For the first time this year, Front Row, trust in dialog services and the Bundesverband E-Commerce und Versandhandel Deutschland e.V. (bevh) organized the “Retail Media Night” on the eve of OMR, Europe’s largest online marketing trade fair – and invited Ingrid to host the event. Among those on stage were the retail media managers from eBay Germany, OTTO, Kaufland Germany, Zalando, Douglas and MediaMarktSaturn. They discussed the pros and cons of retail media.
Because: As market observers, we are ambivalent about the retail media trend. The figures show that there is no getting around the trend: No new form of advertising has grown so quickly in the last 20 years; this year, global spending on retail media is likely to increase by 20 percent.
Second source of income
And it is understandable why marketplace operators are attracted to making their top target group available to advertisers and thus tapping into a lucrative second source of income. It is also completely understandable why advertisers are keen on the marketplaces’ in-depth knowledge of their shoppers.
Driving up the cost of marketplace sale
From a retailer and brand perspective, better equipped advertising spaces open up new opportunities to promote their products on the marketplaces. But of course, this also drives up the cost of marketplace sales. Budgets for retail media can destroy any marketplace business case, especially in competitive categories. On Amazon, 30 percent or more of sales revenue can quickly go on advertising costs. So every return hurts twice as much.
Detailed data and reports wanted
Advertisers naturally want to know all the more precisely how their advertising euros are best spent – and in the search for the necessary data for sophisticated performance marketing, they often ask for more and more detailed reports and data than the marketplaces are willing to provide.
Conflict of interests
This conflict of interest also came up again and again at the Retail Media Night. Jessica Wegner from Douglas and Robert Jozic from Schwarz Media (Kaufland) emphasized in our panel discussions that they keep advertising and retail business strictly separate. Torsten Ahlers from MediaMarkt and Denis Brosius from Rewe, on the other hand, are quite prepared to promote the advertising success of advertising customers with data from the retail business. Heike Lari, on the other hand, would like to open up Zalando’s checkout page to external advertising customers, but her retail colleagues prefer to use the space for in-store advertising.
Pros and Cons of Retail Media
Retail media’s explosive growth marks it as a critical trend in advertising. Marketplace operators are capitalizing on this by offering advertisers access to their prime audiences, creating a lucrative secondary income. However, this drives up marketplace sales costs, especially in competitive sectors. The ongoing conflict between advertisers’ demands for detailed data and marketplaces’ control over it highlights the tensions in this rapidly evolving industry, signaling that retail media’s impact is still unfolding.