May 1, 2023 | By Michael Bürgi
This article is part of a limited series exploring the challenges and opportunities associated with commerce media, from e-commerce to retail media networks. More from the series →
As the media and marketing industries grapple with economic worries that just won’t let up, instinctually marketers and agencies have turned to performance-driven options that deliver a quick and obvious return on investment.
Tie in that the pandemic put e-commerce into hyperdrive as people were stuck at home, and the result is an alignment of scenarios has led to the explosion of commerce media in the last two years.
And any media agency worth its salt at this point needs to have a competitive commerce offering. “It’s almost table stakes to almost any RFPs that we are putting out these days,” said one media agency executive.
This vast landscape that is commerce media encompasses both swaths of e-commerce terrain dominated by Amazon (which now is feeling some competition from live shopping alternatives) and continents of retail media networks both large and small. Together they represent some $1.3 trillion in enterprise value (all the money generated from sales and ad revenue together), according to McKinsey, which last year wrote a somewhat definitive report outlining its potential.
Although alternatives like live shopping have their appeal, the bulk of growth in the commerce media world lies in retail media networks (RMNs), which have been sprouting up faster than mushrooms in a rainy forest. While the Walmarts and the Albertsons currently dominate the space with the size of their operations and the connections they’ve made to either media companies or fellow commerce media players, it seems every retailer that’s sitting on valuable first-party data is setting up its own RMN to harness this moment in time.
“Whatever the pace of e-commerce sales, advertising spending by packaged goods companies on retail media channels will most likely outpace e-commerce growth given the ongoing establishment of new media offerings from these retailers,” wrote media industry analyst Brian Wieser in February.
The other factor that helped to jumpstart commerce media in the last two years is third-party cookie deprecation. “The deprecation of third party cookie makes it harder to target and place media against desired audiences across the web, and it’s a massive change to digital media,” said Frank Kochenash, CEO of Omnicom Transact, which coordinates commerce media activity across the holding company. “I’m not sure how planned this was, but retailers have come to realize that when it comes to purchase data they have, it’s very valuable data — because they have the purchase behavior” data that every marketer and agency wants access to.
How to keep up
Media agencies are furiously trying to stay abreast of the options in front of them. Several of the holding companies have put commerce media czars in place to facilitate the breaking down of silos internally, to deliver more coherent retail media strategies that also take into account e-commerce options.
For example, Kochenash took his current post just last year (he acknowledges he operates most closely with Omnicom Media Group). His job is to centralize commerce media efforts on behalf of the holding company’s clients, which range from the obvious CPG types (Unilever, Johnson & Johnson) to automotive (Nissan, VW) and QSR (McDonald’s).
“When it comes to e-commerce, retail media has been interfacing with our media agencies and our commerce group agencies,” said Kochenash. “With our agencies, we plug in and support them with those two types of of expertise. It helps our clients align their shopper and commerce and e-commerce plans with their brand media plans. It’s also consultancy and strategy, as well as tools and data-driven discovery and budgeting.”
