Latest / Retail Media Breakfast Club / AI Agent Shopping & Existential Threats To Retail Media
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- AI Agent Shopping & Existential Threats To Retail Media === [00:00:00] Welcome back to the Retail Media Breakfast Club. I'm your host Kiri Masters, and I recently joined Nick Morgan and Paul Blackburn on the Commerce Media Matters podcast for a fascinating deep dive into one of the most pressing questions [00:00:15] facing our industry. Could AI agent shopping pose an existential threat to retail media as we know it? [00:00:21] And what made this conversation particularly compelling is thinking through the sort of game theory scenarios of what will [00:00:30] happen to retailers when consumers use AI agents for more parts of their purchase journey, including potentially even the transaction itself. That surface where sponsored products live right now, the retailer.com or the [00:00:45] app [00:00:45] may not be used so much anymore, at least by human eyeballs, and [00:00:49] and suddenly that valuable first party data that retailers have been monetizing offsite isn't so exclusive anymore. [00:00:56] That was just part of the conversation that I had with Nick and Paul on the [00:01:00] Commerce Media Matters podcast, a great show in our space, when they're talking with industry leaders with different perspectives and expertise in the evolving landscape of commerce media. [00:01:13] So if you want more, I do suggest checking out [00:01:15] the full episode, but this is just a little snippet that I took from my conversation with Nick and Paul. Let's jump in. [00:01:22] [00:01:23] Nick Morgan: Let's get into the bingo word ai. There's lots of hype, but there's lots of really, really solid, practical, cool stuff [00:01:30] happening too. Um, the ri the rise of AgTech shopping. Um, just, I'm not sure when we're gonna release this podcast, but about two hours ago I saw, um, Shopify made their official announcement chat commerce, a AI agents predictive purchase journeys. [00:01:42] You know, there's lots of challenges. Are they threats? What's [00:01:45] your take? I know you're deep in a lot of research at the moment, so I'm dying to get. Your thoughts on this? [00:01:48] Kiri Masters: Okay. All right. So look, I, I've been working on this theory. I'll run it by you guys and see if you can poke some holes in it. So I think that, um. [00:01:58] Taken to its logical [00:02:00] conclusion, AI agent shopping really poses a existential threat to retail media. And that's because, you know, when you think about what, what is retail media comprised of? It's the, it's the surface that can consumers are interacting with. [00:02:15] It's your app, it's your. Website for right now. [00:02:19] That's the surface that a brand wants to be on. They wanna be, they wanna be buying sponsored products at the point of sale while someone's searching for it. The other sort of, the other part of [00:02:30] retail media's offsite. Who owns the transaction data? Who owns the audience data? Right now it's the retailer. [00:02:35] And so as a brand you can activate against a retailer's audience on Disney or TV or Instagram or whatever. And so that is like another sort of [00:02:45] monetization vehicle. Not as profitable as onsite, but still like a core part for many retailers. So with that in mind, what happens when consumer behavior shifts from going to a retailer.com searching around and clicking and buying and, you know, coming back? [00:02:58] What happens when that is [00:03:00] done through an agent instead of directly through the, through the retailer.com. So the, the surface goes away. So those sponsored products kind of become irrelevant. [00:03:09] Random noise: Mm-hmm. [00:03:09] Kiri Masters: The retailer will still have the transaction data. Mm. Curie bought a, you know, new, [00:03:15] new T-shirt, but also the AI LLM has that transaction data. [00:03:21] So now there are two entities that have. Purchase and transaction and, and consumer signals data. [00:03:27] Random noise: Mm-hmm. [00:03:28] Kiri Masters: Which means that that becomes [00:03:30] less valuable. Mm-hmm. That audience data that a retailer has that they were able to easily monetize before isn't as valuable because someone else has it. Interestingly, physical environment still remains. [00:03:40] People are still gonna go to stores, still wanna go try things on. I still wanna go to, [00:03:45] you know. Sephora still go to the supermarket. So I actually think trade marketing after all of this trade marketing's very resilient actually. And you know, they just keep coming back. Yeah. Good for, good for those guys. [00:03:59] Then I, I [00:04:00] was talking about this with, um, Scott Wino on his podcast, retail Gentech. [00:04:04] Random noise: Mm-hmm. [00:04:04] Kiri Masters: And he's, you know, he's mystery commerce. He's all about e-commerce, but he is like, yeah, but just remember. E-commerce is 20% of total retail. [00:04:11] Random noise: Mm-hmm. [00:04:12] Kiri Masters: And ag agentic shopping, at least in the early [00:04:15] days, is gonna be a fraction of that. [00:04:16] Mm-hmm. So like, don't, don't get too excited about like the death of retail media, but I do, I do really think if you are running media at a retailer, you