Exploring why brands lack complete commitment to retail media networks

Guest contributor Darrick Li, Vice President of Sales for North America Media Owners at Guideline, shares his perspective on the ad-tech industry. Opinions expressed are those of the author.

The ad-tech industry has a tendency to overcomplicate things with technical jargon. In reality, the industry is working towards the common goal of helping brands connect with the right consumers through personalized and impactful experiences that drive business results. It's not as complicated as it may seem.

In a time of economic uncertainty and rapid technological advancements, the advertising industry has become a complex and constantly evolving environment. Brands are now grappling with the intricacies of these changes, making advertising investments more challenging. This trend is evident in new mediums such as CTV, and is now being observed in retail media networks (RMNs).

RMNs, which are digital platforms owned by retailers and offer advertising space, present a direct opportunity for marketers to engage with consumers during the purchasing process. Given these benefits, why wouldn't a brand choose to invest? Let's delve into the numbers across important industry sectors to gain a deeper understanding.

The automotive sector has seen lower investments in RMNs compared to other industries, such as travel. This is due to the challenges faced in the supply chain during and after the pandemic, resulting in a shortage of new car inventory. As a result, the sale of used cars and related aftermarket products has thrived. To capitalize on this growth, AutoZone, a retailer of automotive parts and accessories, launched a new retail media platform in 2021, offering personalized marketing campaigns using first-party data from loyalty and CRM customer profiles. Similarly, the travel industry, which was also heavily impacted by the pandemic, has only recently started experimenting with RMNs, as seen with Marriott's launch of the hospitality industry's first media network in 2022.

Given the current context and the impact of third-party cookie deprecation, it makes sense for automotive and travel verticals to leverage their first-party transaction and customer data as a competitive advantage and additional monetization channel. In light of this, companies that already have their own RMNs are unlikely to invest in other networks.

Retail media networks (RMNs) face similar challenges to other advertising channels, including performance, cost, uncertainty about value and measurement, and the need to select the right partners to leverage the technology effectively. Unfortunately, current RMN spending visibility is limited, leading to fragmented strategies across retailers. This lack of uniform measurement makes it difficult for marketers to compare RMN performance with other channels. Additionally, some argue that monopolization in the market leads to inflated charges for audience access. With return on ad spend and outcomes being top priorities for marketers, it is crucial for RMNs to demonstrate their value.

First, RMNs should assist brands in helping themselves by identifying areas where brands are spending excessively and offering strategic solutions that cater to their specific business needs. RMNs need to grasp the value that these channels provide to marketers and find ways to replicate that value.

Rather than pressuring brands to purchase retail media inventory solely based on their audience, RMNs should take a supportive approach. They should empower brands to grasp the benefits of the technology and how it can add value to their business. After all, everyone responds better to positive reinforcement than forceful tactics, don't they?

To achieve this, RMNs must invest in empowering products, such as integrations that enable advertisers to track spending within their overall insights. These integrations will help RMNs establish themselves as an interoperable addition, rather than a siloed project, in the market.

Furthermore, RMNs should set aside their egos and focus on the ultimate goal, which is to support the universal measurement of RMN activations. Just as seen with CTV, universal measurement is essential for marketers, and they will demand it as a prerequisite for investment. By offering transparency and understanding, RMNs will start to see a flow of funds.