The Surge In Retail Ad Platforms, Demystified


There's been a blizzard of news in the retail ad biz lately. Target just named Sarah Travis, a Google alum, as president of Roundel, its in-house media company. Walmart ad unit Walmart Connect says it's officially launching its demand-side platform, just in time for the holidays. EBay is introducing an offsite ad program. And Amazon recently said  its ad unit brought in $7.9 billion in the most recent quarter, an 87% year-over-year bump.

Todd Szahun, senior vice president of Kantar Consulting, tells Marketing Daily why the field is changing so rapidly.

Marketing Daily: Why the rapid growth in these platforms?

Todd Szahun: Marketers want to get as close to the moment of purchase as possible. Broadly, there is a sort of collapse of the funnel. It's like a migration from a mass-market approach to advertising to what I call the masses of markets approach.



There are more granular and addressable audiences available now, based on the most recent first-party shopper data. Manufacturers can customize advertising far more than traditional digital advertising.

Marketing Daily: So the benefit to marketers is clear. And it's lucrative for retailers. Is this something you expect all retailers to offer, eventually?

Szahun: Yes, I call it the "Oprah-fication" of retail media: You get a retail media business! And you get a retail media business, too!

Besides Amazon, Target and Walmart, Kroger Precision Marketing is very innovative, too. Both CVS and Walgreens have one. We do expect every retailer to stand up these capabilities. It's pretty simple. Retail, especially grocery, is a very low-margin business. And it costs relatively little to add these programs, and that margin is high.

Marketing Daily: So who's winning?

Szahun: Amazon, by far. It recently announced it expects to generate over $22 billion in annual revenue from advertising. That's more than two times the ad revenue of Snap, Twitter, Roku, and Pinterest combined.

It's even on track to surpass Amazon Web Services. It's the gift of growth that keeps on giving. It's got more than 10% of that overall total U.S. digital advertising market. Now that everyone can see how real those dollars are, they want to get in on it too.

Marketing Daily: How significant a factor has the pandemic been in this?

Szahun: Big. There's been a revolution in the last 17 months, with more change in online behavior than in the previous five years. And retailers adapted in so many ways. Now manufacturers are doing everything they can to address the changes in shopping behavior, including the increase in digital purchases and the increase in time spent online. Our most recent data shows people are still spending 50% more time shopping online than they used to. And 39% are shopping at more online retailers.

Marketing Daily: How much more are they spending?

Szahun: We see double- and triple-digit increases in retail media budgets.

Marketing Daily: So who's losing?

Szahun: Much of this funding for retail media investment was incremental. It's easy to justify more spending because of the big increases in ecommerce.

This advertising is highly targetable and easily measurable. Anecdotally, we hear other retailers are trying to go after budgets aimed at Amazon.

Marketing Daily: Looking back over the last 18 months, what's been the most surprising development?

Szahun: No one saw COVID-19 coming. What's surprised me most, though, is the speed that retailers responded. Stores quickly turned physical locations into omnichannel ones, adding click-and-collect, contactless pickup, darkening stores to fulfill ecommerce, with dedicated parking spaces.

As this new normal continues, they'll keep changing to keep up with the way people shop. And that changes things for manufacturers.

Marketing Daily: How so?

Szahun: That manufacturer-retailer relationship has always been complicated. It's been kind of cold, with firm rules. But with this latest evolution, I think a big surprise is that retailers need brands, and brands need retailers -- now more than ever.

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