off-site, on CTV, display, digital screens, and via email.

In this newsletter, we’ll explore the market of retail media networks, their role in programmatic advertising, the challenges undermining their further growth, and the actions retailers must take to remain competitive in the advertising space.

If you’re interested in diving deeper into the topic, check out our detailed guide on the retail media ecosystem. 

What is а retail media network?

A retail media network is a retailer’s unified ecosystem that enables brands to advertise on their website, app, email distribution, and other digital properties. Brands can use various ad formats to reach consumers with the right message throughout their journey, from product consideration to the point of sale. It’s like in-store advertising but in a digital environment. 

Retail media networks overview 

There are two retail media network types depending on the domains of organizations that own them: Networks of retail giants and connected networks built by tech companies.

Proprietary media networks of major retail companies

Proprietary ad networks of major retail companies are often walled gardens with limited integration into the programmatic marketplace. However, there can be nuances depending on the retailer and their strategy.

Amazon Ads. Retailer and e-commerce giant provides self-service advertising products within Amazon Ads. Its customers have access to one of the most extensive sets of consumer data and a massive audience of over 200 million users just in the US.

Walmart Connect. The largest US retailer company is also competitive in the digital advertising space. Its closed-loop system Walmart Connect allows advertisers to reach over 150 million weekly customers. Brands can combine ads on the retailer’s digital properties, regular stores, and third-party sites. 

Tesco Media and Insight Platform. The British multinational retailer launched the media network in November 2021. Brands can target consumers using a first-party behavioral dataset from Clubcard, Tesco’s loyalty program with more than 20 million members in the UK. The platform recently partnered with such media owners as Pinterest, ITVX, and The Trade Desk. 

Connected retail media networks

Connected networks aggregate inventory of multiple retailers, unify targeting and measurement across different platforms and provide advertisers with a convenient interface for running campaigns.

The Criteo Retail Media Platform facilitates retail media partnerships between retailers and brands. It offers a self-service DSP and API for integrating marketing tools, giving advertisers control and transparency over their retail media campaigns.

PromoteIQ, acquired by Microsoft in 2019, is a retail media platform connecting brands to global e-commerce sites of international retailers focusing on numerous product categories. The network’s benefits are robust data and analytics and campaign optimization.

CitrusAd by Publicis Groupe streamlines media sales and ad-serving for the world’s top 20 retailers, powering over $2 trillion in yearly online sales. Its partners include Lowe’s, ShopRite, Petco, and other businesses across 22 countries.

Programmatic adoption in the retail media networks

Many retail media networks work as closed-loop ecosystems: Only partners or agencies they contract can access their inventory for ad placement. 

However, platforms increasingly turn to open AdTech (programmatic approach), where retail media inventory is connected to off-site properties and third-party media for the omnichannel reach in retail campaigns. 

Retail media networks are balancing between the programmatic and walled garden approaches in terms of providing access and data to third-party bidders.

Amazon is well-known for its closed-tech approach to creating its own content fortress. Advertisers can only use Amazon DSP to leverage Amazon audience segments and attribute ads to sales. Similarly, Walmart’s strategy is hardly open programmatic, using the white-label version of the Trade Desk without access to its wider programmatic infrastructure. 

Target’s Roundel, however, takes a different approach. While having an exclusive SSP partner, Index Exchange, it is open to outside DSPs. Kroger, the fourth-largest retailer in the US, also chooses an open AdTech approach, leveraging an open PMP program that provides access to third-party DSPs.

Pacvue, Skai, and Criteo have a special place in this emerging marketplace, acting as agnostic DSPs for the retail media space. They allow advertisers to run campaigns on the major open retail marketplaces and supply this media buying with omnichannel analytics and recommendations for better placements.

The demand side is also showing an increased interest in proprietary retail media capabilities, leading to a wave of acquisitions by major media agencies. Publicis Groupe acquired CitrusAd and eCommerce intelligence platform Profitero, while WPP launched its own retail media offering, Everymile.

Challenges to further growth of retail media networks

For retail media networks’ continued growth and success, it is crucial to address two key challenges: customer data privacy and data silos.

Customer data privacy. While retail media networks use first-party data, they do not own it, and data belongs to consumers. Therefore, retailers must ensure they comply with privacy rules and create a data governance strategy outlining explicit user consent for personal data use, secure data storage, and data sharing mechanisms with advertisers. Additionally, retailers can devise a privacy-centric solution like a data clean room to share data with advertisers.

Data silos. Retail media is currently going through the same phase as display advertising during the rise of ad networks. Retail media networks often work as walled gardens as their inventory is limited to owned websites and apps. To fully integrate into the marketplace, the retail media industry needs standards that would allow advertisers to use a unified platform to purchase retail media and have more holistic measurement and attribution.

A path forward for retail media networks

Deepening advertiser relationship. To deepen advertiser relationships, retailers can complement first-party purchase and intent data with additional (e.g., transactional) data to lure media buyers with more in-depth audience segments. Partnering with advertisers is also an option, but retailers must comply with data privacy laws. Retailers can use a closed-loop system that matches data points and improves attribution without sharing personally identifiable information.

Developing an identity strategy. To get accurate customer insights, effectively cooperate with advertisers, and provide actionable targeting, retail media networks must control their customer identity — distil multiple touchpoints to a unified view of the customer. Infrastructure that enables identity strategy must complete existing technology, permit the creation of retailer-owned customer segments, smoothly integrate with numerous data sources and partner systems, and manage data according to privacy standards.

Final thoughts 

Retailers can reap the benefits from the situation around new privacy policies by starting their ad businesses. There is also potential for growth for AdTech companies that can provide media buying, measurement or data capabilities in this environment.

The future of retail media networks is bright, but they need to tackle these challenges head-on to succeed. What do you think the future holds for retail media networks? Share your thoughts in the comments section below.