do need to start thinking about this now. Yeah. You [00:04:27] Nick Morgan: need to start planning for it a hundred percent. I agree. Yeah. Like, I [00:04:30] think the hype. Overtakes everything. [00:04:33] But when you, like you just said, you, when you sift through it and you look at the practicalness of, you look at the data and you look at how long it will take to actually, yeah, take that. I think retailers and retail media networks and the people running them need to get a handle of [00:04:45] that and get a true sense of what, what's my, how much time have I got and what do I need to do in that time? Shoppers don't think in silos. They bounce between online and [00:05:00] in-store without skipping a beat. Acosta Group's. Connected Commerce agency helps brands unify trade and retail media budgets to invest where shoppers are most likely to convert, whether that's on mobile or in the store [00:05:15] aisle. Learn more about acoa Group Connected Commerce at ACOA Group and let them know Retail Media Breakfast Club sent you. [00:05:24] That's A-C-O-S-T group. [00:05:29] Paul Blackburn: I think you see [00:05:30] theory sound because you're right. Yeah. It's those surfaces that they're now selling as part of their retail media network offer ring that, that essentially disappear where it's going with the gen ai, it's an API that's exposed. Um, yeah. And I always go back to what's the user experience. [00:05:42] Mm-hmm. 'cause that's what everybody's after. Mm-hmm. Like to get in front of the [00:05:45] user. So what's great about AI is that conversational piece that you can, okay. I'm, you know, six foot two. This is my size for my shirt. Can you give me some recommendations? Um, right now, AI is not providing the end user experience. [00:05:58] You still have to click off and [00:06:00] whatever, so there's a great opportunity mm-hmm. Up there. But yeah. How do the, how do the retailers show up and, and how do they, how do they keep their margin on the surfaces that were once selling? Is a good point. And then the last point I think I'd like to highlight that you made mm-hmm. [00:06:12] Which is a really interesting one, is. That [00:06:15] data piece because if you're a, if you're a GPT or an agent working with several retailers, like you said, they're gonna have the aggregation of several retailers data instead of it being locked in the retail media network. So that is an ex, I can't say that word, a threat, [00:06:30] [00:06:30] Random noise: not one. [00:06:30] Yeah. [00:06:31] Paul Blackburn: Um, so, so I, I totally agree, but. Yeah, agree. I don't know about you, but I'm really excited to see some of the innovation that's coming through in this space. So it's certainly something that Voodoo Voodoo's playing in at the moment. Who, who's, who's doing it well? What's out there that you've seen [00:06:45] in your research? [00:06:45] That's really interesting. I mean, I, I, in your article, you talked about Walmart and Sparky, was it? Yeah, [00:06:51] Kiri Masters: yeah. Yeah. So Walmart's taking a different approach to Amazon here. Amazon's building its walled garden. They've made a great head start [00:07:00] with Rufus. Mm-hmm. And Alexa Plus is kind of getting, getting. [00:07:03] Getting there. Um, so, so they're trying to build an agent that you are gonna wanna use, not just for shopping, but for finding home improvement, you know, contractors and things like that as [00:07:15] well. Doing it doing, you know, basically being like a chat GBT agent competitor itself with within Alexa Plus, right? [00:07:22] They want to create their own personal agent. Walmart's approach that they've spoken about publicly is [00:07:30] they want to open. Their ecosystem to external agents and allow external agents to interface with, you know, with their product catalog so that you could order stuff off of walmart.com [00:07:45] through a perplexity or, or who, whomever. [00:07:48] So I don't think that, you know, it doesn't, doesn't mean Amazon won't change their mind in the future, but it is a very, it's a very different philosophical approach to. This new future that, that they both recognize. Mm-hmm. [00:08:00] My advice to retailers is. Look at AI agents as your VIP diamond level customers, the very best customers. [00:08:11] Nick Morgan: That's a great way of looking at it. Yeah, I like that. Yeah. So [00:08:15] [00:08:15] Kiri Masters: that, you know, there's a, an immediate, like this new technology is an immediate move to like, oh, this is scary. We don't understand it. Let's just block it. Let's block these agents, not let them crawl our websites. Instead, if you look at it, it's like, this is like. [00:08:25] The best influencer we've ever had, and if we can expose [00:08:30] our product catalog and make it super readable and super easy to place orders and, you know, all of the context that, um, an LLM is gonna need to prefer your retailer when they're recom, you know, [00:08:45] recommending a product. What better customer could you ask for than that? [00:08:49] [00:08:51] Well, we have to leave it there for today. Thank you to Nick and Paul from the Commerce Media Matters podcast for having me on, and we'll link up to the full episode in the show notes in case you [00:09:00] wanna check out the full discussion. [00:09:01]