Retail Media Networks

Despite recessionary warnings sounding and brands tightening their belts, one area of advertising can’t seem to stop growing. Retail media was estimated to represent 11% of total advertising spend at the global level in 2022, a meteoric ascendance for a category that wasn’t widely recognized until a few years ago but is now under the higher level of scrutiny the spotlight provides. 

As the market matures and gets more saturated, cracks are forming that resurface old tensions in a brand-retailer ecosystem where the merchant side of the equation has frequently held the chips. Retail media’s stunning upward trajectory at the pure dollar level masks simmering frustrations from marketers that feel obligated to make buys or lose out, even if the strategy proves unprofitable or feels like a cost of doing business versus a nice-to-have perk.

With a lack of industry standardization, third-party solutions providers also see an opportunity to patch over the gaps that retailers are unlikely to mend of their own volition. And hovering in the background is the chance of consolidation that would lead to just a few heavyweights wielding influence. GroupM forecasted that ad revenue for retail-based companies would grow nearly 15% in 2022 to $101 billion and reach $160 billion by 2027.  

“The relationship has always been fraught,” said Nikhil Lai, a senior analyst that specializes in performance marketing at Forrester Research, of brands and retailers. “That relationship is now being put through the crucible of retail media, and it's being changed in many ways.”

Growing pains

Given the amount of money pouring into retail media channels, pretty much any company that owns a brick-and-mortar store, e-commerce website or app is racing to stand up an ad network that can grab a piece of the pie. Trade shows have been abuzz with the topic, with a raft of presentations from companies like Walmart, Target, Albertsons and Kroger, the latter two having since merged, touting the latest in their tech and media innovations.

“We've seen a tremendous growth in retail media network investments from our clients,” said Jeremy Woodlee, a managing director at Accenture Song, during an Advertising Week New York panel in October 2022. “Virtually every client we have, in retail and beyond, [is] looking at this.” 

Interest in retail media is driven by the promise that merchants can apply their troves of first-party shopper data to better target and measure ad campaigns, all while placing messages closer to the point of sale. The value of the “closed-loop” measurement proposition has only increased as third-party cookies face deprecation and performance marketing is decimated on social media platforms like Facebook and Instagram due to privacy changes implemented by Apple.

Meanwhile, marketers are under pressure to prove their efforts can be tied to results in the short term as the economy struggles. Ad spending steadily slipped in 2022 while brands contemplated how to make smarter choices with their dollars. 

There are other perks to retail media that stand out during an especially tumultuous digital period. Ads for pet food running on an e-commerce site that people visit to browse and shop for similar products won’t appear next to conspiracy theories or hate speech, for instance. 

“What brands appreciate about retail media is that there is stronger attribution data (from media impression to [omnichannel] sales) and they consider it ‘more brand-safe’ compared to other forms of traditional media,” said Rachel Tipograph, founder and CEO of MikMak, an e-commerce services provider, over email. 

However, traditional retailers’ grasp of digital technology has historically been patchy, to say the least. The fast influx of brand dollars to retail media has led many to rush to scale up their offerings and partner with outside vendors, but most networks remain fairly rudimentary. Advertising supply can be limited, according to Tipograph, which can drive up rates. Additionally, there’s a shortage of the types of real-time reporting and self-service functions that marketers are accustomed to on digitally native platforms. 

“Most of the growing pains come from the fact that retail media is at its infancy compared to more traditional forms of media,” said Tipograph.

There’s also the issue of internal silos on the retailer’s end. Retail media teams are relatively new and making smart hires, but a lot of shots are still called by the stodgier merchant side of the house. That can create complexities where the retail media division is working closely with certain brand partners that want to boost their profile, while other pockets of the organization are focused on conflicting areas. 

“There is a disconnect between the retail media side and the merchant side,” said Michael Harrison, a managing partner at the management consultancy Winterberry Group. “Ultimately, the [key performance indicators] and objectives of the organization have to be aligned. And right now that alignment is not occurring.”

Walled gardens revisited

Endemic marketers — the packaged goods companies that rely on store and digital shelves to reach shoppers — for years have also warned that retail media networks run the risk of mirroring the walled gardens of Facebook and Google that came to dominate the digital sphere. Retailers put on a compelling pitch to advertisers around driving incrementality but are keeping their data as close to the vest as ever. The result is a lack of transparency, some experts say. 

