It’s Season 2, Episode 2 of The Retail Razor Show and we’re tackling one of the biggest trends you need to understand in retail today – Retail Media Networks!

Our Retail Avengers team has been eagerly anticipating this topic and recently held the discussion in our Clubhouse room, to uncover the truth about retail media networks and why retailers should (or should not) care about them. Is it about top line revenue? Margin? First-party customer data? Or all of the above? To help cut through the clutter we invited the industry’s leading analyst and expert on the topic – Andrew Lipsman, principal analyst for retail & ecommerce at Insider Intelligence, to give us the scoop!

Your hosts, Ricardo and Casey, are then joined by Andrew one more time to dig into what’s happened since the Clubhouse recording and consider the reality retailers and brands should think about when evaluating retail media networks. This episode is tailor-made for retailers, brands, marketing and advertising agencies – there’s something for everyone, and you’ll want to take notes during this one!

News update! We’re sitting at #21 on the Feedspot Top 60 Best Retail podcasts list, so please keep those 5-star reviews in Apple Podcasts coming! With your loyal help, we’ll move our way up the Top 20 in no time! Leave us a review and we’ll mention you in a future episode! https://blog.feedspot.com/retail_podcasts/

Meet your hosts, helping you cut through the clutter in retail & retail tech:

Ricardo Belmar, a RETHINK Retail Top Retail Influencer for 2022 & 2021, RIS News Top Movers and Shakers in Retail for 2021, a Top 12 ecommerce influencer, advisory council member at George Mason University’s Center for Retail Transformation, and director partner marketing advisor for retail & consumer goods at Microsoft.

Casey Golden, CEO of Luxlock. Obsessed with the customer relationship between the brand and the consumer. After a career on the fashion and supply chain technology side of the business, now slaying franken-stacks and building retail tech!

Includes music provided by imunobeats.com, including E-Motive, and Overclocked, from the album Beat Hype, written by Hestron Mimms, published by Imuno.

The Retail Razor Show

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Host → Ricardo Belmar,

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TRANSCRIPT

S2E2 The Retail Avengers & The Power of Retail Media Networks

[00:00:00] Pre-Show Intro

[00:00:00] Casey Golden: So Ricardo, there are two kinds of people in this business, those that love and depend on ads and those that can't stand it and strategize to avoid it. Which one are you?

[00:00:11] Ricardo Belmar: I admitted I am of two minds here on the one. The marketer in me loves talking about advertising when it comes to creating messaging and finding the right mediums or reach your audience. But then on the other hand, I'm also a consumer and I can't help, but consider advertising to be just like what professor Scott Galloway puts it attacks on the poor, who can't buy their way out of it.

[00:00:31] Casey Golden: Okay. That's like cheating. You have to pick one. You can't be in both camps.

[00:00:36] Ricardo Belmar: Why not? You know, the world of commerce is very gray. It's not black and white.

[00:00:39] Casey Golden: Hm, you have to pick one. I will die on my sword. You have to pick it's either one or the other. You can't be on both teams. 

[00:00:47] Ricardo Belmar: But what? So now there are teams?

[00:00:48] Casey Golden: There's always teams There are only two kinds of people and you went and created a third person.

[00:00:55] Ricardo Belmar: I I'm just expressing thoughts on this topic. I didn't realize I was choosing which team I'm on or creating an entirely new person. I mean, I don't know what kind of podcast starts the show by creating new kinds of people and putting everyone into one bucket or another.

[00:01:08] Casey Golden: Who said anything about buckets?

[00:01:10] Ricardo Belmar: Okay. Fine. Not, not buckets. How about different brands of vodka?

[00:01:12] Casey Golden: different brands of vodka have nothing to do with this. 

[00:01:16] Ricardo Belmar: It's a metaphor. 

[00:01:17] Casey Golden: are you sure? I have a feeling you're just making us run out of time to intro your topic.

[00:01:22] Ricardo Belmar: Well, you brought up advertising and then we branched off into buckets.

[00:01:26] Casey Golden: No really buckets of vodka have nothing to do with this week's show with all this talk of buckets. We're not going to have time to talk about retail me....

[00:01:36]

[00:01:36] Show Intro[00:01:56] Introduction

[00:01:56] Ricardo Belmar: Hello, and welcome to season two, episode two of the Retail Razor Show. I'm your host Ricardo Belmar.

