Latest / Retail Media Breakfast Club / Why RMNs Keep Their Tech Stacks Secret From The Very Brands They Want To Attract
Transcript
- [Monday 8/25] Retailers Secretive About Tech Stack === [00:00:00] In an industry where 89% of brands say that a retailer's technology stuck influences their advertising spend decisions. But retail media networks are inexplicably playing hide and seek with their [00:00:15] infrastructure choices. Retailers are treating their tech partnerships like state secrets, even after contracts assigned and decisions are final. [00:00:24] This opacity creates unnecessary friction that limits the growth [00:00:30] that these retailers are seeking. In the rapidly expanding retail media market. This episode is based on an article that I wrote for Forbes that was published on Monday, August 18. Let's jump in. [00:00:41] [00:00:43] I had a crazy conversation a couple of [00:00:45] months ago with a sales executive at a large grocery retailer in the APAC region, and she found herself in this absurd position where her company had run an RFP for a technology partner. [00:00:59] [00:01:00] They'd selected one, they'd signed up. All the paperwork with this vendor. And then when a competing vendor inquired about their status in the RFP, she wanted to transparently share that a decision had been made, but instead her [00:01:15] product team forbade her from revealing this information, leaving her either to lie to this vendor or be evasive. [00:01:23] About the status of a deal that was already complete. I still don't understand why she told me, [00:01:29] [00:01:30] and she made a really important point. If the vendors don't know why they lost a deal, they don't know what problems they need to solve. If the retailers are being so private about this information. [00:01:42] Because I speak with the retailers. [00:01:45] The vendors, the brands, navigating the, the interesting dynamics between those different stakeholders. I hear a lot from the vendors talking about how it's frustrating that retailers often don't allow them. To announce their [00:02:00] partnerships. [00:02:01] So I've heard that frustration from the vendors. I've spoken with retailers about their rationale for not sharing. I have a few reasons to share with you there, but I was also really curious about what do the brands [00:02:15] think the people actually buying the media. On retail media networks, did they stop and think about the technology and how it might actually impact their media buying outcomes? [00:02:27] So I ran a poll on LinkedIn a couple of weeks ago. [00:02:30] Maybe you saw it if you didn't make sure that you, uh, follow me on LinkedIn or, or connect so that um, you can participate in the polls. But the research found that. 88% of brands and brand side media [00:02:45] buyers and consultants say [00:02:47] that, yes, knowing a retailer's ad tech stack would influence how much you spend with them and just breaking it down, the results were almost identical from agencies and consultants versus [00:03:00] brands. 54% said strongly yes. It was a strong indicator that they would spend more with a retailer if they knew their tech stack. [00:03:09] 34% said somewhat, and then only 6% said [00:03:15] not at all. So I found that very, you know, it confirmed my suspicions, but the fact that so many people felt very strongly about that was interesting to me. And just to note that I did exclude any non-brand or [00:03:30] non-agency respondents on that poll and was left with, uh, 67 respondents, for that poll. [00:03:37] So this. This represents real money at stake. These respondents, just these 67 people [00:03:45] represent many, many millions in retail media spend. And collectively these brands, manage billions of dollars in retail media spend, but many retailers continue operating as if their technology choices don't matter to [00:04:00] advertisers. [00:04:00] So why do retailers keep these secrets? After speaking with many retail media executives, both on the retailer side and those in the industry, I've sort of come across four [00:04:15] patterns that explain this behavior. Number one is the shame factor. Many retailers know that their tech stacks are suboptimal, but they lack the ability to change them due to several reasons. [00:04:29] [00:04:30] Internal politics, funding constraints, and or they're often locked into vendor contracts with prohibitive exit fees, so they can't change. And, um, this is what I'll talk about in a future episode, what I call the the doom. [00:04:45] Loop for RMNs, which is they're not growing, so they can't get budget to invest in the underlying technology. [00:04:52] So they see advertiser attrition and that leads to slower growth, et cetera, et cetera, until, you know, they're just. There's, uh, a hollowed out [00:05:00] husk of what they really could be. So that's the shame factor. Number two is financial narrative control. And this was one example that really stood out to me. [00:05:09] Where a retailer's communications team reported up to the CFO and the [00:05:15] CFO wanted to delay announcing a new technology partnership and wait for a better time to align with the company's financial narrative. So they stalled any tech partnership announcements [00:05:30] deliberately [00:05:30] so that it would fit better into their company earnings reporting. Number three reason why this, uh, opacity still exists is the knowledge gap as one retail media executive explained to me. Many retailers, if not most of [00:05:45] them, lack experience selling media directly, so they don't know what's important to media buyers. [00:05:51] Or the fact that buyers would find value in technology transparency. And number four, the margin protection play. [00:06:00] Some retailers see this opacity as a way that they can capture higher margins. Um, more so than with transparent standardized systems, which would allow particularly things like real time bidding, which I've spoken about, [00:06:15] or enabling