“Kroger grades their own homework, Walmart grades their own homework and everybody feels that it's not truly moving the needle and they don't trust the numbers,” said Harrison. 

Marketers have taken assessing retail media into their own hands or tapped outside vendors and agencies to get a clearer picture. Software companies and ad agencies with historic shopper know-how have been able to piggyback off this demand to help brands solve for what’s termed “signal loss.”

With more tools at their disposal, brands in 2022 are factoring retail media into media mix models (MMM) where it can be compared against the historic performance of other areas of spending.

“It's a matter of time, it's a matter of data volume. It's also just a natural human tendency to need verification,” said Forrester’s Lai. 

“This is the first year that marketers have sufficient data to add Amazon or Walmart into their MMM,” he added. “They're able to compare the profitability of retail media as a channel versus search versus social versus TV versus out of home.” 

Fear of retaliation

Subsequent whispers that some retail media is unprofitable stem from the fact that buys rarely happen in isolation for endemic brands.

Slotting fees, traditional shopper marketer agreements and other fines to serve retailers tally up, and are entrenched through long-standing relationships that predate the retail media craze. Some view the cumulative cost increasingly as a “tax” versus a benefit, according to Winterberry Group’s Harrison. That factor can feel particularly sharp when buying media outside the retailer’s owned and operated platforms, or “off-site.”   

“All of the markups on top of it turns it into negative [return on ad spend],” said Harrison. “The retail media networks aren't getting that inventory for cheaper, they're just adding fees on top of it, and the performance doesn't justify the increased fee.” 

Avenues of recourse are limited because endemic brands act as retailers’ customers. They rely on them for prime shelf placement and positive rankings on e-commerce marketplaces to drive sales. Some are starting to fear some form of retaliation if they spend less than they can on retail media, experts said. 

“The threat is imagined, but is nonetheless credible,” added Lai. “The brands need the retailers so much more than the retailers need the brands.” 

Deals like the Kroger-Albertsons merger at the same time may stoke the anxiety that power in retail media could be further consolidated into just a few hands, further tipping the scales and leaving brands with fewer alternatives over the long run. 

“You'll probably have, in reality, three big walled garden entities that compete against each other. I assume that there will be some form of a consortium of the other players that come together similar to an ad network back in the early days,” said Harrison. “It has to be that way. Otherwise, nobody will spend with them.”

Walmart’s U.S. advertising division, Walmart Connect, grew 41% year-over-year in the fourth quarter of 2022, according to an earnings statement. 

The retailer’s global ad operations were up 20% over the period and jumped nearly 30% in 2022, generating $2.7 billion for the full year, executives said. Connect and FlipKart Ads, an India-based business, were attributed as the biggest growth drivers. Strong performance from retail media bets supported healthy sales over the crucial holiday period, though Walmart warned of uncertainty ahead in 2023 that advertising could help alleviate.

Walmart’s advertising take for the year reached $2.7 billion, demonstrating that demand for its retail media networks remained resilient despite a sharp inflationary period that led many brands to pull back on spending. Ad sales growth in Q4 was particularly strong in relation to Walmart Connect, the company’s U.S. division that spent much of 2022 expanding its infrastructure and partnership roster in areas like ad tech and social commerce, including through a tie-up with TikTok. 

U.S. comp sales for the retailer climbed 8.3% in Q4, while e-commerce was up 17% YoY, bolstered by the grocery category. Despite the comparatively healthy holiday takeaway, Walmart warned that high prices and ongoing consumer pressures were leading it to take a cautionary stance for 2023.

Advertising could remain a bright spot as choppy waters endure following a chaotic few pandemic years. Executives have called out strengths in advertising more frequently to investors as retail media becomes a magnet for brand dollars and a more significant generator of income for Walmart. 

“We're driving a lot of change in our company,” said Walmart CEO Doug McMillon on a call discussing the Q4 and full-year results with analysts. “We'll keep shaping the business model by scaling our newer, mutually reinforcing businesses in areas like marketplace, fulfillment services and advertising.”