[00:02:02] Casey Golden: And I'm your co-host Casey Golden. Welcome. Retail Razor Show listeners to our unapologetically, authentic retail podcast for product junkies, commerce technologists, and everybody else in retail and tech alike.

[00:02:14] Ricardo Belmar: So Casey, here we are second episode of the new season coming right off our strong opening with the Metaverse, which by the way is quickly becoming a very popular episode.

[00:02:23] Casey Golden: It's an important topic. I'm not so sure it's popular. I mean, there's so much hype out there about the metaverse. If there was one topic that needed someone to cut through the clutter. This is it. 

[00:02:33] Ricardo Belmar: Yeah, no doubt about it. Well, if that's the number one, I have to say this week's topic is pretty darn close if not tied right up there with the metaverse plus it's one of my favorites.

[00:02:42] Casey Golden: That can only mean one thing. This must be the week we're covering retail media networks. 

[00:02:47] Ricardo Belmar: You got it! Yes. This week is all about retail media networks. One of our top 10 predictions for 2022 back in season one, episode four. And it's another hot topic that our Retail Avengers crew had been anxiously waiting to cover for so long. And we go pretty deep on this one.

[00:03:03] Casey Golden: That's right. But when we cover a topic, we really, really cover a topic. We bring in the big shots to dive in, bring it home. We had an awesome special guest that joined us on clubhouse for this topic.

[00:03:18] Ricardo Belmar: And when you want a big shot to step in and talk, retail media networks, who ya gonna call?

[00:03:21] Casey Golden: I'm guessing it's not Ghostbusters, but yeah, I see what you did there. Um, you're really gonna try to get this back into referencing eighties, pop culture.

[00:03:31] Ricardo Belmar: I am all in for that challenge. Indeed but, but no, of course it's not the Ghostbusters it's even better. We brought in none other than Andrew Lipsman, principle analyst covering retail, and e-commerce at e-marketer insider intelligence.

[00:03:44] Casey Golden: Andrew has done so much research and forecasting into retail media networks. This was such a good session on clubhouse. We of course, had to bring Andrew back to talk with us again for an update. So after we listen to clubhouse, which was recorded a few months ago, we'll come back and chat with Andrew to see what the latest happenings are in the world of retail media

[00:04:06] Ricardo Belmar: It'll definitely be worth the wait. So with that said, since this is a topic that needs no further introduction, let's dive right in and listen to the Retail Avengers and the Rise of Retail Media Networks. 

[00:04:23] Clubhouse Session

[00:04:23] Ricardo Belmar: And welcome everybody. Welcome back to the retail razor room. We've got a great topic today. The room title says the Retail Avengers and the Rise of Retail Media Networks, which is absolutely one of my favorite topics lately.

[00:04:35] And as anyone who's following along in our podcast knows it was one of our top 10 predictions for 2022. I'm thrilled to have someone I consider an expert in retail media networks, Andrew Lipsman, and Andrew. I'll let you introduce yourself in just a moment. For those of you who might be new to our rooms, I'm gonna let each member here of the team introduce themselves quickly. And Casey, why don't we start with you? 

[00:04:58] Casey Golden: Hi, I'm Casey golden. I'm the founder of Luxlock, a retail experience platform.

[00:05:04] And I have spent my career on the fashion and supply chain tech side of the business building Franken stacks, and now I'm slay ' em 

[00:05:12] Ricardo Belmar: fantastic. And Jeff, 

[00:05:14] Jeff Roster: hi Jeff Roster, former Gartner and IHL retail sector analyst. Now serving on several boards, including the Center for Retail Transformation at George Mason University and the host and producer of This Week in Innovation

[00:05:27] Ricardo Belmar: All right. Great. Thanks, Jeff. And Brandon. 

[00:05:29] Brandon Rael: Good afternoon everyone, Brandon Rael in the New York area. I've been in around the retail industry, my whole career, and lately I've worked abroad with fortune 100 companies to drive business and innovation transformations and really to adjust their operating models to the current consumer and digital trends and behaviors.

[00:05:48] Happy to have to be back on this platform. 

[00:05:50] Ricardo Belmar: Thanks Brandon. And Andrew to introduce yourself as well to the audience here. 

