Navigating the Maze of Retail Media Platforms
The explosion of retail media has left many marketers scratching their heads, wondering which platforms to invest time, money, and effort in – and how much? With the inability to shop in-store, came the compression of e-commerce among the retail media platforms and networks that could offer the greatest selection (at the lowest prices), most reviews, and quickest fulfillment. The below is an outline of the different “places” brands should be looking to sell and promote their products. Even if you’ve developed brand equity through marketing channels that point towards your .com site, we’re increasingly seeing spill-over and stand-alone demand for most products, categories, and brands on the platforms below. The right retail media mix is going to be a little different for every brand, so often the best path forward is partnering with an agency or consultancy that has the expertise and can understand your goals in order to help develop the best retail media strategy and advertising mix.
Stand-Alone Retail Media Platforms
Before you spend too much time considering some of the other retail media opportunities below, you should be confident in your strategy on Amazon. Amazon represents over 40% of US e-commerce sales, more than 5.5x compared to the next closest competitor, Walmart (source: eMarketer). That said, I am seeing more and more brands that are diversifying their channel mix by tapping into the platforms and networks below. If you don’t feel poised to expand beyond Amazon just yet or are looking to read up on additional topics in the retail media space, you’ve come to the right place!
As a percentage of overall YoY e-commerce growth, Walmart is growing faster than Amazon. eMarketer projects they will generate close to $65B during 2021, ~21% more revenue than in 2020. Depending on your category, this should be one of the first platforms you look to expand to (after Amazon). Earlier this year, Walmart rebranded their media management team to Walmart Connect (formerly Walmart Media Group). Walmart allows brands to manage their advertising through an in-house ads platform or by partnering with a SaaS vendor with Walmart API access. One obvious advantage that Walmart has is their massive brick and mortar presence. With over 5,300 physical retail stores in the US, Walmart is well positioned from an e-commerce fulfillment standpoint but also offers unique opportunities around omni-channel and curbside pickup. For brands, one thing to keep an eye on is Walmart’s partnership with The Trade Desk. Like Amazon, Walmart has a massive first-party data set that brands will undoubtedly be looking to tap into given Google’s move toward third-party cookie deprecation.
There is a myriad of ways to promote your products on Target.com. Target’s internal retail media group, Roundel, offers both managed and self-service options for advertisers. You also have the opportunity to leverage Target.com as a part of a broader retail media network strategy with Criteo or CitrusAd (more on that below). Like Walmart, Target has created a refined curbside pickup offering, allowing them to leverage their brick and mortar presence (about 40% of Walmart’s). Target’s total projected e-commerce revenue in 2021 is expected to be around $20B, representing just over 2% of total e-commerce sales in the US (source: eMarketer).
Similar to Instacart in the case of online grocery, COVID-19 has accelerated the share of wallet customers are spending on home goods and furniture. Most retail platforms are eager to play in the lucrative high price point furniture category but look for Wayfair to hold their own as they are able to focus on logistics and services that handle the delivery of bulkier products. In a Q1 ‘21 earnings call, CEO Niraj Shah said, “Shoppers need inspiration through relevant content, discovery through a wide assortment and confidence that is built through strong merchandising, fair prices, reliable delivery, and effortless customer service.” Wayfair has built an in-house internal Sponsored Products platform allowing advertisers to promote products on their platform. Brands have the ability to utilize both display ads and sponsored products via keyword bidding. Over 4,000 brands utilize Wayfair’s Media Services, representing 4x growth YoY. Perhaps most inviting for brands looking to sell their products on Wayfair is their 18M square foot warehouse network across North America and Europe. This network lets Wayfair ship to 95% of the US population within 2 days and 60% within 1 day, allowing them to compete with some of the fulfillment giants mentioned previously.