Walmart joins other retail companies, including Amazon, in putting a finer point on their ad sales expansion. An explosion of retail media investments has contrasted with the performance of more conventional digital players like Meta Platforms and Google, which are contending with weakening advertiser demand, sharper competition and a flurry of privacy-related challenges. 

Retail media at the global level is forecast by WARC to be the fastest-growing marketing channel in 2023, reaching $122 billion in revenue. The researcher expects it to become more valuable than linear TV by 2025.

Art Sebastian and his team of digital marketers weren’t floored when they saw the advertising landscape quickly changing a few years ago. As consumers were shopping online more than ever, data privacy became increasingly important and companies began deprecating third-party cookies.

“It's no surprise that brands were looking for advertising opportunities where there was higher ROI,” said Sebastian, vice president of digital experiences for Casey’s General Stores.

More than two years later — after building its digital ordering experience, implementing customer-facing experiences and even tapping into artificial intelligence to enhance its shopper insights — Casey’s is debuting its retail media network in 2023. It’s the second major U.S. c-store chain to do so, behind 7-Eleven.

The network, Casey’s Access, offers CPG companies and other vendors access to Casey's first-party customer data. Like with 7-Eleven’s retail media network, vendors in the program can then use that data to create and target relevant promotions, offers and other marketing content back through the network to customers.

For many c-store operators, retail media networks may be an enigma. But Emarketer estimates that by 2024, more than $61 billion in digital advertising will flow through retail media networks.

“Retail media has been a massive secular trend in marketing, and depending on the analysts that you believe, it's either going to be the fastest- or second-fastest-growing channel amongst all marketing budgets,” said Michael Greene, senior vice president of global vertical strategy for commerce media company Criteo. “You're reaching consumers at the most important time in their shopping journey — when they're going to buy.”

Retail media networks promise to be one of the shiniest new toys for c-store operators in 2023, bringing plenty of new growth and opportunities. But alongside its potential rewards come challenges and risks, experts say.

Frequent visits and impulse buys

In distinguishing from other retail media-focused industries like grocery and big-box retailers, c-store operators have a few advantages. One of those is the frequency with which their core customers visit.

“In grocery, you're thrilled if your guest is in your store once every seven to 10 days to stock up,” said Sebastian, who spent two decades at grocers like Jewel Osco, Albertsons and Meijer before joining Casey’s in 2018. By contrast, the best c-store guests make multiple trips a week, he said, “so that means that there is a high level of frequency of the relationship between the guest and the brand.”

Sebastian noted that this frequency means c-stores have a higher likelihood of getting their ads in front of guests — and engaging them — more often than other retailers.

“I think that's super unique for our channel,” he said.

When consumers visit c-stores, they’re often swayed by impulse purchases. This, too, can play to the industry’s advantage with retail media, said Jordan Berke, founder and CEO of Tomorrow Retail Consulting. 

Berke noted that since c-stores are all about immediate consumption, advertisers can drive high margins because customers will likely visit a c-store within hours of seeing a product advertised. He suggested c-store-based retail media give advertisers the chance to market products that benefit from this “immediate top-of-mind mentality.” 

“It's not like a planned purchase,” he said. “It’s like, ‘Now I need it.’”

Fuel represents another touchpoint c-store retailers can utilize in their retail media efforts, Berke said.

Casey’s is already tapping into fuel trips with Casey’s Access, having planned for this since it installed video screens at its fuel pumps years ago, Sebastian said.

“We did that intentionally because we knew that at some point, we would want to light those screens up with personalized content,” he said.

Sebastian noted the importance of c-store retailers taking advantage of the dwell time created by gas trips in relation to in-store media.

“If your tank is empty, and you've engaged the pump and you're fueling, we've got a captive audience and they're already on the property,” he said. “Delivering the right content is a huge opportunity to drive forecourt in-store conversion.”

Paul Brenner, president and chief strategy officer for Vibenomics, a company that powers audio in-store for businesses as part of their retail media networks, also sees fuel as a big retail media opportunity for c-stores. But he acknowledged that retailers must better connect the entertainment and ads at the pump with the products inside the store, calling fuel stations “programmatic clearing houses.”

