The Challenges of Operating Retail Media Networks … And How Retailers Can Overcome Them

Beyond retail media giants like Amazon.com and Walmart, there’s a growing host of retailers that are still grappling with how to transform themselves into media entities. At the same time, the retail media teams inside these companies are being tasked to grow at 10, 20, or even 50 times the rate at which the core retail business is growing.

With each emerging retail media network (RMN) under pressure to perform spectacularly from the jump, enormous issues have arisen involving change management, scaling indirect demand, integrating new media operations with established retail processes, and orchestrating a diverse range of media formats from digital ads to in-store and offsite advertising.

The Rush to Establish RMNs

Retail media’s roots stretch back to the in-store brand experiences that were the hallmark of classic trade marketing — e.g., endcaps of aisles, signage, and point-of-sale (POS) displays at checkout — designed to grab the attention of browsing shoppers. Retailers also extended their media efforts outside the physical store, purchasing billboard space, newsprint ads, or circulars on behalf of the brands.

The transition to digital formats created a dramatic shift. The retail organizations that depended on promotional units sold through their stores to generate razor-thin margins have found in retail media an extremely profitable, owned space that they could leverage to pad their bottom lines and operating margins.

Challenges Arising From Fast-Tracked RMNs

Currently, advertisers have more than 200 RMNs available for their consideration and budgets — the lion’s share of which currently flows to market leaders Amazon and Walmart. These advertisers are open to alternative options that can reach their key audiences, but most other retail media networks aren’t set up to capitalize on that potential demand due to practical challenges such as the following:

• Fragmented tech stacks: The prevalence of disparate technology stacks — encompassing supply-side platforms, demand-side platforms, point solutions for media management and data analysis, cleanrooms, and more — not only impacts the day-to-day running of RMNs but also poses significant barriers to scaling and adapting to new market demands, contributing to missed revenue opportunities.
• Data silos: Massive troves of data aren't being shared or harmonized across different departments. This is data that needs to be rationalized to deliver the sales motion and measurement paradigms that brands require before they increase their investment in a given retail media network.
• Vendor management: Poor practices in managing relationships with numerous vendors and suppliers have forced some retailers to leave millions of media dollars on the table due to their inability to marshal their partners and tech stakes in concert to meet the needs of brand advertisers.

Additionally, scaling a retail media network is not as relatively straightforward as standing up the ad inventory on site or ensuring that there's shelf space in a grocery chain, for example. To run a retail media business, several stakeholder groups must work in concert, including executive, finance, sales, and ad ops teams, each with their own set of challenges to overcome.

Retailers Need an ERP for Their RMNs

For decades, companies have relied on enterprise resource planning (ERP) platforms to help oversee complex activities, multiple departments, and large volumes of data — think of the likes of SAP, Oracle, Microsoft Dynamics 365, and others.

Similarly, retailers need a centralized operating system for their RMNs, one designed to centralize essential tools and insights and enable retailers to monetize their media assets at scale across channels while facilitating seamless collaboration internally.

With a holistic view of their media landscape and advanced capabilities for data analytics, campaign optimization, and real-time performance tracking, retailers would be able to unlock new revenue streams and enhance their competitive edge as commerce media becomes the dominant advertising channel in the years to come.

Nich Weinheimer is executive vice president of strategy at Skai, an omnichannel marketing platform.