Latest / Retail Media Breakfast Club / Is Retail Media Actually Kinda 'Mid'?
Transcript
- Back channel - retail media experience, jason goldberg === Introduction to the Episode --- [00:00:00] here's a question I never thought I'd ask. Is retail media actually kind of mid. Today I'm sharing a couple of different topics. I'm gonna start out with a back channel topic, which is an anonymized snippet from a conversation with industry insiders that I've had in the past week or so, and then I'm going to jump into. The main question of the episode, which is how can we get Jason Goldberg excited about retail media? Let's go. 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. The Talent Gap in Retail Media --- A tech vendor shared an interesting point of view with me this week that some retailers, media network teams lack the background to [00:01:00] sell effectively to agencies. And that this could be a major reason why smaller RMNs might stagnate and they emphasize that retailers need agency savvy talent to take retail media networks to the next level, especially when shifting from trade marketing to audience-based selling. They noted that current staff often lack the skillset, but also the salary bands to be able to make that leap. And this is ironic because a lot of the tech vendors that I speak to, including this one, have brought in key executives from retail media networks to lead their retail division or to help their go to market strategy. So they're bringing in the retailers. Um, and that just makes me think with all the turmoil in the advertising agency space, perhaps this is a good time for retailers to scoop up talent that's [00:02:00] disenfranchised with agency life. Just a thought. Getting Jason Goldberg Excited About Retail Media --- Number two, is retail media. Really not that exciting. I hope you'll share a proud moment with me. Retail Media Breakfast Club. Got name checked on the Jason and Scott show this week, which you may know it. It is a seminal podcast in the retail space and one I have been religiously following for over seven years now. Jason, one of the co-hosts, had an interesting point of view that I really wanna dig to into in more depth because. Making Jason excited about retail media might be a career topping moment for me. So here's what Jason said, and I wanna share a few of the rebuttals that I have from just doing some quick research this afternoon. And I would love to hear from you if you have some other ideas about how to frame this argument, because I really don't think Jason is alone here. So the [00:03:00] context is this, that Amazon's ad business grew 19% in Q1, 2025, and it's a very profitable business. And as Jason says, Jason: And of course it's extremely profitable as we've been talking about on the show for a number of quarters now, like the ads business is almost certainly the most profitable business at at Amazon. Part of the reason I like talking about it is every other retailer in the world looks at that and goes, oh, I want a piece of that. And now every ad agency in my holding company and all of our competitors like all have stood up armies of retail media people. And I actually like don't think the retail media opportunity is near as exciting outside of the Amazon ecosystem as, as some people will have you believe. Snap. So this is, this is how Retail Media Breakfast Club got brought up on that show. So I wanna go through a few of the points that he made and to what extent. I was able to validate them or not. [00:04:00] And then finally, uh, I guess a call out to the audience to see, uh, if you have some other ideas of framing this rebuttal and let's get Jason Goldberg excited about retail media. Analyzing Jason's Laws on Retail Media --- So, Jason's law, number one, most retail media ad spend sits with Amazon. So that is completely true. Amazon captures 76% of US retail media spend followed by 8% for Walmart and a collective 16% for all the other retail media networks in the us . Jason's law. Number two. Retail media is mostly sponsored product ads. Here's what he says. Jason: So the, the dirty secret of, of this ad business is it's, it's the vast, vast majority of it is sponsored product listings. True, but it is tipping. So search performance ads relative to top of funnel [00:05:00] ads. Um, search still holds a majority share, but it's also true that Amazon's mix of search versus display. Or top of funnel is tilting quickly towards upper funnel connected TV via their DSP. So last year in Q4 ad agency Tinuiti said that 32% of its ad spend on Amazon was on the DSP. Versus search ads and Tinuiti's client size skews more towards enterprise. So it would be interesting to see spend splits from other sources, maybe more across the spectrum. And then a separate data point outside of Amazon. Is that 10% of retail media spend is offsite. The Future of Retail Media Advertising --- That means ads that display on a third party publisher on connected tv, but it's still bought and. Reported through a retailer because [00:06:00] that ad is being activated against the retailer's audience. So the estimate from both Barclays and e-marketer is that only 10% of retail media spend is offsite. Meaning it's not sponsored product ads. Um, but both of them actually expect that split to rise to 30% in coming years. So is Jason's law number two, that retail media is mostly sponsored product ads is definitely true, but the mix is changing over time. Jason's law number three, most sponsored product ad spend is from smaller spenders. He says Jason: And the vast, vast majority of the sponsored product listings are from third party sellers. The, as I mentioned, there's 2 million sellers on Amazon. There's almost a billion items. No one is ever gonna find your item unless you buy an ad to make it show up, right? And so when you have. The world's best third party marketplace, uh, you, you have a very valid reason for people [00:07:00] to give you a lot of ad dollars, So my data so far says probably yes. There's some data from Smarts Scout that shows that three P Brands spend 127% more on sponsored products and 146% more on sponsored video relative to revenue compared to first party than that's a, that's a lot to take in, but this math essentially, it answers a slightly different question. It tells us how aggressively. Sellers buy ads per dollar of their own sales versus vendors buying ads per dollar of their own sales. So you know, it was missing some math there to answer the question fully. But there's also some separate analysis from Andrew Lipman from Media Ads and Commerce, which also unpacks a pretty strong relationship between a marketplace, between a retailer having a marketplace and having a [00:08:00] large, healthy mix of advertisers, both big and small, and high monetization of ad inventory. So this one is. A probably yes. And then Jason's law number four, which is Incremental Ad Dollars for Specialty Retailers --- therefore, incremental ad dollars for specialty or regional retailers is limited. So he says, Jason: I'm, I'm very skeptical that there's a lot of incremental ad dollars for a regional grocer with no third party marketplace or a specialty retailer in home furnishings with like, like, no, no traditional shopper marketing spend and no, no CPG or everyday essentials. Like I just, I think once you start getting out of these like two or three biggest retailers in the ecosystems, the retail media opportunity gets a lot less exciting for me. Data so far working on it, can you help? I think he is correct on the first part actually, that there are [00:09:00] many retailers out there whose footprint and reach simply don't make sense for brands to go outta their way to activate against. Particularly if they don't integrate with A DSP, which is one of the topics from earlier in the week on this very podcast, I recommend you go check it out. But retail media is clearly an attractive enough value proposition for many of the larger retailers outside of Amazon and Walmart. To have been investing significantly in, and they're investing because brands want what retail media promises, which is direct access to consumers at various points of the shopping journey. Closed loop attribution sometimes, and, and al a hedge against alternative advertising channels like Search, social and linear tv, which all have challenges of their own. And that's why shopper marketing [00:10:00] dollars are being directed into retail. That's why brand dollars are being redirected into retail media because it answers some of these inherent challenges that brands have. I would love to hear what you think. Let's see what the smart listeners of this podcast have to say. Further data, further arguments, and let's see if we can get Jason Goldberg excited about retail media. Prime Day 2025: Big Spend or Pull Back? --- Topic number three, are brands going big this prime day or are they pulling back? Prime Day 2025 is stretching out to four days this year, and of course. There's a very interesting backdrop this year with tariffs impacting margins. Consumers have pulled forward a lot of purchases already, according to different data sources, so a brand's gonna be spending more or less on Prime Day this year. I started a poll on LinkedIn [00:11:00] that you can participate in and see what the results are so far in real time. I'll drop the link to that in the show notes. Thanks for tuning in. I know this episode was a little longer than usual. I'll be back on Monday with a 10 minute episode, I promise. See you then.