“If you're going to take advantage of the pump, you're going to have to do more creative things to drive people into the store,” he said. “It's got to be a continuation of the experience.”

A small talent pool

In an area that’s so new, c-stores are relying on a mix of in-house marketers and outside talent to manage their retail media networks. Brenner said he’s never seen a retailer not work with a third-party service in building their retail media network.

While some of these third-party companies offer clients a white-label service that may give the retailer more control over their program, when it comes down to the coding and the work to “connect the dots and move the pieces,” it’s out of the retailer’s expertise, he said. Brenner noted that even on the media sales side — where a retailer may be a bit more qualified — they still need to source a third-party provider.

To help with Casey’s Access, Casey’s tapped third-party provider CitrusAd, whose “best practices and implementation teams” have been helpful, Sebastian said. CitrusAd has also worked on retail media networks for Hy-Vee, ShopRite, Lowe’s, Kohl’s, AT&T, Bed Bath & Beyond and others.

But that doesn’t mean Casey’s doesn’t have its own people working on Casey’s Access too.

“We manage our own paid media, so we have folks that understand the space,” Sebastian said. “We have folks that come from digital merchandising backgrounds, so we have a mix of talent internally that we've been able to leverage.”

The fact that Casey’s has employees who have experience in some aspects of retail media seems to put them ahead of the curve. Greene said that, historically, internal marketing or merchandising teams have been “thrown” into a new role or given new responsibilities and told to “figure it out” when their company takes on a retail media venture. 

“It was experimental,” he said. “It was, ‘Go find somebody who’s eager to do this, who understands the business, understands the relationships and see what they can do.’”

But as more retailers tap into retail media, some are realizing they need to “professionalize” their workforce, Greene said. Retailers are increasingly looking to hire people who come from digital media backgrounds, and they’re even poaching people from big tech companies like Google for these roles, Greene said. 

Bringing in people with this type of expertise is necessary if c-stores want to scale their retail media businesses, he said.

“This can't be a side gig,” he said. “This needs to be something [retailers] hire for with a dedicated skill set that's going to help build this.”

Harder on the smaller players

At a basic level, c-store operators will be challenged by the fact that the retail media business is far different than the traditional retail business they’re used to, Berke said. 

He noted that addressing this gap takes a “considerable amount of learning and investment,” which favors larger operators who likely have the investment capital and capacity to learn, acquire and build retail media muscle over time.

Smaller operators, meanwhile, will need to be more strategic. Berke suggested these types of operators form a retail media network alongside other independent or regional brands, since advertisers are only going to deal with so many platforms at once.

“The advertiser can't deal with thousands of small advertising channels,” he said. “You've got to figure out a way to become meaningful and have enough reach, data and trust to be able to compete.” 

Brenner agreed that smaller retailers with fewer assets will have a tougher time getting retail media networks up and running. He noted that many of Vibenomics’ c-store customers starting retail media networks — some of which even have hundreds of stores — are struggling to scale for these same reasons.

“C-stores are going to have to see a lot of buy-in across a lot of small groups to get the attention that they want in retail media,” he said.

Another challenge facing c-store operators is the low participation in loyalty memberships compared to other industries like restaurant and grocery. Since first-party loyalty data is directly tied to retail media programs, boosting loyalty participation should be a priority for any c-stores creating a retail media venture, said Brenner.

“The only value in retail media is when you have the first-party data about the person,” he said. “I need to know that [the customer] is a guy that comes here twice a week and buys these things.”

Beyond the investment, loyalty and scaling challenges, retail media networks come with risks for c-store operators as well. One is the possibility of fundamentally harming their core business by disrupting the shopper experience, Greene said. He noted that even testing a retail media venture is a “leap of faith” for many retailers.

Avoiding this risk is a “balancing act” that involves lots of trial and error, Greene said. This is why he suggests operators take baby steps into the space, so they don’t do anything that would detract from the core mission of their business and alienate their shoppers.

“You want to get that customer and keep that customer,” Greene said. “I think that's one area that every retailer including c-stores need to be looking out for.”

Reasons like these are why Casey’s took two years to develop its retail media network before launching, Sebastian said.

“With something like this, you've got to take your time, which is why we've been very methodical,” he said.

