Latest / Retail Media Breakfast Club / Meet The First Retail Media Federations & Consortiums (Part 2)
Transcript
- Meet The First Retail Media Federations & Consortiums (Monday 9/22) === [00:00:00] Last week Best Buy announced a reinvention of its ads, business positioning itself as an experiential, creative driven bastion of gaming and sports culture. But what got me most excited wasn't the splashy branding or the [00:00:15] NFL partnerships, it was the whiff of a more collaborative model for retail media. [00:00:20] Speaking at the IAB Connected Commerce Summit a couple of weeks ago, the president of Best Buy Ads, Lisa Valentino, outlined a vision that goes beyond [00:00:30] typical network expansion. This is what she said. We can become a network for other rms. [00:00:36] Of course, my ears pricked right up, and I asked her to extrapolate on this a little bit more in an interview that we did later on, and she [00:00:45] said. Best Buy could partner with anybody who has a commerce presence. That may include quick serve restaurants like McDonald's or Starbucks, transport companies like Uber or Lyft, and yes, even direct retail [00:01:00] competitors. [00:01:00] Best Buy just said the quiet part out loud. With more than 200 retail media networks live today. Still, most brands only actively advertise in five to seven of them, and very few have [00:01:15] conviction around expanding that number. [00:01:17] Any casual observer would agree. There's got to be consolidation on the horizon. [00:01:23] [00:01:24] So when I wrote about retail media federations and alliances a few weeks ago, the response from [00:01:30] industry leaders on LinkedIn was immediate and telling. [00:01:33] Lynn Reck an ad tech veteran now leading the commerce media practice at Mad Connect expressed the frustration that many feel with the current landscape. She said, I'm feeling unsettled at best by the [00:01:45] oversaturation of the commerce media space. The decisions being made are seemingly fueled by a land grab mentality that is taking brands further from their customer. [00:01:54] And this was really the basis of my argument for part one, that the current fragmented model is [00:02:00] unsustainable. Today in part two of this series, we are going to examine the federation models that are already in place and those taking shape and the challenges that they could solve for the industry. [00:02:09] This is going to be a multi-part series 'cause there's a lot more to discuss here around the technical and business [00:02:15] requirements, and that is something that I'm going to follow up with next in the series. But for today, let's talk about what's already happening. [00:02:22] While Best Buy teases its platform ambitions, other models are already proving that retail media federations can work in [00:02:30] practice. The first example I wanna share here is called Values, and this is a company that is leading the pack in Europe. [00:02:36] What started in 2018 as a data alliance among retailers in the Millware family ecosystem, including major chains [00:02:45] like oan, Leroy, Merlin, and Decathlon. This is an alliance that has rapidly evolved into a full retail media operation. [00:02:52] Through strategic acquisitions, values now covers 80% of French households. That is 55 million unique [00:03:00] customers and over 4,000 retail stores closer to home. In the US we have Ripple, which represents a third party consortium approach. Ripple recently announced a partnership with Hy-Vee's Red Media, [00:03:15] and that was really a breakthrough moment for the consortium which now reaches over 140 million unique shoppers in the us. [00:03:22] Enrique Munoz Torres is the general manager of Bridge, which powers Ripple's identity resolution? Enrique told [00:03:30] me that the company's recent partnership with Hy-Vee has generated significant interest from CPG brands and agencies leading to an uptick in inquiries about how Ripple can help their advertising needs. [00:03:42] And finally, regional models are gaining [00:03:45] traction to. Digits agency operates what I'd call a proto consortium for regional grocers like Coburns, schucks, and Fairway by providing shared infrastructure, things like standardized programmatic display, unified first [00:04:00] party audiences. Digits is able to enable smaller players to access media opportunities that would otherwise require national scale. [00:04:07] Let's talk about why consolidating the long tail would be helpful to brands. With over 200 retail media networks active [00:04:15] today, brands are managing relationships with an average of just. [00:04:18] Five to seven platforms. Case in point. Just last week I spoke with retail media leaders from two multinational CPG companies. Both actively buy media through only five [00:04:30] to 10 RMNs with no plans to expand that roster. Despite these brands being sold across hundreds of retailer banners. These two CPG companies have developed tight scorecards for their existing networks which [00:04:45] set a high barrier to entry for any new RMNs. [00:04:48] From these brands' perspective, they're containing the chaos and staying focused. But for the 190 plus aspiring ments, still trying to break through, that's a [00:05:00] sobering reality check. The brands