Latest / Retail Media Breakfast Club / The UK Takes A Run At Retail Media Aggregation
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- The UK Takes A Run At Retail Media Aggregation - snips version === [00:00:00] Kiri Masters: Last year, I wrote a three-part series on retail media federations. The idea that a bunch of networks could pool their audiences and sell as one the way that ad networks cleaned up [00:00:15] a fragmented publisher market 20 years ago. I talked about Ripple, Values in France, Best Buy Ad saying out loud that they wanted to become a network for other RMNs. [00:00:29] And then the [00:00:30] idea kind of sat there. In the US at least, we haven't really seen much forward movement with this model. But over in the UK, they just rolled a double over the summer. In June, SMG [00:00:45] launched RMX by Plan Apps, pitched as the UK's first retail media exchange, one buying and measurement layer across multiple networks. In the same month, Dunnhumby [00:01:00] announced its network alliance with Tesco, B&Q, John Lewis, and Waitrose all in pilots over the summer [00:01:09] [00:01:10] Kiri Masters: So I was really interested to tune into the Retail Media Therapy [00:01:15] podcast with hosts Viv Krasinski and Colin Lewis, because they had on their show Dean Harris, who runs Co-op's Media Network, which is itself delivered in partnership with ThreeFold, an SMG-owned [00:01:30] business, and they talked about retail media aggregators specifically [00:01:35] And Dean's answer about why this is all happening now is not the one that the press releases give you. Let's listen [00:01:43] dean: If you think these [00:01:45] aggregator platforms are essentially a solution to the retail media's industry fragmentation problem, right? But if you reflect on why fragmentation is a growing problem and that these two platforms are launching now in the [00:02:00] context of some other industry movements, I think what we're seeing is the change in dynamics to the retail media industry. [00:02:06] And I think Dunnhumby and SMG saw it happen a few years ago, to Colin's earlier point, and they are acting on it now in preparation [00:02:15] for this change. And what they saw happening was a mix of advertiser side challenges. So one is their expectations are rising, their resources are falling, so they essentially want to do more with less. [00:02:28] And retailers have responded [00:02:30] first to the do more, so better media capabilities, better data capabilities, sophistication, and now more recently to the with less, which essentially means less friction, ease, speed, connectivity. [00:02:45] But what RMNs can't solve for is the industry-wide fragmentation between each of their walled gardens, and I think that's gonna lead to advertisers and these platforms solving it for them because ultimately consolidation is gonna hit [00:03:00] the market [00:03:00] And you could argue that some RMNs are already there in, in the industry the way it's going, where they're struggling to get agency attention, they're struggling to get repeat purchase, they're knocking on the doors, they're struggling to sell their screens in the [00:03:15] performance world, in the digital out of home world. [00:03:17] [00:03:18] Kiri Masters: And I do like that framing because of who it puts in the driver's seat. These platforms aren't launching because retailers discovered the joy of sharing all of a sudden. They're [00:03:30] launching because the needs of the media buyers have evolved, and networks have been answering part of the need. We have better dashboards. [00:03:40] We have better reporting. We have better, more transparent [00:03:45] measurement. Now we're still missing another piece of what media buyers really want, which is simplicity in media buying. Brand teams, especially the long teams, don't want to be running ad campaigns in [00:04:00] 12 different platforms [00:04:02] so if the industry doesn't solve for fragmentation, someone else is going to solve it for them. And look who is volunteering. Dunnhumby is owned by Tesco. Amazon's retail [00:04:15] ad service sells ad infrastructure to other retailers like Macy's. And so if you're a UK grocer sizing up the Dunnhumby alliance, the pitch is plug into a platform that is owned by [00:04:30] the biggest retailer in your market. [00:04:32] So that is the case for these aggregators. Now the pushback and this is where Colin had a challenge. It wasn't will this work? It is [00:04:45] what is this actually for? [00:04:47] Here's what Dean had to say [00:04:49] dean: with the aggregator, you've got to understand is the value on the demand side, on the buy side, in having a one-stop shop, a platform that has all the same buttons and all the same [00:05:00] dials and all the same graphs. [00:05:01] Is it that? Or is it where you can buy the same audiences within the same sector? So I believe the value is more in the latter, where if you want a beer buyer, you go to one place and you can get [00:05:15] the UK grocery market's beer buyers, right? And if you want a confectionery buyer or if you want a non-food or kiosk or anything like that, you've got a one-stop shop. [00:05:25] Now, the interesting thing with the Dunnhumby is it's a mix of sectors, right? [00:05:30] Except for the Waitrose and Tesco thing, which does have competing grocers in the same network that have similar audiences that, that can be purchased. 