In the latest episode of TraderTalk TV (TTTV), Kevel CEO & Founder James Avery joins ExchangeWire CEO Ciaran O’Kane at the whiteboard to discuss retail media and more. We’ve boiled it down to our top 4 key takeaways here.
Retail media experienced explosive growth, spurred on by 2020’s increase in time spent online. The industry is expected to reach $136B in 2024, and the opportunity to cash in left companies scrambling.
“We went from retail as a new thing, with your Amazon or eBays, to suddenly everybody has a retail media network,” Avery explains in the TraderTalk TV episode. “But they’re all signed up with the same couple of vendors…so, suddenly everybody has an off-the-shelf, standard retail media. Some promoted listings, some banner ads that we call native, and that’s it.”
“This is a whole new landscape that requires a different approach in terms of monetization.”
- Ciaran O’Kane, TraderTalk TV 2024.
Throughout the TTTV episode, Avery and O’Kane refer to "cookie-cutter" retail media, which is shorthand for blocky, standardized ads typically produced by black-box solutions. O’Kane highlights the issue of banner blindness, as just one of the consequences of this kind of retail media.
But the larger issue with cookie-cutter, black-box solutions is one of irrelevancy. Avery points out that many of these cookie-cutter retail media networks display ads far removed from users’ initial search. O’Kane agreed, adding that, “They’re not relevant to the product on the page, so the user experience has a downgraded effect.”
“[With cookie-cutter ads] there’s a lot of that inefficiency, but also bad user experience. And what do retailers care about most? If you’re hurting that with these irrelevant promoted listings, and crappy banner ads, you’re not only leaving money on the table, but you’re also potentially hurting your core business.”
- James Avery, TraderTalk TV 2024.
When it comes to standardization, some ad units, like promoted listings, make sense to standardize. However, the ads must still be relevant to the user.
“Promoted listings are a pretty standard idea of a unit, but the question is, who’s deciding the relevancy?” Avery asks. “Where is that data coming from? How is first-party data being used to target it?”
Serving up relevant and differentiated ads makes a significant difference for both brands and users. Users’ feeds aren’t bogged down by irrelevant content and brands get to engage with more interested users. However, the Kevel CEO points out that platforms built on cookie-cutter RMNs cannot deliver these relevant, differentiated ads.
The value of first-party data in retail is greater than it ever was on publishers alone. For instance, the information a news website learns from a user is minimal compared to the information a grocery retailer gains from years of a user's purchase history.
“You need to have first-party data and be able to activate it,” O’Kane says, then asking Avery where Kevel fits into the data conversation.
“Instead of our relevancy being driven by just our own…some of our customers have huge data science teams,” Avery answers. “They have a ton of data, they have a huge data science team, and they can come to us and say, ‘we want to plug in our machine learning, we want to plug in our model’, and use that to power this relevancy.”
The key difference with Kevel is this ability for customers to bring their own first-party data.
“We’re a data processor, we’re not going to use that data to run ads somewhere else or to build our own machine-learning models,” Avery says. “[Customers] can bring in their own first-party data -- they can even bring their own machine learning models, like BYOML.”
It can seem like a no-brainer that ads that stand out are more likely to capture users’ attention, but even so, many retailers have turned to the cookie-cutter, standardized ad formats that are susceptible to banner blindness. In turn, advertisers aren’t eager to buy these placements.
Avery shares that, “The key thing when customers come to us, is usually because they’re hearing from brands. Their brands are going to them and saying, “we don’t want to buy this [cookie cutter ad], we can get this anywhere.”
Instead, brands are asking for innovative video formats or eye-catching native ads, in hopes of reaching new-to-brand users. The data backs this up, too, as nearly 90% of publishers have some form of native advertising on their site, and 70% of consumers report wanting to learn about products through content, not through traditional advertisements.
Another reason retail media has been growing so rapidly is due to a fear of being left behind. As retailers see their competitors hopping on the retail media bandwagon, making that jump becomes increasingly vital.
“If you're a grocery store and your competitor is making 500 million in retail media and you're making 50, that's really going to hurt you in the long run…because now they have all this additional margin,” Avery explains. “They can cut prices lower. They can spend more on marketing. It's really a risk to the core business if [retailers] aren’t being aggressive in retail media.”
Kevel customers see the opportunity in retail media and take the right steps to invest in it. If you resonated with any of these insights and want to start your retail media journey, get in touch today. Or click here to watch the full TraderTalk TV episode and gain even more insights into the retail media landscape.