[00:05:54] Andrew Lipsman: Thanks Ricardo. So I'm Andrew Lipman, the principal analyst covering retail and e-commerce at e-marketer. So retail and e-commerce is a, is a pretty wide purview, but I'd have to say in the past year or so 70% of my time has gone pretty exclusively to retail media. It's just become such a hot topic. I do have a background in digital advertising as well. So the fact that commerce and advertising have intersected so nicely in the form of retail media has just become a, a coverage sweet spot. So I have leaned into it.

[00:06:25] I I've been a part of the forecast that we've done at e-marketer to help round out the picture of the space. But I, I often say that I, I think, you know, we're just getting started. I mean, we're really in the second or third inning of what I think is just one of the biggest trends that we will see in digital advertising and commerce.

[00:06:41] So I'm excited about where we are and, and also what's next. 

[00:06:45] Ricardo Belmar: All right. Great. And I, I gotta say, I, I share that enthusiasm for this space. It's also one of my favorite topics and we've been saving this one for the room. So I'm glad to see that we have some loyal fans here that are joining us in the audience.

[00:06:59] And so really quickly, I'm Ricardo Belmar. For those of you in the audience that don't know me, I host the retail razor room here and also co-host with Casey golden, the retail razor podcast. So if you're not to subscribe to that, I encourage everyone to check that out. You'll hear some of our favorite past clubhouse sessions there, as well as some other interesting interviews and other topics that we're, we're bringing to that medium. I'm currently lead partner marketing advisor at Microsoft for retail and consumer goods. And let's go ahead and jump into this topic and I'm gonna lean over to you, Andrew, cuz as, as you just kind of nicely put, you were spending so much time on, on retail media networks.

[00:07:37] It was one of your, I think top five trends you, you gave for 2022, right at the end of last year as well. Can you kind of set the stage for us? Tell us a little bit about where retail media networks stand currently in terms of, ad spending, what, what are you forecasting as growth for that?

[00:07:54] And also give us a definition of what you would call a retail media network. What is it? What is it not. 

[00:07:59] Defining Retail Media Networks

[00:07:59] Andrew Lipsman: Sure. So let's maybe start with the definition. I mean, I think of a retail media network as any sort of an ad network that exists on a retailer's owned and operated assets, which historically really has, has kind of met in store.

[00:08:13] More recently it's been on e-commerce sites and apps. But I'd also widen the definition a bit to include any media that is powered by retailer first party data. That's a, a reasonable slice of what we're seeing in retail media ad spend today. It's about 10% of the market. But it's a part of the market that's only gonna grow as you start seeing that first party data kind of connect into all sorts of inventory, whether that's display and video online, increasingly connected TV and then other digital media assets.

[00:08:45] So that's kind of how I, I define the space our definition of, of digital retail media ad spend for 2022 in the us showed just under 41 billion in spending growing in about 30, over 30% for the year. This year that's down in terms of growth rate from the previous years were, were upwards of 50% growth.

[00:09:05] But it's actually about the same amount of incremental spending coming into this market every year. In fact, if you go from 2020 on it went from about 21 billion to 31 billion to 41 billion, 2023, we're projecting 51 billion and then 61 billion. So it just sort of lands nicely that way, where it's about 10 billion in incremental spend every year to date and then also what we're projecting for the next few years going forward. So that's a big reason why this is such a, a big emerging opportunity. And, and just to put that, those numbers in context, cuz you know, you hear a big multibillion dollar number. You don't just have the context for it.

[00:09:42] By the end of that period, when it's 61 billion, that will be about one in every five digital advertising dollars, obviously an enormous very profitable market.

[00:09:52] Ricardo Belmar: So that was going to be my next question, when you look at that growth, as you said, it was going to be one in five of every ad spend dollar. If you're a brand, how are you deciding where to put that spend? What's the appeal to be spending your money with these retail media networks. And maybe even before that question, let me make this a two parter question and then I'll turn to some of the other speakers up here for their thoughts, but for the retailer themselves, cuz it does seem like every week we hear of yet another retailer who's launching their new retail media network.

[00:10:22] I think Ulta beauty was the most recent that that comes to my mind. What's the appeal for the retailer? Is it really just the incremental revenue and margin from this ad spend that they're getting from brands? Or is it about getting more data? Is it a combination of both? 

[00:10:36] Andrew Lipsman: So everything that you mentioned is true, but just to get right to the heart of the matter, it's the margin. In most cases, the incremental revenue is, is gonna be pretty modest.

[00:10:45] There's not that many retailers that have the potential to grow their top line in a huge way from this. But if you're a retailer who's treading on, you know, modest to thin margins and you, all of a sudden can introduce a new revenue stream that maybe drives 30 or 40% net margins, it changes the whole profit profile for your company.

