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| Retail Networks Might Not Be the Shiny New Thing After All |
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| Judging from the press late last year, 2023 looked like it would be the year of retail media. eMarketer predicted that spending would grow nearly 26% to reach $51.36 billion and would even disrupt the linear TV market. Retail media is supposed to be a bright spot in an otherwise concerning market. There’s no doubt that brands are spending on retail media, which is a Godsend to the retailers that attract those budgets. In its earnings report, Walmart noted that its ad revenue grew by 30% in 2022, delivering the retailer $2.7 billion in revenue and contributing to its overall profitability. But a recent Association of National Advertisers survey revealed that marketers aren’t as enamored of the channel. In fact, 88% of brands say they feel pressured by retailers to spend in their channel, with some 42% feeling it’s just a cost of doing business. Some marketers hint that the relationship between the advertiser and the retail media platform can veer into toxic territory. What’s going wrong? According to the ANA, brands credit RMNs with driving sales, but they’re not convinced they can drive brand growth. Brand growth is a far cry from brand awareness. Most brands (75%) want their RMN spend to result in direct sales. Only 18% say brand awareness was their most important goal for retail media. It was a topic covered at AdExchanger’s yearly kick-off conference. In a panel discussion, Vinny Rinaldi, Head of Media Analytics, Data, and Technology at Hershey’s, suggested that retail media is pricey, but performance is not remarkably better than other data sets. |
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| Many in the industry pinned their hopes on retail media, especially as cookie deprecation loomed. It seemed like a win-win-win for everybody: retailers like Walmart benefited from diverting the marketer’s ad spend to retail media and higher average order values from targeting shoppers in real-time. Advertisers benefit by getting their messages in front of consumers closer to the point of sale. Moreover, they can use the retailer's first-party data to hone their targeting strategy and reach the right user at the right time. And as a walled garden, they can attribute actual sales to their ad spend. Meanwhile, shoppers are introduced to products they never knew they wanted. Perhaps the RMNs over-promised the sales marketers could expect to get from advertising with them. Clearly, many expected to see meaningful brand growth at a time when consumers are cutting back. It’s important to note that the ANA survey respondents are still bullish on retail media, and the ANA says that it is here to stay. The degree to which it grows will depend on how helpful the RMNs are in meeting the marketer’s needs. “The next phase of growth for RMNs and value creation for brands will be through RMNs assuming shared responsibility with advertisers for driving brand growth as well as demonstrating the ability of their platforms to drive profitable incremental growth and positive ROAS for brands. Results versus relationships will drive the next growth stage, " Joel Paquin writes in an ANA blog post on the topic. |
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| The Supreme Court Takes a Big Swing at the Ad Tech Industry |
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| If you haven't been paying attention to the Supreme Court, we firmly suggest you do. They have their eye on big tech, and major changes may be on the horizon impacting the entire advertising ecosystem. First on the docket: Gonzalez v. Google. The Supreme Court recently heard arguments in this landmark case. The case will decide if the Court will make drastic changes to the 1996 law that protects service providers and publishers from being sued over the content their users post. This decision has significant blowback on any website curating third-party content. Of course, there are valid arguments for reforming Section 230, but mostly, no one has had any great ideas about how to drive that forward. Even now, some speculate that SCOTUS will pass on making a decision and leave it up to Congress to decide. This particular case started after the ISIS Paris attacks in 2015. The victim's family sued Google because they felt they were responsible for radicalizing ISIS members. And, after two and a half hours of oral arguments, witnesses say SCOTUS was confused about the plaintiff's arguments. The ball is now in Congress's court. |
