Retailer Media Networks Are Coming, but Where Are They Coming From?

Microsoft and Google are among the contenders

Retailers' ads popping up
Momentum is growing for retailer media networks, but where will they come from if retailers aren't building them in-house?
Sources: Getty Images, Amazon, Walmart, Target, Home Depot, Kohl's, Office Depot

Like so many changes in commerce to date, the rise of retailer media networks can be traced back to Amazon.

The ecommerce giant introduced its media business in 2012 as it sought to monetize its own properties. And, along the way, it not only found additional revenue for other projects that may or may not forever change the way we shop, it also created the first truly legitimate challenge to the heretofore unshakable digital marketing duopoly of Facebook and Google.

A few years later, Walmart and Target joined the party and, insiders say, more retailers will follow in 2020. In fact, just a little over a week into the new year, Microsoft announced a self-service platform to help brands advertise directly on big retailers’ websites.

Microsoft’s move wasn’t surprising after its August 2019 acquisition of vendor commerce platform PromoteIQ. Media buyers expected as much, although most predicted Microsoft would make a bigger play for the retail market as retailers look to monetize first-party data, deepen their relationships with brands, provide better experiences for their customers and, ideally, find chinks in Amazon’s armor in the process.

So, we know momentum is growing. But what if you’re a retailer that doesn’t have the resources of Amazon or Walmart to build an in-house media network?

“My view is it is really hard to build a great ad platform and that most retailers do not have the talent in-house to build a great ad platform,” said Rob Gonzalez, CMO of product experience management platform Salsify. “Think about it—Amazon … [has been] working for years [on its platform and] you have heard complaints it’s not as mature as Google. You have heard that advertisers are frustrated by the lack of features. If Amazon has been working for years and has tech [that’s not as mature], it’s unrealistic every retailer will build their own.”

Gonzalez conceded a player the size of Walmart might be able to pull it off, but the rest of the market will struggle.

Andrew Ruegger, managing partner and head of commerce and data science at advertising media company GroupM, said even Target may not have the scale to pull it off.

“If you’re a retailer who is not Amazon or Walmart—you’re the tenth largest retailer in the U.S.—you’re probably better off licensing a platform than you are doing it yourself,” Gonzalez added.

So how are smaller retailers with zero media network experience going to build successful networks? They have to find partners.

Contender 1: Microsoft

If you’re among the top 100 retailers in the world, one option is to work with Microsoft PromoteIQ, which provides a self-service platform for retailers that can’t build everything in-house, said Todd Bowman, senior director of Amazon and product marketplaces at performance marketing agency Merkle.

PromoteIQ has worked with large U.S. retailers like Kohl’s, Kroger, The Home Depot and Office Depot.

In a recent announcement, the vendor commerce platform said it helps retailers control on-site ad placements and attract consumer brands that have plenty of other advertising options. At the time, former PromoteIQ CEO Alex Sherman told Adweek that 30 of the 50 biggest retailers in the world are working on their own media networks as the industry collectively awakens to the opportunity.

But, like Walmart’s Advertising Partners Program, PromoteIQ is limited to paid placements on ecommerce websites for now. And, Microsoft isn’t much interested in helping those retailers that don’t rank among the world’s top 100—at least not yet. Sherman did not comment on plans to expand beyond the initial target audience.

Contender 2: Criteo

Melissa Burdick, president of ecommerce platform Pacvue, noted that this is sort of what ad platform Criteo already does when it runs sponsored product ads on retailer sites like Costco, which is probably not going to create its own ad platform. And while Criteo said brands and agencies can still access sponsored product placements for retailers like Walmart and Target, Bowman noted Walmart’s self-service tool will give advertisers Walmart-specific data and control, so he expects more will move to Walmart as the capabilities get better and Criteo will be used as a secondary option to buy media to fill in any gaps.

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