just don't have the capacity to play Andreas Refin, co-founder and CEO of adtech firm. Penta Leap frames the scale challenge a little bit differently. [00:05:11] Here's Here's what he said to me. There's no way brands can talk to 500 little [00:05:15] retailers. Instead, a solution aligns with Best Buy's vision, vertical category leaders that should become ad networks for their sectors. He says Home Depot should become an ad network if you go buy vertical. It would make total sense that whoever leads that [00:05:30] space tries to double down on the brand relationships and resell ads to the others. [00:05:34] So this is what Best Buy is alluding to. And of course, the ultimate frenemy in the room. Amazon retail ad service, which we will get to in another part of this [00:05:45] series. For these long tail networks, federations might be the path to survival. [00:05:50] They might indeed be the lifeline for long tail RMNs that otherwise lack the scale to compete for these national budgets. [00:06:00] Shoppers don't think in silos. They bounce between online and in-store without skipping a beat. Acosta Group's. Connected Commerce agency helps brands unify trade and [00:06:15] retail media budgets to invest where shoppers are most likely to convert, whether that's on mobile or in the store aisle. Learn more about acoa Group Connected Commerce at ACOA Group and let them know Retail [00:06:30] Media Breakfast Club sent you. [00:06:31] That's A-C-O-S-T group. [00:06:36] now, Let's talk about standardization in measurement, and is this the prize of retail media federations and consortiums, [00:06:45] or is it the ultimate catch? [00:06:47] Alex Arnet, the senior director of Retail media monetization at Newstream Media, captures the brand side frustration. He says, managing the complexity of multifaceted programs across a myriad of retail media [00:07:00] networks each with their own unique measurement methodology, makes it nearly impossible for brands to measure holistic success and determine the best place to invest then next dollar. [00:07:09] I've spoken a lot about inconsistencies in measurement approaches in retail media on this [00:07:15] podcast. These are things like varying attribution windows for clicks and views, viewable conversion requirements. [00:07:22] Probabilistic versus deterministic data sources and differing incrementality methodologies. Such challenges make it [00:07:30] extremely difficult for a brand to evaluate a campaign's true success across media networks. Individual networks have little incentive to standardize its additional work with no immediate payoff. [00:07:42] And certainly when I speak with retailers. [00:07:44] [00:07:45] There's overall resistance to standardizing every metric. In their network. Each retailer believes that their customer base is different. They act differently. Their retail pasture purchase is different somehow. And that all may [00:08:00] be true, but it makes it very difficult for the advertisers to compare apples to apples from one network to another. [00:08:08] But if we're talking about federations and conglomerates, this measurement consistency issue is a problem that needs to be [00:08:15] solved, and it's both an opportunity for federations to deliver their biggest win as it is the biggest hurdle that they need to overcome. [00:08:22] Neil Sheridan, the Vice President of Sales at Stingray Advertising and the former head of Belk's Retail Media Network, puts it like [00:08:30] this, successful federations need the same measurement language across different stores. Standardization where it matters and differentiation, where it adds value. But of course, getting competitors to agree on common standards involves both technical complexity. [00:08:44] And [00:08:45] political negotiation. [00:08:46] The IAB launched measurement guidelines back in 2024 with varying levels of adoption from the different retail media players in the ecosystem so far. [00:08:55] So wrapping up this segment where the opportunity lies, where we're already seeing momentum, [00:09:00] I did wanna get into more of the challenges in a later part. We've already discussed a couple of them, but what we're seeing here is that there are examples that are multiplying. [00:09:09] The values in Europe proves that federations can work at scale and ripple [00:09:15] closer to home shows that third party consortiums can attract major grocery partners in the us. And finally, best Buy hints that category leaders might indeed become the convening platforms. [00:09:26] But building functional federations and consortiums requires solving [00:09:30] technical governance and competitive challenges that have derailed similar efforts in other industries. The identity resolution alone matching customers across different retailer systems without exposing personal information, represents a significant technical hurdle, [00:09:45] and that's what we're gonna be talking about tomorrow in part three of this series. [00:09:49] Exploring what it actually takes to build a retail media federation from the clean room architecture to revenue sharing agreements, and why some industry leaders remain deeply skeptical [00:10:00] about whether retailers will sacrifice competitive advantages for collaborative benefits. [00:10:05]