Getting creative with the data and ads

What does innovation look like for a c-store operator whose retail media network is implemented and churning out profits?

Greene said he’s seen retailers invest in new, higher-value ad formats as their networks grow, creating incremental opportunities for brands to scale.

“We're seeing a lot of retailers experiment with things like adding video ad units to their site,” Greene said. “Two years ago, that was unthinkable.”

Additionally, Greene has seen retailers focus more on data monetization as their retail media networks grow, meaning they’re applying loyalty data to things like social channels or even connected TV (CTV), a form of digital advertising within streaming content. Beyond that, he’s seen retailers offer brands new types of shopper insights beyond transactional media buying data.

One non-c-store retailer at this stage is Walmart. Greene referenced the company’ Luminate products, which use advanced data science to synthesize insights from across its omni-channel offerings.

“How do we influence a brand or agency's planning process with our data?” he said. “How do we go beyond audience data and bring things like shelf data in a programmatic way?”

Despite getting creative with how loyalty data is used, Brenner believes innovation in retail media comes down to one thing.

“Get results for the advertisers — just get results,” he said. 

Amazon in 2023 is shaping up to be a dominant force among retail media networks, commanding 37% market share in a space that’s estimated to be worth $100 billion, according to an analysis MediaRadar shared with Marketing Dive.

The ad intelligence firm found Amazon attracted over 14,200 companies representing 17,000-plus brands in 2022. General mass retailers, including Walmart and Target, made up the second-largest retail media allotment, or about 36% of the market. Amazon and mass retailers combined captured close to two-thirds (73%) of spending, pointing to power consolidation with a few large players. But MediaRadar emphasized that Amazon operates in a category all its own, meaning rivals will need to prioritize differentiation. 

Amazon is a bit of a unique player in the retail media game in serving as an e-commerce platform first. The company’s roots and scale in digital provide it with an advantage over legacy brick-and-mortar stores as brands look to wed online campaigns closer to the point of transaction, particularly as performance media receives greater attention among CPGs. 

Amazon’s digital bona fides are strong enough that no competitors came close to capturing its share of retail media dollars in 2022, even with a wide range of companies — including behemoths like Walmart and Kroger — ramping up their network investments. Mass retailers as a vertical did not achieve Amazon’s share of the market as a standalone company. 

“Amazon has such a tight grip on the digital space that they really sit in a category of their own,” said Todd Krizelman, CEO and co-founder of MediaRadar, in a statement. "Other players are growing quickly, but it will be difficult for legacy brick and mortar retailers to beat Amazon on its own terrain.” 

Amazon in the fourth quarter of 2022 saw ad sales up 19% year-over-year to reach $11.6 billion. For comparison, Walmart — which has significantly expanded its retail media operations and stands as the world’s largest brick-and-mortar business — notched $2.7 billion from ads for the full year.  

MediaRadar recommended that traditional retailers focus on channels where Amazon has less of an historic foothold to win over brand dollars. Those include in-store experiences, such as screen touchpoints, and email marketing, according to Krizelman. 

Amazon has recently piloted email tools to help merchants better connect with existing audiences, as well as reach new ones. It’s possible such offerings could become a bigger piece of Amazon’s retail media strategy as ad sales turn into a more significant profit driver. 

The top advertiser verticals on retail media networks in 2022 were consumer electronics (15% of total spend), housewares (6%), snacks and desserts (6%), household maintenance products (5%) and furniture and decor (5%), according to MediaRadar. HP, Palmolive, Pepperidge Farm, Planters, Ritz, Epson and Starbucks were some of the top brands cited. 

MediaRadar examined nearly 30 of the top retailer sites for its research. The study’s sample, which focused on display and sponsored ads across key categories, represented about $5 billion in spending, the company said. Sponsored and display ads remain some of the most popular choices for brands using retail media, though the sector has expanded into other areas, including connected TV and video, that are viewed as increasingly competitive. 

While marketer interest in retail media networks shows no signs of slowing, 88% of brands feel they are somewhat or heavily influenced by retailers to buy advertising on their networks, according to a 2023 report by the Association of National Advertisers (ANA).

