March 27, 2023
Launching a retail media network is the path towards riches.
Put simply, retail margins are measured in the single digits compared to double digit media margins. Retailers have jumped on this opportunity as site traffic has grown two, three, four, even five times higher compared to pre-pandemic.
Of course, it’s smacking them in the face.
After all, Amazon has done it to the tune of $38B, financing their entire retail model. Walmart followed, generating $2.7B and highlighting how this effort is fundamentally reshaping its margin profile.
Retail rivals look at this and can’t help but dream about what a fraction of a fraction of this success would do to turn their margin decretive eCommerce sales into a profitable venture. This type of thinking happens to entrepreneurs worldwide - “If we only get a tiny bit of (you name the) market, we’ll be rich”.
But even tiny market share gains can be incredibly elusive.
For new retail media networks, brands must be…
- Shaken into paying attention
- Easily convinced why it’s significantly better
- Armed with real data to convince the higher-ups
- Fluid enough in budgeting to have the ability to experiment
- Resourced with enough people to execute on another network
All five of these reasons compound into a substantial challenge.
Only the savviest retailers will therefore earn significant incremental revenue from brand partners.
This isn’t a knock on trying. Rather, it’s a call to action - retailers must understand roles are reversed.
They must treat brands as their customer and anticipate having to fight like hell to win ultra-competitive media budgets.
