By Kimeko McCoy • August 29, 2024 •
Ivy Liu
Retail media networks are seemingly big business.
The ad industry’s latest shiny object is expected to account for almost a quarter of all U.S. media ad spend in 2028, according to eMarketer. At this point, there are more than 200 retail media networks and counting as retailers look to cash in on their customer data, drumming up alternative revenue streams.
But for all its growth, standardization and transparency remain a pain point yet to be resolved. According to one agency CEO, the lack of transparency has led to suspicions of quid pro quo relationships between media buyers and retailers, in which retailers promise in-store shelf space in exchange for brands buying into their RMN.
Simply put, “If you’re not paying this retail media network, you’re not going to be on the shelf,” said the agency exec, who spoke to Digiday for our latest Confessions series, in which we exchange anonymity for candor.
This conversation has been lightly edited and condensed for clarity.
The frustration is their price tag. Their price tag can be $25 CPM or higher. So a lot of our clients, especially those that are not necessarily dropping $10 million a month, sarcastically speaking, especially the clients that are in the CPG category, don’t necessarily have that kind of fund to be able to support that all the time. So they need another workaround.
So what’s the workaround? How do you navigate those prices?
Our work around is really more closely focused on, say, for example, Costco shoppers. I don’t necessarily need to know exclusively if you bought something last month in the Costco frozen food department. I just need to know that there’s a charge on your Visa card for Costco and I have other [alternative, more affordable] data that has maybe some other signal to us. When I combine those two together, my CPM price tag drops by a half, if not more. So if you want to be super specific about somebody who bought the 12 pack or the 24 pack of blah, blah, blah product, yeah, [RMNs will] have that level of data to a large degree. When you’re just trying to build a brand and sell your products and get as close as you can to the most qualified consumer, there’s a lot more affordable data that just is flying out there right in front of us that you can just tap into, and then your dollars can go so much further. But what I just said is a direct conflict of what agencies want to do.
What makes you say that? What do agencies want to do instead?
They want to charge the client maximum amount of dollars. “Look at all the millions of people we got to reach. The CPM is $25 therefore, do the simple math, and you need a gazillion dollars to go to market.” That’s a big frustration for a lot of major marketers, but you’ve got to think there’s a lot of these little brands out there.
There’s a lot of brands out there that want to compete. These retail networks open up, it gives them more opportunity to reach those consumers, but it’s still coming at a very high price tag.
I feel like it’s fundamentally the rules of engagement with the retailers [say], “Hey, if you want your product on the shelf, you need to buy some of my retail media network. Otherwise, you lose shelf placing, or you lose preferential treatment.” So it becomes like wait, isn’t this more of a quid pro quo? It’s the same thing as, well, you would have to pay premium placement for the shelf placement. But it’s not really.
How so?
This is a very different game. So when some of our clients are being gunned to the head that you need to buy our retail media networks or risk being dropped, that’s messed up. As more and more of these networks expanding and growing to this whole space, I feel like there’s this risk of the only players [brands] are going to be left at the end of the day are going to be the big players who have all the money to be able to pay this retail media network, because there could be a complete and total blackout.
Is quid pro quo becoming the norm?
From our experience, our observation, it’s almost the standard. They’ve discovered that they’ve got all this data, they can leverage it, and then it becomes a revenue stream for them that they never had before.
https://digiday.com/?p=553871