Retail media networks have quickly risen to become one of advertising’s shiniest toys, predicted to reach an ad revenue of $52 billion in 2023 and $61 billion in 2024, according to eMarketer data cited by ANA. However, not all that glitters is gold, as evidenced by the marketers who report having underlying concerns with their retail media bets.

Among issues, perhaps most notable — and expected — are suggestions of a toxic relationship between advertisers and retailers, with brands viewing retail media networks as a “have to buy” versus a “want to buy,” per the ANA report, titled “Retail Media Networks: A Forced Marriage or Perfect Partnership?” The report’s characterization of marketers as “reluctant buyers” is supported by the high percentage of brands who report they are somewhat or heavily influenced by retailers to invest in advertising on their media network, with one respondent noting that “it’s a power struggle right now.”

Further, 42% of advertisers report questioning their investments in retail media networks, viewing it as both a valuable advertising tool and a cost of doing business. A lack of both measurement standardization and transparency present additional challenges. 

Retailers continue to push efforts to build out their networks in the chase for ad dollars, with companies like Lowe’s in-housing retail media efforts in the name of efficiency and others banding together for an expanded digital footprint, as seen with the Kroger-Albertsons merger. However, as retailers sell more ads, power-balance concerns by marketers are mirrored beyond ANA’s findings, signifying growing pains that could prolong retail media’s maturation.

Still, the issues have not proven detrimental at this point, with retail media networks being considered foundational platforms, praised for being viewed as a way to counter potential shifts by shoppers to store brands and less prone to macroeconomic impacts.

Despite hesitations, 56% of respondents reported working with at least five retail media networks at the time of the survey and the majority expect that total to grow, viewing the strategy as both recession proof and less prone to budget cuts. ANA’s report, conducted in the summer of 2022, surveyed 138 of its members, 80 of which use retail media networks.

While the majority of respondents said they worked with five or more retail media networks, 40% reported that they were using between five and nine and 16% said they used at least 10. Looking ahead, 58% of advertisers believe they will utilize more retail media networks than they intitially were and no advertisers believe they will be using less. The timeline coincides with the expected end to third-party cookies by Google in 2024, which could partially explain why bets might rise. 

As retail media networks grow up, another concern to be addressed is a lack of standardization across platforms, which is the biggest problem brands face as 57% of respondents say they feel this way and cite difficulties with cross-platform comparisons as the driver. The second biggest challenge, reported by 44% of marketers, is walled-garden environments, with some noting they were “driving blind” when it came to enhancing the deployment and results of various activations. Combined, the two concerns are what’s blocking brands from fully optimizing investments with media networks, per the report.

The majority of respondents also noted their retail media budgets are not incremental, instead being funded from existing advertiser budgets, with a major fear being that budgets used to drive brand growth for new customers are instead being used to fund sales from existing and known customers, challenging networks to prove how they can drive long-term growth over short-term success. 

“If we just keep reaching the people who browsed our pages before, bought our products before, we’ll never grow our business or bring new people in,” another respondent wrote.

NEW YORK — As other channels see spending dip with the economy in a rough patch, retail media continues to soar. A steady influx of investment has led pretty much every major player in the game to stand up some sort of ad network leveraging first-party shopper data, with the concept more recently spreading to new industry verticals. GroupM estimated that retail media accounted for 11% of total ad spend and 18% of digital advertising globally in 2022. 

“Virtually every client we have, in retail and beyond, [is] looking at this,” said Jeremy Woodlee, a managing director at Accenture Song, the management consultancy’s marketing services arm, on an Advertising Week panel in October of 2022.  

Peering past the positive numbers at the macro level, questions arise about how many companies can truly grab a piece of the retail media pie and sustain a business. Budget-strapped marketers only have so many dollars to spend and heavy weights, like Kroger, Amazon and Walmart, have operated their offerings for years, granting them mature technology and scale. Others have only recently jumped into the space and hope specialization and partnerships can help them stand out from the pack.

“The problem that we see touching a lot of companies is, you have to have an immediate interest in this,” said Woodlee of retail media. “It's not like you can sell the vision and have three years. You've got to generate immediate value as a company.” 

Woodlee was joined during the discussion by executives from Lowe’s and Marriott, which introduced their media networks in October 2021 and May 2022, respectively. In both cases, executives indicated that the strength and reputation of their brands — as well as the loyalty of their customer bases — could translate to advertiser interest in their budding media operations.  

