What began as a gold rush is now encountering the hard realities of fragmented markets and complex execution. How can retail media maintain sustainable growth?
Andreas Reiffen, CEO and co-founder, Pentaleap, believes retailers’ rush to rival Amazon has been both its catalyst and its problem.
In this video interview with Beet.TV, he says the space needs to unlock new growth with a new approach.
From gold rush to reality check
The sector initially gained traction around 2014 when Amazon began seriously exploring selling advertising on its digital store pages. “Initially, (over retailers) said, ‘Well, that’s for Amazon, we are retail and we love our customers, and we don’t want to become an ad platform.'”
However, the tide turned as Amazon’s retail media presence grew, creating a competitive disadvantage for those who had previously hesitated. “And at some point everyone realized, ‘Oh damn, that’s actually a severe competitive disadvantage if we don’t have that,'” Reiffen said.
According to eMarketer, U.S. retail media ad spending is now projected to reach $62.8 billion in 2025, marking a 20% year-over-year increase, but the growth is not without its challenges. Advertisers are seeking standardized metrics and improved measurement practices as the number of retail media networks grows.
Like Riefenstahl, eMarketer’s forecast highlights the financial potential while underscoring the need for strategic adjustments to meet market demands and overcome fragmentation and obstacles.
Ad network approach for revival
Pentaleap‘s Publisher Manager aims to optimize clients’ presence and provides analytics to track campaign performance and adjust tactics as necessary. For instance, the company helped Home Depot boost the performance of sponsored products.
To navigate the retail media current frustrations, Reiffen suggests a return to an ad network approach to simplify demand generation and ease budget allocation for brands.
The focus should be on streamlining the process of translating ad budgets into tangible sales, Reiffen noted. “So like difficulties in raising the money, and difficulties and then basically translating ad budgets into tangible sales for brands.”
Reiffen also envisions a “composable” ecosystem where different companies specialize in various components of the retail media stack. “There will be a multitude of different retail media platforms that will build pipes to any demand that is out there,” Reiffen said. These platforms will connect to demand sources, while others will focus on the front end or ad-serving technology.
This modular approach allows retailers to avoid dependency on a single vendor and to replace components as needed. “You want to be able to replace the ad serving tech if it’s no longer good enough,” Reiffen said.
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