3 Challenges for Retail Media Networks

Retail media is one of the hottest trends in digital advertising, paralleled in its buzz possibly only by CTV. The growth of retail media networks offers brands one-on-one connections with shoppers at a time when third-party data is drying up. It also equips retailers with a fresh revenue source in a tough business during a downturn.

But the space is not without its challenges. Retailers need to determine how to curate advertising partners, avoid spoiling the shopping experience, and navigate the retail media tech stack. Here’s what each of those challenges entails.

Selecting retail media demand partners

Digital advertising is going through growing pains when it comes to connecting supply and demand. In traditional publishing, the programmatic open market looks increasingly dicey. Privacy changes are complicating third-party targeting, and fraud and brand safety issues persist.

The same challenges will now come to retail media. Retailers will not want to adopt completely open marketplaces. That would risk undermining their relationships with shoppers. It could also come with the aforementioned brand safety and fraud issues. So, they will need to find a way to boost demand to drive price competitiveness without losing control of the digital shopping experience.

Expect to see retailers set up robust direct sales operations to capitalize on programmatic’s efficiency while retaining control of advertising. In other words, I expect programmatic direct to come to retail media. Companies like FatTail (full disclosure: a client of mine) are pioneering this in traditional publishing by making programmatic direct easier to access and manage. But it will come to retail media, too.

Protecting the shopper

Digital advertising has made surfing many websites a harrowing experience. Ads so thoroughly dominate some media sites that they are unpleasant to visit. Retailers cannot risk the same happening to their e-commerce platforms. So, they will need to safeguard the digital customer experience.

The question is how, and this is where technology partners make a big difference. Retailers will need to evaluate whether technology partners foist a cookie-cutter aesthetic on their ad products or offer custom looks and formats to make the retail media experience feel native to shoppers.

Without the shopper, there’s no media revenue for the retailer to enjoy, so maintaining the integrity of the end user experience is paramount.

Navigating the retail media tech stack

How will retailers fulfill advertising demand and court partners? How will they foster a positive shopping experience while integrating sponsored product ads? How will they maximize revenue, keep fees low, integrate first-party data-driven targeting, and add reporting?

All of these questions are part of navigating the retail media tech stack. The partners that can answer them effectively will get a big slice of the $40 billion pie. Retailers who fail to answer them will see growth peter out or customers depart as a result of that growth.