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“No marketer, whether it's outside retail media or within retail media, should take numbers for granted. The rules of the game will always be that a publisher is selling ROI [return on investment], and the advertiser who has to pay the bills needs to double check this and get a sense for where he or she stands.”— Andreas Reiffen, Co-Founder and CEO, Crealytics
In 2023, retail media networks grew about 16% year-over-year (YOY), generating nearly $44 billion in revenue, according to the IAB/PwC Internet Advertising Revenue Report 2024.
Retailers are increasingly becoming publishers, but not all retail media networks are created equal, and the industry still has persistent problems with measurement, targeting, and transparency.
But Andreas Reiffen, co-founder and CEO of the retail media supply side platform provider Crealytics, says there are effective ways to navigate today’s constantly changing retail media landscape.
Reiffen appeared on a recent episode of the “Unpacking the Digital Shelf” podcast, “How to Access and Measure Retail Media Networks in the Wild West Era,” to share his perspective on how both brands and retailers can win in these evolving times.
If you want to define the current state of retail media today, you could use one word: Amazon.
Just like Amazon rules ecommerce, it has become an early leader in this nascent space. Amazon currently owns about 75% of retail media spend, according to eMarketer, with dozens of retail media networks fighting for the remaining 25% of the pie.
Reiffen says Amazon has become a first mover in retail media because it has made much more inventory available compared to other retailers. Crealytic’s research has found that 20% of product listings on Amazon are already sponsored.
“If you compare this to many others [retail media networks], you will notice that it's a fraction of the aggressiveness we see on the Amazon side,” Reiffen says.
Amazon’s dominance not only has implications for retailers, it also has a big impact on brands.
Brands have to go through so many walled gardens to target customers on retail media networks outside of Amazon effectively. There are different measurement approaches across retail media networks, which is why standardization has become so critical, Reiffen argues.
“That's key to success because if you have different tracking and attribution windows, different tracking mechanisms, those numbers are just not comparable at all. Standardization on this side really makes sense,” he says.
Targeting is another issue. Right now, it’s difficult for brands to target various retail media networks. One way to address this is “to democratize access to the retailer-side inventory,” Reiffen says.
“We need a structure in the market that is more similar and more comparable to what we see in the broader open web display space, where we have a separation between DSPs [demand-side platforms] and SSPs [supply-side platforms],” he says.
Rather than brands’ using a variety of tools to make these buys, new platforms like Crealytics are emerging to optimize this process.
Crealytics’ platform lets any DSP connect to its API, display ads on retailer sites, and optimize performance based on the retailer's data.
This is mutually beneficial for retailers and brands. Retailers get to work with one platform and brands get access to every retailer in one place.
“It simulates a little bit of what we see within the Amazon ecosystem,” Reiffen says. “Amazon owns the supply side piece, which we now offer to retailers so that they can do the ad serving, run an auction, and optimize the website with banners and product ads,” Reiffen says, adding that these capabilities also benefit retailers who are too small to access national agency budgets.
Though technology offers a solution for current execution challenges with retail media networks, both retailers and brands need to take actionable steps to drive more value from this channel.
Retailers already struggle with thin margins in their traditional business, but retail media networks can help them build an additional revenue stream that offsets this. Reiffen suggests retailers run A/B tests to measure their retail margin plus ad margin to figure out what levers they can pull to optimize performance in both areas.
A holistic approach is best to help retailers grow their networks and not further erode their margins in traditional retail, he adds.
For brands to maximize their retail media investments, Reiffen says standardized measurement is crucial. IAB is working to close this gap by establishing retail media measurement guidelines, but it’ll be some time before these guidelines become the industry standard.
In the interim, Reiffen urges brands with enough resources to create their own measurement mechanisms.
“No marketer, whether it's outside retail media or within retail media, should take numbers for granted. The rules of the game will always be that a publisher is selling ROI [return on investment], and the advertiser who has to pay the bills needs to double check this and get a sense for where he or she stands,” he says. “This means, generally, run experiments and find out what you truly get. That's the advice for the more sophisticated players.”
Reiffen admits that this will be hard to do because retail media networks are still in their infancy compared to Google and Facebook advertising and other main players.
However, he suggests running incrementality experiments, where brands turn on and off geolocations and alternatively scale up or down these activations to gauge the potential revenue impact.
“If you see 10 times in sales on your ad campaigns if you scale up, but you see no lift on the retail side, you should have an informed doubt that this might not work out as well.” — Andreas Reiffen, Co-Founder and CEO, Crealytics
Aside from running experiments, brands need to build their retail media expertise to maximize the value of these investments — rather than solely relying on what a retailer gives them. At the same time, they should push retailers for better metrics, so that they can make more informed decisions about where to best allocate their spend.
Reiffen says retail media may currently be the Wild West, but retailers and brands who invest the time and resources into measurement and tracking and remain agile will generate the most value from this new, but growing sales channel.
“In this more difficult environment, there is an opportunity to set yourself apart if you just play this more complex game better,” he says.
To hear more of Reiffen’s insights on retail media listen to the full episode.
