Commerce Media Challenges and How to Overcome Them

AdExchanger Programmatic I/O, NYC

Even a blind man can see the accelerated growth of the retail media market. From the confluence of the Pandemic to the shift of incremental spend from other media channels, retail media is a commerce subsidiary that, like the heart, keeps that aspect of advertising alive.

When people could not go outside during covid, we began to see massive shifts in commerce towards more consumer shopping, and the shift is still shifting. Such changes increase margin pressures that retailers face, and retail media is emerging as a net new revenue stream that helps to defend what is happening.

On the flip side, first-party data has become equivalent to gold as the advertising ecosystem needs help finding a viable alternative to third-party cookies. The industry is scrambling to find ways to retain addressability without violating privacy concerns. Brands are looking to diversify how they target their audiences. 

Studies show that roughly 80% of consumers are perfectly fine with and expect things like personalization. Retailers are taking advantage of this statistic and are investing significantly in personalization over the past several years. The closed-loop attribution that retail media offers allow retailers to understand the series of events consumers make and how they influence shopper decisions. New data analytics investments for personalization advancement are quite synergistic with what it takes to produce quality media operations.

During Programmatic IO, Jason Cherok, Partner at McKinsey & Company, sat down with Charlene Charles, Head of Operations at Dollar General Media Network, to discuss ways to “Close The Loop Between Impressions and Transactions.” 

Commerce media is bustling. In the last two years, 15 to 20 media networks launched. Nonetheless, everything is not a walk in the park. With such rapid growth, adapting is challenging for retail media networks.

Current Roadblocks in Commerce Media

Charles oversees the P&L growth plan, ad product strategy, internal operations, media planning and buying, reporting and measurement, and procurement. She highlighted three main hurdles in the road that commerce media companies need to jump over.

  1. Revenue
    Of course, we are starting with the money part. When preparing to implement a commerce media network, many retailers’ initial question is, is it incremental? According to Charles, it is, but it does take some internal education to convince key stakeholders whether or not this is happening in the merchandising funds. Often this is new territory for a retailer, and your ability to communicate that point to merchants and marketers on how it fits can be a learning curve.
  2. The importance of a Dedicated Team
    There’s a balance between tech and talent that commerce media needs to consider while also realizing those gaps within their organizations. The work is more complex than copy and paste, so if/and when establishing a retail media network, think about whether or not you will need to seek outside talent and how you’ll operate effectively.
  3. The Creative
    When thinking about personalization, audience segmentation, and the ability to curate messaging for consumers on their personalized journey, retail media networks should strongly consider meta-tagging everything across the board. Pay attention to the analytics behind the scenes, and observe vendor owned, paid, and amplified in a way that you don’t look at your results in silos.

How to Win at Commerce Media

Navigating new monetization territories is never easy, but here are some essential guidelines to motivate and help retailers win in this space.

Having a clear vision is critical. While it may sound easy peasy, many retail media networks need help articulating their value proposition and distilling it in a way that resonates. After this is thought out, a retailer’s next question is, what makes my customers unique?

“At DG Media Network, we pride ourselves in reaching the hard-to-reach and hard-to-measure consumers in rural markets,” Charles explained. “Brands want that unduplicated reach. They want to talk to our over 80 million customers that we can reach 90% of the time through paid media, and measuring their investment return is important.”

It’s crucial for commerce media networks to carve out what they plan to do from a dedicated end-to-end standpoint and what that means to sales ops technology teams.

Work through the ambiguity of business and technology simultaneously. When dealing with innovation, the unknowns can be endless. You have to be able to deliver fast and efficient outcomes and troubleshoot them. There will be problems, but it’s all about maneuvering them.

Lastly, performance is everything. It doesn’t matter if you can deliver outcomes if you do not have something to offer or the right technology and resources. It would help if you had measurable outcomes. Retailers and brands want to ensure they can see the return on ad spend in their investment build.

The Future of Commerce Media Networks

DG’s media network debuted this year, and we expect to see many more in 2023. Retail media networks serve a crucial role within the advertising ecosystem because there is an ability to close the loop. Traditionally, when you think about brands and agencies, they usually only worked with maybe four or five major players. From a media network standpoint, Charles expects that to “explode.” Expect to see more executions, more comparisons across different media networks, and more of a need for a centralized way to understand results across each.”

DG Media network also predicts that services will evolve. It can be beneficial to have the right partners, whether they’re clean room, identity resolution, or even operational day-to-day. Following figure out how they can add value to media networks to provide a service and partner together,” Charles stated.

It’s essential to keep the value proposition in mind. After all, you will need to have a differentiated message as to why your consumer is more valuable because everyone will start looking the same in the eyes of buyers.