Latest / Retail Media Breakfast Club / How retailers 'Do' Sponsored Product ads: 4 takeaways for brands
Transcript
- Pentaleap report part 1 - for brands === [00:00:00] Introduction to the Benchmark Report --- The follow up to a killer benchmark report from Adtech Company. Pentaleap just dropped today and it compares how major retail media networks perform across search terms, categories, and bidding models. I'm gonna be doing a two-parter on this podcast, breaking down my biggest takeaways from the report. In today's edition, I'm gonna be sharing some of the takeaways specifically for brands and advertisers, and then next week I'm going to flip the table and share some takeaways for retailers. Understanding the Methodology --- So first, let me explain the methodology so you can appreciate just how robust this benchmark data is. What Penole does is they do a continuous crawl of major US retail media sites using tens of thousands of real shopper search terms that are refreshed. Each quarter they identify sponsored product badges for each [00:01:00] search, and then aggregate the data across four rolling quarters. So that the current edition covers Q2 2024 through to Q1 2025. And so this methodology means we have true independence with no reliance on self-reported retailer dashboard. So everything is verified from. Front end reality, and it gets into a lot of detail around slot level and word count views that expose nuances that retailers just don't. Surface to us at all. So it is a really unique view into how retailers do sponsored products on their own websites. Key Takeaways for Brands and Advertisers --- You can access the full report today on Pentaleap's website. And just by way of disclosure, I need to mention Pentaleap is a client of mine.~ And just by way of disclosure, I need to mention Pentaleap is a client of mine. ~now. Testing and Scaling on Major Platforms --- Let's jump in Good morning and welcome to the Retail Media [00:02:00] Breakfast Club. I'm your host, Kerry Masters, and every weekday at 6:00 AM Eastern, I bring you candid and real discussions in the world of retail, media and marketplaces in just 10 minutes. So bring your own cup of coffee and we'll get smarter about retail media together. take away. Number one, show me where to test and scale. According to the benchmark, Amazon, Walmart, and Home Depot have mastered the art of inserting sponsored products on virtually every query they handle. So on Amazon, 99% of searches have sponsored products attached to them. Walmart and Home Depot. 97% of searches have sponsored product ads attached to them. And this ubiquity doesn't just mean higher impression volumes. It signals that these platforms have developed sophisticated relevance algorithms and that [00:03:00] they're still able to keep shoppers engaged despite the high ad density. And so if you're a brand or advertiser, that means. When testing new tactics, run them first on these mature surfaces because data is gonna come back fastest with the higher ad load. The scale and sophistication of these retail media networks provide an ideal testing ground before rolling out campaigns to networks with lower ad density take away. Number two,~ take away.~ Long Tail Resilience and Bidding Models --- long tail resilience, a new quality metric. Another valuable insight from the report is how drastically retail media networks differ in their ability to serve ads on specific multi word searches. Pene does this word count breakdown, which shows that Amazon, Walmart, and Home Depot, again, still return sponsored product ads on. Five, six, and even seven word [00:04:00] queries. These are the really long tail queries, high buyer intent. We want to get in front of those customers, right? Whereas Office Depot, ~their retail media network meant ~their retail media network. Is set up in such a way where ads fall off dramatically once the query exceeds three or four words. Now, there's lots of technical reasons as to why that would be. It's as Andreas reen ~uh, ~the CEO of Penn Leap told me ~when long tail searches don't trigger sponsored products. It's a client. It it ~when long tail searches don't trigger sponsored products. It's a clear sign of weak tech. But ~what this, ~how this matters for brands is longer searches signal higher purchase intent, and you want to be advertising with retailers who ~offer that.~ Offer the ability to bid on those search terms and have your ads show up, take away. Take away number three, why bidding models. Product first versus keyword first matter.~ matter. ~This is not an over story in the report, [00:05:00] but it is a, between the lines kind of takeaway. There's been an evolution in retail media bidding approaches. The legacy approach is keyword first, and this is where advertisers. Share keyword lists with their bids for each. And the retailer only shows the ad when the typed string matches those keywords. ~Sounds should sound familiar. ~And the second approach is product first, and this is when advertisers bid at the skew level and the platform's logic. Decides ~which shop, ~which search terms map to that product in real time. ~This distinction has made implicate so ~on Amazon. You can do both types of advertising with these more sophisticated, larger retail media networks, you can often do both. ~Um, but it is sort of moving more towards product first and that distinction.~ But the distinction between the two has major implications for campaign management calling in friend of the pod, Jordan Whitmer, head of Retail Media at the [00:06:00] agency Nectar first. He noted in an article from a couple months ago that while product-based systems are simpler to operate, they can result in a large investment against ads that advertisers wouldn't choose to buy. ~And ~he said. CPCs and CPMs from product based targeting can be often lower than keyword based targeting, but it can cost more in the long run because you're generally ending up bidding on more pages and placement types and keywords that eat up your investment. ~Um, you know, the retailer, ~the retailer has every incentive to spend all of your budget, right. Andreas from Pentaleap offers a different perspective, though, noting that Amazon itself started as pure keyword targeting and then moved to product level bidding for exactly this reason. The campaigns are only as good as the keywords you cover, and this makes a lot of sense if you're a sophisticated advertiser. ~Really great with keywords and running a really good system. ~Keyword first might make a ton of sense, [00:07:00] but there's a heck of a lot of advertisers out there who don't really know what they're doing. And leaning on product first is actually going to be very helpful for you, and so this makes complete sense from the retailer's, POV as well. They wanna take all that incremental revenue that they can, but ~but the way that this kind of shows up in the Penn Leap report is around,~ ~wait, wait, wait.~ ~But how this links back to the report is showing is~ ~how this links back to the report, is that the methodology in the long tail and grid slot lens in the report? Uh, ~how this links back to the report is some analysis around the long tail keywords, which I just covered, and the grid slot. ~So where, how many ~So sponsored products showing up on the product grid in a search results, where do they show up? How dense are they? Those prove which retailers have made the leap from keyword first to product first. And it is something that's really helpful to understand. As an advertiser, what kind of model you're gonna be working with Category-Specific Opportunities --- Takeaway number four, category specific opportunities. ~How do these trends filter down to your, ~how do these trends filter down to your brand's product category? There's a couple of sections in the benchmark that point out some really interesting trends. [00:08:00] one is that ad saturation is higher in everyday essential categories, so in vitamins and supplements category, 90% of searches carry an ad in household products, 88% ~of searches cov ~carry an ad in dairy. 80% carry an ad and snacks. 87% carry an ad. Brands in these categories face higher competition. Conversely, opportunity exists in under monetized categories, even in Amazon's 99% coverage world. Some subcategories remain lightly contested. So large appliances. In 61% of searches, there was still no ad. And in nail care, 54% of searches showed no ads. So for those challenger brands, these segments offer potentially cheaper clicks and outsize share of voice provided. Your creative [00:09:00] and landing pages are conversion ready. Conclusion and Next Steps --- So the bottom line here, as retail media continues to mature. Every edge counts. Understanding how things work from the retailers side of things and what that technology stack looks like. It really impacts your outcomes as an advertiser. So I really encourage people out there on the advertiser side to dig into, ~um, ~the, the tech stack, how it works, how to tell if a retailer is investing there. I've been spending the last few months about it. If I can get this into my brain, you definitely can as well. Thanks for tuning in. I'm going to cover the retailer takeaways next week. Thank you for subscribing and catch it then.