[00:11:06] So that's what everyone's chasing. They've seen what's happened to Amazon. Maybe, the last two quarters, not withstanding, if you pay close attention to Amazon's earnings, you would've noticed that amid the pandemic as their ad revenues really grew. And for a few quarters, I think it was growing 60, 70, 80% year over year.

[00:11:23] All of a sudden Amazon was just blowing its profit expectations out of the water by like multiples by two or three times what, what wall street was expecting. So everyone's seeing that and they're paying attention to it and realizing that it can totally transform the bottom line of, of their business.

[00:11:38] But the big question is whether they can get there. And as you've said, everyone's a media network today. They've all flooded into the space. And the question is realistically how much incremental revenue and margin can they drive at the end of the day? 

[00:11:51] Ricardo Belmar: So I, do have a follow up to that, but before I get to it, I want to ask the other analyst on stage, Jeff, what are your thoughts on, everything Andrew just described about where we're at with retail media networks. 

[00:12:02] Jeff Roster: Well, it's, it's 

[00:12:03] really such a fascinating area typically. I mean, it's not a, an it spend area, so it's, it's something I haven't really studied and we knew about it. We, you know, the Walmart radio network we've always talked about.

[00:12:14] And when I saw Andrew numbers, I I almost had almost fainted. I mean, it's just, you know, incredibly large and growing. So as somebody that understands how retailers operate, I mean, incremental revenue , is, dang good at revenue. And so I can see them clearly trying to not only just continue to expand this, but I think also add some power into their negotiations with, with their brands, people that wanna market with them.

[00:12:40] I mean, we've always talked about slotting fees. Now we have, media advertising fees. So somebody that's always championing the innovation. I love seeing it. I love the experimentation. I love the, the growth, the, the exploitation of a new market, new opportunities.

[00:12:52] Ricardo Belmar: Thanks. And Brandon one are your thoughts.

[00:12:54] Brandon Rael: Yeah, I think it's amazing to see the the vertical integration where the retailers and brands can controlled the experience , and the media and the marketing. So it's they're controlling, what's communicated their customers and what's proprietary to them. So this is another channel, another opportunity, like to where there can be revenue growth and less dependency on third party media companies.

[00:13:13] So I think it's a fascinating development 

[00:13:14] Casey Golden: Yeah, I think that's a really good, point's just really about them managing their own proprietary content and, and that distribution I think it's, it's gonna be interesting to see how the third party ad networks adjust over the next few years. 

[00:13:28] Jeff Roster: So Andrew, could I ask a question to better understand the numbers?

[00:13:32] Andrew Lipsman: Absolutely. 

[00:13:32] Jeff Roster: So really before Ricardo and Casey started talking about this as a major trend. I mean, I, I knew it and I understood sort of what it was. I just always assumed what we were talking about or just the Walmart radio network, just music and ads playing inside their physical stores. Certainly high value for, for them.

[00:13:50] And then all of a sudden, now we're talking about selling ads. Could you maybe just unpack what it means, or an example of where these dollars are coming from who's who's paying and who's receiving those dollars. 

[00:14:00] Advertising Spend vs Retail Media

[00:14:00] Andrew Lipsman: Sure. So let me start by just kind of defining the space. So the, the, the vast majority of the numbers I referenced.

[00:14:07] Almost about 75% of it actually is Amazon like sponsored product ads on Amazon. When you search on e-commerce sites, Walmart, eBay, Instacart, all of those players are driving the bulk of the market. The in-store media that you're speaking to is, is frankly a pretty modest sliver piece. That said, I think it's going to be transformative.

[00:14:32] I think you're gonna see all sorts of digital media entering the stores. And there's a lot of innovation that's gonna happen in both digital you know, display, video and audio. So it's all of that. Where are the budgets coming from? So it's, I would say, a big thing that spurred the growth of this market in the last two years was the pandemic and obviously the, the boom and e-commerce, and those ad dollars started to follow commerce dollars.

[00:14:54] You know, obviously Amazon was a big part of drawing those dollars online. So those dollars largely were incremental budgets. There's a lot of incremental budget during the pandemic as you know, T and E budgets were held back. So there, a lot of that got poured into advertising. Obviously consumer demand came back, so everybody wanted to spend ads into that.

