Calls for industry unity are growing as marketers stamp their feet about its fragmentary state, but the push for shared best practices faces an uphill battle.
Retail media has risen to become the fastest-growing marketing channel in recent years, but the chance for aspiring networks to get a piece of the $100 billion-plus pie could be in peril if the category doesn’t clean up its act. As frustrations mount, with more brands becoming reluctant buyers in a fragmented ecosystem with a patchwork approach to transacting, measurement and campaign reporting, calls for standardization have gained notice in recent months.
Experts see true industry standardization as a difficult concept to realize and one that would be unlikely to get buy-in from the players that wield the most influence in shaping actual retail media practices. On the other hand, a failure to achieve some sort of level playing field could result in a reckoning for smaller platforms that are trying to prove their worth in the face of a handful of giants that are eating up more and more market share.
The ‘trough of disillusionment’
One of the biggest pitches for standardization is coming, not from watchdogs or regulators, but the publisher side. At Cannes Lions in June, Albertsons Media Collective, the retail media unit of Albertsons Companies, proposed a framework for bringing greater unity to the landscape, with a focus on implementing common practices around product characteristics, performance measurement, third-party verification and network capabilities. In the pitch, which received endorsements from Omnicom Media Group and Unilever, the grocery chain painted the lack of standardization as an existential problem for all retail media networks.
“To ensure the survival of this industry, we must come together toward a greater goal,” said Kristi Argyilan, senior vice president of retail media for Albertsons, in the announcement.
While the language is lofty, some underlying anxiety is founded. Albertsons cited a January study from the Association of National Advertisers that revealed many member marketers of the trade organization now begrudgingly buy retail media.
“From the publisher side and also on the brand side, the questions are popping up more: What’s this investment going to do for me?”
Nich Weinheimer, EVP of strategy, Skai
A lack of ways to accurately measure performance; the growing sentiment that retail media buys are imposed as a tax by retailers versus a benefit; and the overall fragmentary state of the landscape have pushed 42% of advertisers to question their investments in the space, according to the ANA.
“When I’m buying banner ads or TV or streaming advertisements, I can create one unit and it can go to many different places,” said Nii Ahene, chief strategy officer for Tinuiti. “That ability does not exist at all for retail media.”
That said, retail media networks remain a juggernaut in an otherwise patchy ad market. The category is forecast by GroupM to grow revenue by 9.8% to $125.7 billion this year and overtake TV in terms of ad sales within the decade. Retail media networks have been a major beneficiary of cookie deprecation, which has driven brands to seek targeting methods that rely on the types of first-party transaction data that retailers wield in troves.
Still, souring sentiment today could carry long-term consequences. Weinheimer said that brands likely reached a “trough of disillusionment” in the retail media hype cycle in the second half of 2022 as an anemic economy battered marketing budgets. The standardization campaign demonstrates that publishers are taking the potential fallout’s impact on their bottom lines seriously.
“A lot more of the pressure has flowed upstream to the publishing side of the house, a.k.a. the retail media networks themselves,” said Weinheimer.
Who benefits from standardization?
While Albertsons has identified a clear pressure on the industry, its gestures toward standardization have invited some skepticism. Albertsons is effectively asking rivals to buy into its own framework for how the industry should be run, though it has an advisory council to oversee the development process and has pledged to support key initiatives being led by the Interactive Advertising Bureau (IAB), a trade group dedicated to digital marketing best practices.
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