“We've kind of played catch up in the sense of our toolkit and in our talent,” said John Storms, head of sales at Lowe’s One Roof Media Network, at the 2022 show. “We really feel like our differentiation here is: We're taking a page out of Lowe's. This is a 100-year-old company that is built on customer service.”

A representative from Marriott similarly aligned the hospitality chain’s fledgling media bets with its “luxury-focused” consumer-facing position. The idea is not to plaster ads everywhere but work with select brands to create a well-rounded experience for travelers who might be on the hunt for things to do or shop for on their trips. Marriott has the benefit of being the first in its sector to latch on to the media network craze, along with wielding data derived from the Bonvoy loyalty program that spans its portfolio. 

“We wanted to make sure that anything that we do is highly curated,” said Nicolette Harper, vice president of global marketing and media at Marriott International, on the panel. “A lot more curated than some of the traditional media networks, so we can kind of keep our brand and what we stand for intact, but also deliver on this bigger experience.” 

The curated approach

What does a more specialized media network look like? Harper illustrated a case where a traveler going on a ski trip might forget their winter coat at home and search for North Face apparel nearby, an area where Marriott could assist. Other examples skewed toward the experiential. Someone on vacation might want to check out the opera or other local activities where Marriott has an ear to the ground through its sprawling hotel network. 

“We don't want to disrupt what you came to do, but we want to enhance everything around that,” said Harper.

Marriott has to contend with some delicate areas that don’t apply to retailers that mostly serve their messages on websites, apps and in the shopper aisle. The level of curation Harper touted risks coming across as invasive if executed poorly, as does all hyper-targeted advertising.

“Think of the screens in the elevators or the gyms or even in your own room. That's a pretty intimate experience,” said Harper. “It's a very interesting area that we want to be really, really thoughtful — certainly starting more contextual — because we don't want to be creepy Big Brother, either.”

To address these complexities, Marriott is working with Yahoo, which moderated the panel, on the supply side of its ads business. Lowe’s also partnered with the tech firm as it moves to scale its off-site media operations. 

The home improvement store initially focused on owned properties like Lowes.com with sponsor and display units that are typical to retail media. While the company has over 72 million customers, according to Storms, it sees its next big opportunity with outside channels like digital out-of-home. 

Lowe’s views its customers as high value since they’re making deliberate efforts to refurbish their homes with high-consideration purchases. Asked about non-endemic verticals that could be brought into the fold, Storms pointed to moving companies, insurance firms and cable providers that might want to reach people who just moved into a new place or are looking to upgrade their old one. 

“These aren't immediate purchase decisions, these are decisions that are taking and shaping months in advance,” said Storms. “It's important for us to think about that full lifecycle from the home improvement, home lifestyle standpoint.”

Time will tell if brands have the same degree of patience.

NEW YORK — Retail media generated a lot of buzz at 2022 Advertising Week New York, reflecting its status as a growth driver in an otherwise cooling ad market. While the category has drawn a deluge of new entrants, Kroger has been operating a network since 2017, a degree of maturity that led to it recently expanding into other emergent channels. 

The country’s largest grocer in September 2022 added connected TV and video inventory to its private programmatic marketplace, another step beyond the display and sponsored product listings that make up a sizable chunk of retail media activity. An addition to the program includes ad-tech partnerships with Magnite, OpenX, PubMatic and Xandr to help advertisers better target their messages. Kroger’s retail media business is part of the Kroger Precision Marketing (KPM) arm and is powered by shopper data derived from a loyalty program that claims to capture 96% of transactions.

“There are multiple channels and the channels need to be leveraged for the right time,” said Cara Pratt, senior vice president of Kroger Precision Marketing at 84.51°, about the CTV push. “Working through the sequencing of an effective investment strategy is really important.” 

As KPM broadens its purview, it’s set for an even bigger shakeup. Days before the October 2022 show, Kroger announced it would merge with rival Albertsons, a self-admitted “late mover” in retail media but one with a vocal presence at Advertising Week. Pratt declined to discuss the deal beyond pointing to a press release but spoke about KPM’s CTV ambitions and how the landscape is changing (also a topic on a panel she led later in the day).  