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That is [00:06:45] go.growthloop.com/breakfast [00:06:49] So the value is being able to target every beer buyer in the UK grocery market from one place, which is what makes it useful to media buyers, but also [00:07:00] what should make retailers sweat about this value proposition, because the moment your audience sits next to a competitor's audience in the same auction, you're not selling a relationship anymore, you're selling a price. [00:07:13] And this is where [00:07:15] Viv jumps in with his lived experience [00:07:17] viv: but I am slightly worried about those lessons from the past because I used to work for a grocery aggregator, and our CPMs were 15 to 25 pound CPM. [00:07:28] And then programmatic came in, [00:07:30] and you could get the same type of shopper audiences, you know, with or without purchase intent for like one pound. So the risk here, as you describe the sort of dunnhumby network, Media Alliance, what- whatever it's called, uh, it sounds something quite [00:07:45] Star Wars-y really. The risk here is that if you got Waitrose and Tesco on the same platform, and let's say Waitrose audiences are more expensive for that beer buyer, then Waitrose loses out. [00:07:58] So I love the idea [00:08:00] of complementary retailers coming together, but what happens when the super networks have to start competing for agency spend or direct spend? Do we have a race to the bottom like we have with programmatic? Or by [00:08:15] then, do we have some other technology upending us? [00:08:19] dean: Um, it's an interesting question 'cause you, you, you can say the, the industry's got some dynamics that are totally different. [00:08:26] But the one that I quite like in terms of observing it [00:08:30] and some of the strategic choices are gonna be made is we talked about those budgets of where growth comes from, and if you're not getting the advertiser's attention, the agency's attention because you're not big enough or you're not different enough, you might still get incremental revenue [00:08:45] from entering these aggregator platforms. [00:08:47] So it might be low CPM, but it still might be incremental versus your other budgets. The challenge, I think, will be the ripple implications of that on your other module- models and your other budgets. [00:09:00] So you're gonna have your service, managed service element to your shopper media money, your JBP money that you release. [00:09:07] So how is it gonna go where you've got low CPMs over here and then your tenancy pricing rate card over [00:09:15] here? So I, I think there'll be a bit of a strategic whack-a-mole that might happen if retailers don't think five steps ahead. You'll solve one problem and up pop two others, and you'll end up just hitting around facing loads of [00:09:30] consequential challenges that you create for yourself. [00:09:32] So I think there needs to be careful consideration about what doing one thing means for an existing model that you already have. But yeah, I totally agree. It's gonna be really exciting. It's obviously gonna pan out. I [00:09:45] think that aggregator platforms will have a role to play. The demand and the advertisers and the agencies want it, and not enough retail media networks are gonna fall above that line of where that curation happens. [00:09:58] [00:09:59] Kiri Masters: So you can [00:10:00] see how this starts to all get a little bit complicated [00:10:04] What we saw in publishing was an extinction event for a business model And it happened to people who thought that they were joining a growth platform [00:10:14] And so this is [00:10:15] the challenge that aggregators will need to resolve to bring on board enough retailers to make this a marketplace that makes sense for the media buyers, while also addressing concerns around [00:10:30] commoditization [00:10:31] And I'm gonna leave it there for today. I definitely recommend checking out the full episode of Retail Media Therapy. We'll link up to it in the show notes. Thanks for tuning in, and I'll catch you tomorrow [00:10:41]