Lessons from AdTech’s Past and Present for the Future of Retail Media

Retail Media is currently a hotbed of innovation. There seem to be daily announcements about new channels, capabilities, or partnerships from one of the many networks and vendors in the Retail Media ecosystem.

The trend in Retail Media leans towards ‘more’: more channels and inventory, more audiences and data, and more transparency. What began as a discipline focused on eCommerce has rapidly expanded into offsite, physical stores, connected TV, and even audio ads are now part of the offering for some networks.

Take a look at the following screenshot of a vendor whose platform seems to cover a lot of the innovative grounds that we see from Retail Media ad tech players today:

These capabilities look enticing, and it’s understandable why retailers would desire all of these things from a Retail Media platform, and why advertisers would want to access all of these capabilities. More channels + more data + more intelligence = more money, correct?

Lessons from the Past and Present 

Perhaps, but not necessarily. Eagle-eyed readers may have noticed the name of the vendor tucked into the text of the screengrab above: MediaMath. There are two concerning aspects here for retailers: firstly, MediaMath is not a Retail Media platform, but a DSP; secondly, MediaMath unexpectedly filed for bankruptcy last week, just a few years after being valued at over $1 billion. In reporting the shutdown, AdScholars described MediaMath’s business in terms that would not look out of place in a Retail Media vendor’s press release:

“MediaMath founded in 2007, is a trailblazer in programmatic advertising, revolutionized brand-audience connections with its advanced demand-side platform. By leveraging data-driven insights and real-time bidding decisions, MediaMath enabled precise audience targeting, efficient campaigns, and improved ROI. Through strategic partnerships and a commitment to transparency, MediaMath shaped the digital advertising landscape, earning a solid reputation in the industry.”

While the retail media and MediaMath-style programmatic models are significantly different, there is a clear risk for retailers that their innovative retail media networks might start resembling the now-obsolete DSPs. Additionally, when it comes to the plethora of third-party channels that retail media networks are expanding into, they face the same set of challenges that put paid to MediaMath and many erstwhile big beasts in digital advertising: decreasing margin, increasing data regulation, and a permanent struggle to differentiate in a crowded market.

Thinking Closer to Home 

More fundamentally, evidence suggests that the majority of retail media revenue is generated via owned channels. Crealytics’ recent deep dive into Amazon’s model suggests that as much as 95% of their colossal retail media revenue comes from their properties:

When you also consider the relative margin of owned vs third-party channels, it might be more profitable for retailers to invest in getting their onsite and owned channel retail media perfected before branching out into additional channels.

At Crealytics, we believe that the present and future opportunity of Retail Media remains firmly in the retailer’s own channels, even for retailers with established offerings. Despite being a more mature technology and accounting for large chunks of revenue, key offerings like Sponsored Product Ads and Onsite Display are very often not executed in an optimal way. It doesn’t take long on almost any retail site to find a lack of relevancy or coverage in onsite advertising, which harms revenue potential. The tension between Retail Media and Customer Experience is also well-documented and an ongoing source of frustration for retail teams.

Crealytics’ Retail Media SSP focuses on intelligently integrating the paid and organic experience, ensuring that onsite ads have unbeatable coverage, relevancy, and yield, all while providing a great customer experience. Our suite of self-serve tech gives retailers complete control over their onsite ads, with the ability to change ad volume, pricing, and category rules in moments – we call this Fluid onsite advertising. At present, we focus on sponsored products as the major driver of value, but we have plenty planned for the near future, so watch this space!

On the demand side, our flexible approach means that campaigns can be sourced from our self-serve campaign manager interface, our experience ad ops team, an existing third-party demand source or any combination of these. 

Finally, we have made significant investments to make our tech lightning-fast and easy to implement, making it easy to test the Crealytics Retail Media platform within a matter of weeks and without overburdening retailer tech teams. The results? For a recent client, we managed to increase their sponsored product ad revenue by almost 4x in just 3 weeks after implementing our Fluid sponsored products tech.

Unlock Retail Media Revenue with the 2024 Sponsored Products Benchmarks Report
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