The interview, which was conducted in October 2022, has been edited for clarity and brevity.

MARKETING DIVE: When we first met last year, Kroger was launching a private programmatic marketplace. This year, you've got a big theme around CTV. Why is that a channel that's come into focus?

CARA PRATT: When we made the announcement last year for the private marketplace, it was wave one, with programmatic display the first wave. 

A lot of the work that we've been doing over the last several months has been tethered into ensuring that we have the right integrations with the SSPs. The inventory side of things is critical with the announcements we’ve made, with Magnite being a primary one. That extends on top of OpenX and PubMatic and some other core players as well.

Obviously, we've been watching CTV viewership trends for some time. Nielsen officially announced that streaming surpassed cable for the first time ever in July. Really, it's around making sure that we're creating the right access to where consumers are consuming content. It's a step in the journey.

A topic of discussion on your panel is addressability. CTV has seen increasing consumer adoption, increasing brand investment, but there are still gaps. What about Kroger's data gets over the gap? 

PRATT: We've got access to the right inventory and brands because their traders can have hands on the keys. They can put their own brand safety standards on top of that. It's creating an environment where we've identified who are the right households to expose and what's going to drive the highest business impact.  

A lot of the conversations we have with brands and agency partners are also around the ultimate objectives they have. There are brands that are leveraging a real pinpointed activation opportunity for a re-engagement plan for lapsed buyers. There are brands that are really looking to drive net incremental shoppers from a household penetration gains perspective. Being able to slice and dice the cohorts of consumers that you want to expose content to or different creative to is really critical. That's why the connection back into their own tech stack and their own safety standards is a really important piece. 

Then, there’s living up to the measurement standards. It's a real challenge in the industry right now with the lack of standards that exist. We want to continue to put focus on standards that get into business outcomes versus standards that get into media consumption. Moving beyond viewable CPMs and click-through rates and those types as an engagement proxy to an actual business outcome. There are a lot of ways to augment what has historically been a common view of performance that has never really gotten into the heart of what performance really means. 

If you could have a solution tomorrow to enhance the CTV side of the business, what would you want?

PRATT: The operational side of influencing media at scale is really front of mind for us. What does sustainability in media really look like? Supply path optimization is going to be an interesting set of innovation and technology accelerations that are going to create a meaningful opportunity for operators that are fueling media investment activation to optimize at scale in different ways than we've optimized for to date. We're excited about the continued evolution of the landscape.

Kroger has been in the retail media game a lot longer than other retailers. It is now this huge investment channel across the board. Is CTV the next big competitive battleground? 

PRATT: There's no doubt that mature retail media businesses that have the right scale in addressability and in their data foundation can impact advertisers well beyond owned and operated properties. It is making sure that we bring a more performant media ecosystem in the off-property space as well and make those publisher assets work harder. That's where CTV is going to be a big play as investment starts to evolve between linear and streaming. Social commerce is going to be a really fast-moving place because of consumer adoption and the ability to inspire and connect that inspiration. You can go from awareness to conversion in an instant.

Those are the spaces that we think are gonna be really strong engines to the future. That retail media, again, for those that have the right scale and rigor and appropriate practices at play, are going to be able to influence productively.

Social and streaming commerce are interesting. It seemed like they were set for a bigger moment earlier in the pandemic, and then some platforms pulled back their investments. Are you generally optimistic?

I'm an optimist for it, not necessarily for Kroger to be a publisher at scale on the social commerce side, but really about enabling core social commerce platforms to be able to inspire, engage and convert in a frictionless way. 

Anything else you'd highlight?

PRATT: The one thing that I'm hearing and seeing, not just here at this conference but that has been happening for the last nine to 12 months, is this attention measure. That's something that I have a level of curiosity around as we think about the future of media, measurement practices and making sure that there’s discipline, from an industry perspective, around what we're solving for.

The industry doesn't need another vanity metric. That's a pseudo-lens into whether an ad had a degree of influence into changing behavior. It really is about continuing to drive that rigor and focusing on brand outcomes. There's a great degree of intrigue and then inconsistency in understanding the role that, potentially, this new measure could bring forward.