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10 minutes of expert insights every weekday. Your morning ritual for staying ahead in retail media.
The Four Eras of Retail Media Tech. (publish Weds Sep 16)
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[00:00:00] Kiri Masters: On a recent call, a retail media leader at a mid-sized US network told me how technology decisions actually get made. They told me how they joined the company and did what any competent operator would do. They [00:00:15] audited the on-site ad stack. What they found was an ad server that was built for legacy publishers doing a job that it was never designed for.
[00:00:25] Its forecasting couldn't read a retailer's traffic [00:00:30] pattern. And after a tentpole promotion week, the ad server assumed that the spike of traffic that it saw would continue in perpetuity, and so it paced campaigns against that assumption and then ultimately [00:00:45] under-delivered when traffic inevitably came back down to Earth.
[00:00:49] My source here asked for funding to replace the ad server, but the request was denied. So my source built a seasonally [00:01:00] adjusted forecast model by hand using last year's data, layering in assumptions for promotional calendars and outside factors. And now this person has to manually feed that model [00:01:15] back into the platform every week or two because otherwise the system just looks at the most recent four weeks of traffic and reverts to its own bad guess.
[00:01:25] Without this, my source estimates the network would have missed [00:01:30] seven figures in ad opportunities it didn't know that it had. Welcome to twenty twenty-six and the manual labor still holding up a US retail media network
[00:01:44] Retail media [00:01:45] might feel new, but it isn't. It has already been through several eras and reinventions over the past decade or so, and today's operators have more technology options available to them than at any previous [00:02:00] point. What they don't have is a straightforward way to get it approved and installed
[00:02:05] In this piece, I argue that this gap between what the technology can do and what an organization can actually buy, approve, and run is part of what [00:02:15] is really holding retail media back. Today I'm going to read part of an essay that I wrote for my column at The Drum It was published last week. I'm not able to cover all of the information in it because it is a little longer than we have time [00:02:30] for in the podcast today, so I will link up to the full piece in the show notes
[00:02:34]
[00:02:35] Kiri Masters: To get some historical context here, I spoke with Soma Simpson, who is the vice president of product at Growth Loop. And as a disclosure, Growth Loop [00:02:45] sponsors this newsletter and podcast, and recently they launched a product that is relevant to what we're about to talk about. So I shared with Soma my own version of these eras as I [00:03:00] saw them, and I started with era one, which is Amazon building its own entire ad tech stack in-house.
[00:03:06] Walmart and Target largely built their own core engines including some third-party technology. And then we have companies like Criteo, [00:03:15] who have sold an all-in-one solution to the other early players in the space. And this is where Soma picked it up and added three more subsequent eras.
[00:03:25] So era two, she said, isn't really an era. It's more of a pendulum [00:03:30] that swings on the economy. So she talks about how when budgets tighten, retailers cut point solutions and often consolidate into all-in-one players. When budgets loosen, they [00:03:45] tend to start to build in-house again using their own in-house dev and product teams.
[00:03:51] And she talks about how this just kind of follows the economy. When the economy gets better, retailers might just decide to [00:04:00] build this stuff themselves. They will build their own ad server. They'll build their own CDP, whether or not that is really the best idea. Um, and so what this means is that a network's tech stack often says more about the [00:04:15] year that it was chosen than what the retailer really needed or what the market really needed at the time.
[00:04:22] So I thought that was a very insightful, way to look at things. Era three is the cloud, and this is an [00:04:30] important one because instead of copying customer data out into each vendor's system, the data stays in its own warehouse, and the vendors come to it. And so that inversion is what [00:04:45] composable technology means in this instance, and it's why that word seems to be everywhere right now.
[00:04:51] It's the difference between renting your capabilities and owning them. And the fourth era is AI and the bar that [00:05:00] it sets for data. S-Soma Told me how your data has to be good enough, not just for your data analysts and your marketers to leverage and for business insights and reporting, but it's also got to be in a state that is usable by [00:05:15] AI.
