A recent study from eMarketer found that $1 out of every $8 ad dollars was spent on retail network ad platforms. That is quite the accomplishment for a category that didn't even exist all that long ago.
What are retail network ad platforms? They’re any paid media you buy on the platforms of Amazon.com, Walmart.com, and other retailers such as Kroger, Best Buy, Home Depot and many others. It obviously extends to their apps and any other digital real estate.
EMarketer writes: “Retail media networks threaten TV budgets and the ad platform duopoly. Google, Facebook, and the nearly $70 billion TV ad market’s stranglehold on branding dollars will feel the impact. The powerful behavioral advertising duopoly is encountering a cavalry of new media platforms equipped with better data. The most durable of advertising media, linear TV, will face an unprecedented threat to budgets. What happens when the dominant advertising vehicles of the past 50 years suddenly face better competition?”
I’m not sure I agree with the eMarketer characterization that retail media “threaten TV budgets and the ad platform duopoly.” I think the duopoly has been under threat for a while, and it is not retail media that are the last straw. Shifting viewer behavior, content plays and new content distribution options have been chipping away at TV budgets for at least five years, if not longer. And “FANG” (Facebook, Apple, Netflix, Google) is also a thing of the past, as Disney, Paramount, Discovery, Hulu, HBO and many other players have entered the platform wars. On the social media side, we now see TikTok, Snapchat and Truth Social (hahaha, only joking) chipping away at the established class of platforms.
I agree that retail media are becoming a significant advertising market, but so are gaming and influencers. Gaming this year even has its “Playfronts,” a name and concept I hate with as much gusto as I detest upfronts and Newfronts. But it does point to the platform reaching a level of maturity, and all of these are chipping away at the duopoly.
The 1,000-pound gorilla of retail media is, of course, Amazon, followed by Costco and eBay. Amazon’s ad offering has a 93% awareness among advertisers, and 82% have bought ads. Walmart only has 43% awareness and 33% bought ads, while Kroger scores 27% and 16% respectively.
Why are these networks so wildly successful? According to advertisers participating in the eMarketer study, the number one reason is that these websites generate significant traffic. And number two, they throw off a hell of a lot of data. That makes them very valuable to advertisers.
The one thing that's not mentioned is “pay to play.” You will not find any advertiser, retailer, agency or anyone else in the food chain mentioning this as a driver to invest. But of course it does play a role. I remember the good old days of retailers having their own print publications. It was always a smart move and almost an unspoken rule that if you wanted a special placement in a cooler or on the shop floor, you needed to buy some ad space to grease the wheels. And if you wanted your product to feature in the weekly circular, same thing.
The digital retail media have largely replaced these types of publications. But I am pretty sure it does not harm to make an investment in the medium dujour, owned and operated by one of your key distribution outlets. You still pay to play.