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| Next on the docket: SCOTUS v. Big Tech. The industry is worried the Supreme Court is ill-equipped to decide this case. The court heard arguments against Google and Twitter, and the plaintiffs argued whether the companies are liable for the content that their algorithms promote. If the court doesn't understand the tech behind content recommendations and algorithms, its decision could create more problems than solve them. "There is a valid concern that the Court may simply not understand nor appreciate the technical complexities that drive the modern web," wrote Jess Miers, a pro-tech Chamber of Progress lawyer. SCOTUS generally makes laws about one broad principle, and big tech and the open web are far too complicated for that approach. For example, in 1979, the court ruled that police did not need a warrant to obtain a list of phone numbers you called because a third party (the phone company) already had access. Now that your phone holds a significant amount of data, including a person's location, it clearly violates privacy. There are other areas where it is clear that the federal government does not fully grasp the full scope of the ad tech industry. For instance, the U.S. federal government struggles to create federal privacy laws. This became clear when Privacy for America recently called out President Joe Biden. "Privacy legislation should distinguish between harmful practices that should be prohibited and responsible data practices like advertising that provide valuable information to consumers and are essential to innovation and economic growth," said the umbrella group Privacy for America. Wherever any of these decisions fall, the industry and the federal government must cross the aisle and find a common understanding. |
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| DEI Initiatives Are Flourishing, but Is Diverse Media Reaping the Benefits? |
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| Adweek released its marketing "In and Out" list for 2023, and one of the major talking points was DEI initiatives. More specifically, they stated that "DEI pledges are out and "DEI action and accessibility in practice" are in." And they hit the nail right on the head. They noted it had been nearly three years since media agencies committed to supporting diverse-owned media. From their perspective, only a tiny portion of diverse media has reaped the benefits. In addition, diverse consumers represent nearly 40% of the population, but they get different attention than their counterparts. Will this change in 2023? If diversity is a priority for brands, it should show up in how they market to their audience, how they hire, whom they create partnerships with, and how they allocate funds. |
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| DEI initiatives came to the forefront of many industries after the death of George Floyd a couple of years ago. Brands wondered how to center their messages to include the voices of the marginalized population crying out from centuries of mistreatment. Brands centered marketing campaigns around Black History Month and Juneteenth. They hired diversity officers. They even started to donate money to a small sect of diverse media. But where did that leave us? To many, it felt like lofty words to soothe a guilty conscience. Now, diverse media owners are calling for action that breeds actual results for the marginalized population. A recent study conducted by Direct Digital Holdings noted that despite diverse audiences making up a significant amount of the population, ad spend directed toward those communities remained the same. In addition, brands that don't invest in these communities are missing out on significant revenue. Diverse audiences hold a substantial amount of spending power. They are missing out on $5 trillion of spending potential. "Clearly, this shows that underrepresented communities have considerable clout, and it's a cautionary tale for those brands that take a one-size fits all approach to customer segmentation and marketing consumer goods and services," said Sheryl Daija, founder and CEO of the DEI trade group BRIDGE. "For companies and brands to be successful, they need to think of inclusion as their next big growth opportunity and implement it as a business practice across the workplace, workforce, and marketplace." |
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| Google’s Black and Latinx Publishers 2023 Summit |
L to R: Kerel Cooper, President of Advertising, Group Black; Ryan Johnson, Founder, Cxmmunity Media; Grouch Greg Watkins, Founder, AllHipHop.com. Image sourced from Melissa Chapman, Part Two Consulting
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| In an intimate but packed room, Google hosted its Black and LatinX Publishers Summit in person for the first time. It was one of those events you just had to be in the room for, but if you weren't, we got you. The event started with Managing Director of Publisher Platforms Darline Jean presenting mind-blowing stats about the substantial growth of Black and LatinX populations and their spending power, as well as focusing on how their cultures have expanded worldwide and become the mainstream culture. She cited examples of Hip Hop at the Super Bowl with Dr. Dre, Mary J. Blige, Snoop Dogg, Eminem, 50 Cent, Kendrick Lamar, and how Bad Bunny has brought Latin Trap to the mainstream. Plus, almost all of these artists have transcended being music artists into fashion, tech, TV, and film. Next up was AdMonsters' content director, Lynne d Johnson, who breathed life into the room. Here are some highlights that stood out for us:
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| Around the Water Cooler |
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Just in case you missed it...
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