Retail media should be simple and lucrative. Brands pay to advertise their products to consumers on digital assets owned by retailers. In return they enjoy exposure to new consumers and a boost in sales, while retailers profit from a new ad revenue stream.
But there’s a problem. A study by DoubleVerify has revealed that brands in the US, France, Germany and the UK are facing significant hurdles when implementing retail media strategies and working with retail media networks – the retailer-owned advertising services that allow marketers to purchase ad space across all digital assets owned by a retailer.
High costs, a lack of quality verification by third parties, on-site ad space limitations, minimal activation options and the absence of industry standards for measuring ad performance are some of the biggest challenges cited by brands and advertisers. If networks can’t solve these problems, advertising spend could stall as brands opt to advertise with competitors. Consumers may also be turned off by irrelevant ads that hinder their shopping experience.
Retailers are telling us they want to stand out by providing innovative, relevant, fast loading ads, driven by first party data
It’s a problem James Avery, the founder and CEO of Kevel, a cloud Saas platform for building differentiated retail media networks, understands well. “During the pandemic there was an explosion of retail media networks,” he says. “Lots of retailers launched them, but they mostly used the same three providers. They’re all quite basic - conversely, retailers are telling us they want to stand out by providing innovative, relevant, fast loading ads, driven by first party data.”
There is a reason why retailers are eager to tap into this new revenue stream. Retail media is the fastest growing advertising channel in the world. Analysts forecast that by 2027, $105 billion will be spent on retail ads in the US alone, growing by more than 20% each year. It’s also expected to tie with social media for ad spend, second only to online search, such as Google, and outstrip TV, digital audio, and traditional television combined.
Some retailers have already cashed in. Amazon is the current retail media leader and by some distance, having captured more than three-quarters of the US market. In 2023, Amazon Advertising was roughly 12 times larger in share than its nearest competitor, Walmart Connect. Amazon leads the way in Europe, too, with a staggering 54% share of the digital retail media market, based on its advertising revenue.
Avery says Amazon’s success is the result of the retailer solving problems for brands and end customers alike and provides a roadmap for other retailers to follow. “If you’re a consumer shopping on Amazon, every ad is very relevant,” he says. “That’s because they use first party data (information that a company has collected directly about its customers or users) really well, they probably know everything you’ve bought for the past 10 years. The creative is really clean and eye-catching and it’s also fast loading. It adds to the user experience rather than hurting it, which can’t always be said for other networks.”
Kevel is enabling retailers to compete with the likes of Amazon and Walmart. The company’s software empowers them to easily develop unique, fast loading, seamless and high performing ads that circumnavigate ad blockers that damage revenue by restricting visibility. Ad servers built in Kevel have advanced functionalities in targeting and reporting that employ first party data. Advertisers can also build self-serve portals, use first-and second-price auctions, and leverage advanced targeting features to reach revenue goals while minimising time and resource spend.
Avery explains his approach to working with new clients: “The first question we normally ask is: ‘what can we do that will generate new advertising spend inside the first six months?’ For retailers with no retail ad experience, sponsored listings are a good starting point. From there, we can develop native advertising units, promoted listings, branded units at the top of a category page or shoppable videos that drive consumers to a brand page.”
For retailers with no retail ad experience, sponsored listings are a good starting point
Using first party data is key to delivering relevant, targeted and high performing ads, but it’s also a source of concern among decision makers, who fear breaching global privacy laws. Violations can result in fines as high as €20 million or four percent of revenue. But while retailers and brands must ensure they remain compliant with ever-changing laws and be aware of regulatory differences in international markets, it’s entirely possible to use first party data and remain compliant. This can be achieved by ensuring data isn’t shared with third party advertising technology companies and by storing it securely within a single tenant, retailer- owned platform.
For Kevel, the aim is to give retailers the tools to process and use data with ease, without compromising privacy. “Data is retailers’ biggest advantage and they should have 100% control of it,” says Avery. “We don’t sell data to power a secondary business model, we make sure it’s stored securely in one place, within the retailers’ ad platform.”
Kevel Audience - the company’s customer data platform - is a solution built specifically for retailers. It enables them to collect first party data on their owned platforms, use AI to segment by creating groups of users based on common attributes and then target these groups with ads relevant to their search intent. For Kevel, the aim is to give retailers the tools to process and use data with ease, without compromising privacy.
An increasing number of retailers are even building data science teams to make sense of the mountains of data at their disposal. “We want to make our software even more componentised so that retailers can be really specific about the areas they want to control and those they want us to handle,” says Avery. “To remain competitive, retailers must harness the power of their data to deliver intuitive ads that fit seamlessly within the buyer’s journey. If they do, they could tap into a powerful new revenue stream that fuels growth and steals a march on their competitors.
Retail media should be simple and lucrative. Brands pay to advertise their products to consumers on digital assets owned by retailers. In return they enjoy exposure to new consumers and a boost in sales, while retailers profit from a new ad revenue stream.
But there’s a problem. A study by DoubleVerify has revealed that brands in the US, France, Germany and the UK are facing significant hurdles when implementing retail media strategies and working with retail media networks – the retailer-owned advertising services that allow marketers to purchase ad space across all digital assets owned by a retailer.
High costs, a lack of quality verification by third parties, on-site ad space limitations, minimal activation options and the absence of industry standards for measuring ad performance are some of the biggest challenges cited by brands and advertisers. If networks can’t solve these problems, advertising spend could stall as brands opt to advertise with competitors. Consumers may also be turned off by irrelevant ads that hinder their shopping experience.