buying media through A DSP, which is something that. [00:06:19] Pretty much, many, many brands, if not most of them, would like to be able to buy media programmatically for every type of media activation that they have. So I've, I've written about [00:06:30] these two things in previous posts for Forbes that I'll link up to in the show notes. Acosta group's, retailer intimacy is legendary. [00:06:45] Merchants answer their calls. You just can't find that access at the same scale with any other partner out there. [00:06:52] That expertise with both retailers and Shoppers fuels its Connected Commerce team, which offers digital [00:07:00] shelf retail, media, and data analytics all under one roof. Tap into a hundred years of retailer relationships and award-winning digital commerce capabilities. Learn more at ACOA Group and tell [00:07:15] them Retail Media Breakfast Club sent you. [00:07:17] That's A-C-O-S-T group. , there was some separate research. [00:07:25] Showing that brands would move spend if they could transact [00:07:30] programmatically. And that, um, research came out in June. So the tech stack opacity slows those kind of integrations down because, if a retailer doesn't have the ability to programmatically run [00:07:45] ads and do identity resolution, they're just sort of bundling up buyers in the backend or just managing things through direct sales, it means that they're not tapping into broader advertiser demand, and that is the very [00:08:00] thing that would allow them to scale. [00:08:02] There's also a bit of a mindset difference here. One executive explained to me that in tech companies, the software is a revenue generator, which drives investment. [00:08:13] In [00:08:15] technology and integrations and interoperability, but retailers view technology as a means to facilitate sales of physical products ~for which~ [00:08:25] ~I, no, I'm just gonna scrap that section.~ [00:08:25] ~Now who is doing this really well? I want to, ~now there's one retailer that's doing this really well and taking a different approach, and that [00:08:30] is Home Depot. I did an interview a few months ago with Melanie Babcock Brown, who is the head of Orange Apron Media, home Depot's, RMN, and she's refreshingly transparent about their technology decisions and partnerships.[00:08:45] [00:08:45] And what she said to me was. When you think about the experience a supplier has with a retailer, often the retailer thinks about the customer and customer experience, but the supplier experience isn't necessarily top of mind yet, they're the ones [00:09:00] engaging with the retailer as well. [00:09:02] And this is something I, don't hear a lot, from retailers is thinking about advertisers and brands as their customers as well. And what if we took the perspective that we should make [00:09:15] it as easy as possible for brands and advertisers to do business without RMN. What are they looking for? [00:09:23] What kind of technology is gonna make it easy for them to buy? What kind of technology is gonna make it [00:09:30] easier for them to buy, measure, justify, expand, um, and she says. After speaking with me about their technology partnership, she says, I'm gonna put it in the top five things that we did for our [00:09:45] retail media network, which was retooling some of their tech partnerships and creating a foundation for suppliers to be able to buy offsite media and onsite media through the same system. [00:09:58] So I'll link up to that [00:10:00] post in the show notes as well. If you wanna read more about how Home Depot is approaching it. [00:10:04] So just to recap some of the hidden costs of this hide and seek game one, innovation stagnation. When the tech vendors don't know what problems [00:10:15] exist and they're not getting feedback from retailers about why they lost an RFP or feedback from the market, they can't develop solutions. [00:10:23] Number two is budget migration brands will allocate spending to more transparent [00:10:30] competitors who demonstrate investment in their platforms. [00:10:33] And number three, trust deficit. Secrecy breeds suspicion, particularly when retailers won't explain basic functionality. There is a bit of a tiff between [00:10:45] brands and retailers about transparency, about things like consistent measurement, methodology and things like that. [00:10:52] This is not the only issue with regards to transparency, but it does add to this sense that, hey, retail media networks [00:11:00] are a black box. We don't know how things are measured. We don't know how this works. They're not sharing what technology they're using or what kind of investment they're making in the technology stack. [00:11:11] ~And it just, it adds to that sense of.~ [00:11:11] ~And it detracts from, and it detract from what should be a more, and ~it detracts from trust that a retailer wants to [00:11:15] build with their brands and advertisers. [00:11:18] So just to wrap up here, retailers clinging to tech stack secrecy missing the point. The most sophisticated media buyers have already learned to identify underlying technologies [00:11:30] through reporting patterns, targeting capabilities, and things like that. Meanwhile, retailers who embrace transparency like Home Depot are positioning themselves as trusted partners. [00:11:40] Rather than black boxes. Here's what matters. In an [00:11:45] ecosystem where brands have choices and technology directly impacts performance, transparency isn't just good practice. It's a competitive necessity. Retailers who continue playing hide and seek with their tech stacks risk losing advertiser [00:12:00] interest as advertisers take their budgets to partners willing to have honest conversations about how their platforms actually work. [00:12:06] As the retail media landscape matures from experimental add-on to core profit center success depends on [00:12:15] understanding that you can't build trust while hiding the foundation you're building on. [00:12:18]