Can You Afford To Work With Retail Media Networks?

A growing number of marketers are frustrated with Amazon, for good reason. It’s not the most considerate partner, particularly for CPG brands, which confront a range of advertising and inventory issues on the platform. Since there seems to be a new retail media network every month, many are looking for other platforms to work with.

Should you?

Certainly, Amazon’s Black Friday ad reporting outage, where ad spend data simply vanished for several days, showed the dangers of over-reliance on the platform.  

Yet marketers need to avoid knee-jerk reallocations. Most need a now, next, and later plan for expanding beyond Amazon.

For now, is really the only major platform that can challenge Amazon in terms of audience size. And return on ad spend (ROAS) is improving there, thanks to an update in the auction format. Even so, the platform typically represents only 5%-10% of Amazon’s overall sales volume for endemic brands.  And a brand’s specific percentage matters -- it’s the point beyond which shifting spending yields diminishing returns.



Next, experiment with a few other retail media networks. Pick retailers the sales force relies on most, or wants to deepen relationships with. But remember that managing a smaller channel is likely to be the same amount of work for lower return.

Every retail media network operates differently. That means moving money between them isn’t as simple as pressing a few keys. Someone needs to manage that account, likely a new agency and/or internal person; and they need time to sync marketing with the new platform’s capabilities.

What’s more, new retail media networks have their own data silos. Amazon Marketing Cloud shows me if someone who saw my ad bought on the platform or a direct-to-consumer site, whether my product is a candy bar or a car. The newer retail media networks can’t do that yet.

For these reasons, brands already selling more than $20 million per year on Amazon have the greater case for expansion. Smaller brands will be better off strengthening their marketing on Amazon.

The next step for retail media networks will be sharing anonymized shopper information in data lakes. Their survival depends on it. Once they do, there will be very real and attractive reasons for brand advertisers to allow their eye to wander away from Amazon.

Ultimately, all brands will be able to predictably target a large number of shoppers throughout their purchase journey using a portfolio of retail media networks, rather than spreading and diluting their brands. Until then, small and midsize marketers, in particular, need to fortify their presence on the biggest marketplace to sustain their brands’ velocity. 

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