[00:05:15] Now Growth Loop has a dog in this fight. Last month, they launched an end-to-end commerce media network solution, which is Growth Loop pre-integrated in a kind of bundle [00:05:30] with The Trade Desk, Moloco, Snowflake, BigQuery, Databricks, and identity provider Audience Acuity. And this is bundled in such a way that a retailer can stand up or upgrade a network without assembling the plumbing [00:05:45] itself, which, you know, from the outside in, sounds like an attractive proposition and also a reflection of the current moment, which is we're in an era where we have all of this technology, multiple [00:06:00] options that are purpose-built for retailers, but also very little organizational appetite to actually integrate any of it [00:06:15] Costco isn't scaling its RMN with legacy ad tech and manual solutions. It's leaning into a cloud-centric composable stack. As part [00:06:30] of the Costco Velocity Network, GrowthLoop empowers the retail media team to build audiences directly from the Data Cloud, enabling faster activation, greater relevance, and better [00:06:45] performance, all while maintaining privacy and governance standards.
[00:06:50] The result? Exceptional value and experience for Costco members and better ROI for brand advertisers. [00:07:00] Learn why the GrowthLoop Composable Commerce Media Solution was the right choice for Costco's Velocity Network. Visit go.growthloop.com/breakfast. That's [00:07:15] go.growthloop.com/breakfast
[00:07:18]
[00:07:18] Kiri Masters: Now importantly, eras might be a little bit of a misnomer in this situation because they're not so much eras that are sequential, they're [00:07:30] simultaneous. And I look at two examples that are
[00:07:33] Operating in this space that are very different. Costco Velocity. Costco operates on this hand-built composable stack. [00:07:45] That's in one corner, and in the other corner, we have Ace Hardware's Redverse Media, which runs more or less its entire platform on CitrusAd, now owned by Epsilon. And Redverse's head of retail media, Molly [00:08:00] Gelm, told me in an interview last year that she considers that a feature, not a compromise.
[00:08:06] Meanwhile, that source from my introduction from a s- a-another RMN is using a general purpose [00:08:15] publisher server, ad server, because that's what a management consultant told them to do a few years ago. and so these eras don't play out over this neat timeline sequentially from one to another. Across this [00:08:30] universe of RMNs, we see a cross-section, and that's not because some leaders are smarter than others.
[00:08:35] It's because there are two timelines that they're operating under
[00:08:40] The first is the budget clock. The budget clock turns over [00:08:45] once a year. As my anonymous source told me, "It's June, I need you to submit your full annual business plan with your request for expenses for next year." And that is how most organizations work, [00:09:00] including retail media networks operating within a retailer.
[00:09:03] You can't anticipate some breakthrough new technology capability that's going to launch three months from now. You just have to work with what [00:09:15] you have as known knowns. So that is one constraint, one timeline. The other one is the career clock. The career clock runs two to three years, and it is often tied [00:09:30] to a target, like a revenue number, rather than the
[00:09:35] quality of anything that you build. My source was blunt about where that leads. What can I do to hit my goal? My goal is some [00:09:45] revenue number. So do I care if a brand that works with me does well enough to come back and keep spending with us next year? I don't care about that right now. I need to hit my number for this year
[00:09:56] We are all operating under [00:10:00] rational self-interest at the end of the day So I'm going to wrap this up here. You know what? I am actually going to share the rest of this piece tomorrow in a separate podcast drop because the second [00:10:15] part of the piece
[00:10:16] calls on another RMN leader who I am able to name 'cause they did a public interview talking about a different kind of access for making technology decisions. This comes from Co-op Media Network in the UK, and [00:10:30] we're gonna talk about another access or framework to look at technology investment by retail media networks, and also what does this mean for the people on the other side of the table actually buying this media?
[00:10:43] So make sure you're [00:10:45] subscribed to the podcast to get part two of this piece about eras in retail media. Thanks for listening, and I'll catch you tomorrow
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