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Is Retail Media Saturated?
Walgreens introduced their new retail media network – Walgreens Advertising Group – this past month. It was met with applause for a variety of reasons.

First and foremost, building a retail media network from scratch is a monumental undertaking. This one incorporated the likes of Publicis-owned Epsilon, Adobe and Microsoft for their respective ad-serving and audience building capabilities. Countless internal hours were focused on the effort as well. They used those hours to build a new revenue stream, creating something out of nothing. Time well spent to say the least.

Second, retail is no longer about simply moving SKUs. It’s now just as important to acquire data. This is something all retailers need to come to terms with. Getting ahead of the “monetize your online presence” curve should be of the utmost importance. The pandemic-induced jump-start ecommerce received is even further proof consumer preference has officially pivoted towards online.

Third, advertisers love options. Retail media started out with Amazon. Target (Roundel) and Walmart (WMG) followed suit. Since then, smaller (relatively speaking) players have joined in – most recent examples being CVS launching CMX (CVS Media Exchange) and The Home Depot beefing up its offering via Retail Media+.

Despite the applause, though, the recent launch of Walgreens Advertising Group was greeted with some rumblings as well. Certain conversations pointed to this most recent addition driving retail media towards a precipice. Was the market now saturated with too many similar options? For example, do advertisers in the grocery industry have the capacity to properly fund media efforts across Kroger, CVS, Walgreens, Meijer, Albertson’s, Costco, etc.? And if so, what unique differentiators does each possess to necessitate this?

The answer to these questions, in short, is the following: each advertiser is unique. They have unique KPIs focused on unique audiences with unique needs. This uniqueness is what makes CVS a better fit for one advertiser, while making Costco a better fit for another.

That said, they may seem ubiquitous from afar, but there are notable areas of differentiation across these retail media networks. As always, the devil is in the details:

Audiences – One can never have access to enough data. Each of these retailers has their own distinct audiences with their own unique processes of segmentation. Consumers interact with Walgreens in ways they don’t interact with CVS and vice versa. Additionally, access to first party data is becoming more and more valuable with each passing day. It’s looking more and more like the beginning of the end for third-party tracking. This shift away from cookies should cause the value of first party data to skyrocket.

Competition – When talking ad placements via digital or search, there is limited ad space on-site. Amazon, for example, has become highly competitive in the last few years – especially within sponsored search. It’s also a platform that not only allows, but encourages, conquesting in all forms. This pervasive thunderdome mentality has made it harder and harder for brands to succeed on Amazon.

Other retailers have taken the opposite approach, in some cases forbidding conquesting via their search offerings. They also have less combatants vying over each auction and can boast lower CPCs as a result. The more retail platforms there are, the more dispersed the overall competition can be.

Functionality – As it relates to self-service models, there are obvious gaps across respective retailer offerings. Some have built their own platforms (Walmart, Amazon), whereas others have leased tech from providers such as Criteo, PromoteIQ and Quotient. One constant is a lack of functionality. Product-related holes and inefficiencies exist at every turn, making management difficult regardless of retailer. But there is definitely an ease-of-use gap when comparing newer platforms versus more seasoned offerings.

Maturity – How long a retailer has been entrenched in the space is also quite important. Looking at the self-service side, Amazon Advertising’s Sponsored Search platform is lightyears ahead of Walmart Performance Ads (WPA). Looking at managed service, some have longer standing supply-side, social and influencer partnerships.

With age comes experience. Older offerings have already stepped on the landmines associated with a launch of this magnitude. Newer efforts have yet to navigate these same pitfalls.

Relationships – As noted, a lot of these offerings are brand new and the processes themselves are still experiencing growing pains. In some cases, it can all boil down to the nearest human point of contact. A great vendor rep can help you overcome some of their products shortcomings. A not-so-great rep can often end up exacerbating those very same issues.

Performance – Performance is obviously going to vary based on attribution methodology, but all things being equal, advertisers will still see different results across different platforms. Competition, pricing and inventory availability (both in breadth and in number) will all factor in. As will back-end factors such as average sales price, profitability, conversion rates, etc. Getting benchmarks from prospective platforms—even though some may be less than willing to oblige—is always key.

These retail media offerings may look similar at first glance, but their differences can be rather glaring upon closer inspection. There is very little parity among them beyond the methods they use and the space they exist.

Saturation likely won’t be a problem, but not all of these newfound media endeavors will flourish. Even the ones that don’t should provide advertisers with alternatives. We love options, remember? The main question lingering is which networks will flourish, and which will be left on the periphery?