Retail Media Networks
If you’re a brand operating in the grocery space, Instacart needs to be on your radar. Some estimates expect online grocery to grow 15x faster than brick and mortar over the next 5 years. Grocery itself represents a $1.1T revenue opportunity in the US, so expect Instacart to continue to make strides in securing a larger piece of this pie given their narrow focus (compared to players with a more broad focus on retail). Instacart has the ability to deliver to the front door of over 85% of online grocery shoppers in the US so they are well-positioned in the space. Advertisers can leverage the Instacart Customer Intelligence Platform (ICIP) to understand their performance across 600+ (and growing) retail partners. Instacart is heavily investing in it’s platform as well as the monetization of its traffic. They expanded their team by over 50% in 2021, including corporate hires from Facebook, Goldman Sachs, LinkedIn, Amazon, Airbnb, and Google. In March of this year, Instacart’s valuation grew to over $39B compared to $17.7B in October of 2020.
Criteo is most well known for their display targeting capabilities but has built an extensive retail media network, beginning with it’s acquisition of HookLogic in 2016. Criteo’s leadership expects to power over $700M in media spend via retail media in 2021, up from $400M in 2020 (Source: Criteo). Their technology allows them to seamlessly integrate sponsored placements on retail media platforms that haven’t developed their own ad stack. This benefits retailers in allowing them to monetize their traffic while focusing on their core competencies rather than ad management and corresponding software development. For brands selling on these platforms, they can not only focus on an “always on” advertising approach but seamlessly manage their advertising across many platforms (abbreviated list below) out of one ads platform. Additionally, Criteo offers several attribution windows to allow brands a flexible understanding of their advertising effectiveness (this is unique compared to a platform like Amazon that does not offer varying attribution models). Criteo’s acquisition of Mabaya in May of 2021 is aimed at allowing more retail media platforms to monetize their site traffic without needing to develop in-house advertising solutions.
Notable North American Platforms Integrated*: Target, Best Buy, Ulta Beauty, CVS, Walgreens, Staples, Costco, Meijer, Macy’s
* Criteo has done a nice job developing it’s offering in Europe as well, highlighted by a recent agreement with Carrefour on the supply side.
PromoteIQ’s offering is similar to Criteo’s albeit with a different set of retail platforms. Acquired by Microsoft in 2019, PromoteIQ works with both retail platforms and brands to allow for targeted sponsored placements based on a consumer’s purchase intent. Home Depot reported customer engagement increased by 35% and promoted products grew by double digits year-over-year since it launched with PromoteIQ in 2019 (source: Search Engine Land). Momentum Commerce’s Caitlin Kang, Manager of Media Services, had this to say about leveraging PromoteIQ, “We have created a strong partnership with PromoteIQ to manage all facets of our client’s advertisements on Kohl’s. PromoteIQ built a robust solution that enables us to efficiently build our marketing strategy and execute seamlessly to achieve our client’s goals. We look forward to expanding our efforts to other PromoteIQ powered retail platforms.”
Notable North American Platforms Integrated: Kroger, The Home Depot, Kohl’s, Office Depot, B&H Photo, Overstock.com
CitrusAd is an early-stage venture-backed software company out of Australia that is seemingly vying for the same retail partners as Criteo and PromoteIQ. They appear to have done a good job convincing retailers that they are best off working with multiple ad tech partners (versus an exclusive agreement) in order to maximize yield and demand for retail media solutions. CitrusAd has used this strategy to secure partnerships with Target, Lowe’s, Shipt, Macy’s, ShopRite, GoPuff, and others. Their advertising capabilities include sponsored products, banner ads, branded landing pages, and email placement. The platform remains very early in its development but is definitely one to keep an eye on.
Other Emerging Players
Founded in 1998, Quotient rebranded from Coupons.com in 2015. They offer omni-channel digital marketing capabilities mainly around on-site promotion as well as a variety of digital marketing capabilities that drive sales through compelling consumer experiences. Their network of retail platforms includes Walmart, CVS, Dollar General, Albertson’s and others.
Kevel began as Adzerk in 2010. They focus on server-side API ads and have built not just an API ad server but tools for companies to build their own ad products. They aim to help retail platforms drive revenue and to enable brands to be less reliant on some of the larger platforms mentioned previously (i.e. Amazon).
Koddi is a technology platform that provides a robust network for brands to connect with consumers and grow revenue through native sponsored placements, metasearch, and programmatic media campaigns. Clients can harness real-time intelligence to drive informed decision-making across their marketing and media activities.