Latest / Retail Media Breakfast Club / DSPs Wanted: The Retail Media Revolution 96% of Advertisers Crave
Transcript
- DSPs Wanted: The Retail Media Revolution Advertisers Crave === [00:00:00] Until 1914, any vessel moving between the Atlantic and Pacific oceans had to brave the 13,000 kilometer journey around Cape Horn, but the Panama Canal completely rewired world trade by letting ships cut straight through a tightly governed corridor with Panama collecting the tolls. Today, retailers sit on a trove of first party data and onsite ad inventory. Yet much of advertiser's budget still takes the long way around. Koddi's new state of programmatic retail media report makes the case that opening programmatic locks to advertise a demand by way of DSPs can replicate the Panama Canals breakthrough. Unleashing faster, larger flows of commerce ad [00:01:00] dollars while retailers remain the gatekeepers. This report just dropped today, and I'm gonna share my takeaways with you. Good morning and welcome to the Retail Media 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./ First takeaway, fragmentation and manual workarounds are the number one break on retail media growth. We've all seen this stat before from E-marketer that most of today's retail media dollars are spent on Amazon, who commands 77% of all retail media dollars spent. Next up, Walmart scoops up 7%. And the remaining 16% of retail media ad dollars are spent on [00:02:00] dozens of other retailers ad networks. The big point that Koddi makes in this report is that many advertisers and brands would like to allocate more budget to this long tail of retailers. If only it was easier to do so. Dare I say it. If only buying media on other retailers was more like Amazon. So what is standing in the way? Well, there are many roadblocks. That's basically what all this podcast is about. But one that Koddi calls out specifically and one that the industry does indeed seem to be working toward is DSP access. For many advertisers, the current landscape feels prohibitively complex despite widespread agreement around how effective retail media is. And, uh, from this report, [00:03:00] 81% of advertisers agree. That it's an effective medium. 61% of respondents in this report admitted that buying retail media can be painful, but as it performs well brand spend on it will continue to grow. Now, the solve here that Koddi's suggests is that if this long tail of retail media were available to buy. Through demand side platforms, DSPs, it would solve a lot of this supply and demand issue. according to their study. 96% of buyers say they will certainly or will consider buy onsite media via A DSP, and 93% would shift non-retail budgets into retail media if they could do so programmatically. Why? Why would they wanna do this? The most compelling advantages of buying through A DSP, according to the study [00:04:00] center around operational efficiency and cost savings, 67% said more cost efficient buying as the top advantage, 51% valued, eliminating manual tasks and saving on resources, and 47% highlighted more effective. And precision targeting. This makes complete sense to me. As an ex agency person, there is just not the scope to understand and manage a hundred different retail media networks and for a good segment of advertisers, they are using agencies to make a lot of their media buys. Having a single front end where you can buy media across a number of different properties, get that reporting back, understand one platform, save on resources makes complete sense to me. In the blog post accompanying this episode included a mind map that I created of the flow of ad dollars from [00:05:00] an advertiser right through to a retailer's media network and how it all kind of flows through. 'cause I didn't understand it myself. Candidly, we all gotta start from somewhere. So I put this together. If you're new to this world or you're having trouble imagining how money flows through. Check out this mind map. I'm sure there are many ways that it could be improved, but I think it's a good starting point. so, why are retailers reluctant to integrate into DSPs if there's so much to gain? Well, this report subtly points out some concerns that retailers have, and the big one really is that opening up their network to more demand will commoditize their key value proposition of this proprietary first party data that they have spent a lot of time and a lot of money aggregating and I guess the concern is why would advertisers commit to spending. With a specific retailer when they could access a whole [00:06:00] basket of retailer driven ad inventory through A DSP, it's not special anymore, it seems like more of a commodity when you can buy it through a third party That's aggregating a whole bunch of other ad inventory and audiences as well. Retailers may also fear that the prices that they painstakingly negotiated for managed service campaigns would collapse once onsite inventory sits in the same DSP as other performance advertising offerings. But the reality is. That retailers can still syndicate inventory through A DSP without it becoming an open auction free for all. As Koddi says in the report, retailers can retain their competitive edge by placing guardrails around data, preserving exclusive ad formats, and offering curated deals tailored to their audience. This is something I've heard, not just from Koddi, but from [00:07:00] other. Tech plays in the ecosystem that there are many ways to do this, whether that is on the supply side or through things like an order management system like placements.io. What else is holding us back? There's a couple of related pieces I want to call out here because this, you know, just asking retailers to integrate with DSPs is not going to magically solve all of our problems. Here I wrote last month in a post of Forbes, why realtime bidding is retail media's next frontier, and the reality that these 70 plus retail media networks in the US alone cannot keep growing their retail media revenue through one-off manual dashboards and ad buys. Realtime bidding is the technology that powers programmatic advertising on the rest of the web and connected tv. And that is the [00:08:00] technology that's required for a true advertising matchmaking scenario where buyers and retailers can exchange bids and ad inventory both onsite and offsite in real time, which creates a better customer experience because ad results and organic results show up cohesively at the same time and it. It also still allows the control that retailers want over who and what and where can be advertised on their sites. So this is another piece of the foundation that needs to be laid in order for us to move into the next era of retail media. I also think about what happens when retailers. Chase budgets without making access easier. Last month, Walmart asked advertisers to bump their existing ad spend by 25%, a propo of no performance improvement or additional [00:09:00] capabilities. Here's the simple truth of what actually unlocks ad budgets. It's better outcomes, better legibility, and ease of use. Simple, not necessarily easy. / So where to next? Asking retailers to integrate with DSPs is not a silver bullet. To be sure. While opening up onsite inventory to demand side platforms will ease buying friction, it won't solve the even stickier issue of apples to apples measurement. Brands still face a patchwork of. Methodologies and limited cross retailer comparability, which industry groups like the IAB are trying to codify the need for progress in these other areas aside, I do agree that DSP integrations by retailers will be a net benefit to all like the Panama Canal, which revolutionized global [00:10:00] trade while still keeping control firmly in place. Programmatic access to retail media can potentially transform digital advertising investment flows. For retailers who embrace this approach, the reward could be substantial, unlocking new revenue streams while maintaining their position as indispensable gateways to highly valuable consumer audiences. The alternative, forcing advertisers to navigate each retail media network separately, increasingly looks like asking them to sail around Cape Horn when a more direct route is clearly possible.