[00:15:17] But the big question really is as the market rationalizes, the advertising market rationalize, where do the budgets in the future come from when it's not gonna be so heavily dependent on incremental dollars? There it's, there are a few places. I mean, there's really three. So the first one is other digital ad spend Facebook and Google.

[00:15:37] And I would say right now Google's holding up pretty well amid the deprecation of third party, identifiers Facebook, not so much. So you will start to see some budgets shift. Away from Facebook and in the direction of retail media. There's not a ton of overlap though in the specific types of advertisers and the types of advertising today.

[00:15:56] So it's not kind of a, a direct line between one and the other. The next big bucket of ad spend that it will pull from his TV. These TV dollars have just been sitting there for years and years. Viewership continues to decline and those dollars don't have anywhere better to go. Now that said those TV dollars still wanna chase TV like inventory, they want video.

[00:16:17] So the, the opportunity for retail media is either in store video, or I mentioned connected TV. Like Amazon is, is powering more and more of that. You're gonna see a lot of those TV dollars go into those formats. And the last one that if, if you're coming from, physical retail world is shopper and trade dollars huge, huge budgets starting to shift.

[00:16:38] We saw a big pronounced shift from between 2020 and 2021 from those budgets specifically. There's a lot more to come. Now, the interesting aspect of that is that the brands will pull from shopper and trade marketing and put it into retail media. But retailers don't necessarily want that because it's just, you know, taking out one of their pockets and putting it in another.

[00:17:00] So the brands in many, in most cases would much prefer that those dollars come from the other buckets that I mentioned, basically Facebook and TV. 

[00:17:08] Casey Golden: I think it's really interesting the opportunity here we have to essentially hold those retailers accountable for the distribution of the funds. When I was at Ralph, I would negotiate the margin agreements as well as a bucket of ad spend for our brand.

[00:17:26] And I would just blindly write a check. I wouldn't get any KPIs back. I wasn't deploying it to a specific medium or. A specific location necessarily. We just had to blindly write a check to say here's a few million dollars for ad spend for you. Great. So I think that it really just empowers a lot of the brands to be able to hold accountability to the retail media networks.

[00:17:50] If they're, they're gonna start doing that. I think it's a win-win for both sides. A lot of companies have been doing it without any insights in return. 

[00:17:58] Ricardo Belmar: And Andrew question for you on, on Casey's point here, I mean, are, are the metrics there? What are you finding brands are, let's say pleased with the kind of reporting they get on the, the performance of their dollars on these retail media networks, or are they struggling to find the ROI and the return on ad spend.

[00:18:14] Andrew Lipsman: No, they're, they're really not struggling. I can talk, there is a little bit of friction that I can mention in a moment, but let me talk about the, the bigger picture first here. Casey's point is right. They were spending these dollars anyway but there wasn't accountability. My, my thesis before this, this space exploded a few years ago, I actually wrote my first report on retail media networks in 2019, when this was bar barely a blip on people's radar.

[00:18:37] And my thesis was essentially that measurement makes markets, especially digital advertising markets. If you think about digital ad dollars that got pulled online in the early days, it was Google because people could see that closed loop on performance. You put, you know, dollars into Google. You could see that you got a, a dollar 25 out.

[00:18:56] Then the social era happened and Facebook built an amazing apparatus of targeting and measurement. And when you just see, and when brands large and small, see that you put dollars in and you get more dollars out. They keep pushing spend in that direction. So it was it's kind of obvious or, or, or that we would see this parallel in retail media because it links so directly to e-commerce and that measurement is gonna move those budgets and, and certainly brands like accountability.

[00:19:25] Now I mentioned a, a couple minutes ago that retailers may not necessarily like the fact that if it's just pulling from shopper and trade spend, it's not necessarily a net benefit for them. But in some sense, it is if those dollars are moving from not being accountable to accountable because of how that can unlock incremental dollars.

[00:19:44] Right. I, I mean that, that is what's gonna fuel the biggest portion of this growth going forward still. Maybe not quite as much as it did here as, as it's rationalized, but there's still a lot of incremental spend. That's gonna come into digital advertising over the years and it will disproportionately move into retail media for, for exactly those reasons.

[00:20:03] As far as the, the friction points, what you hear is that the, the ROAS right, the first metric that everyone looks at return on ad spend for Amazon in particular, it's, it's coming down as ad prices go up. But it's still proving really strong. And if you just cross compare it to other digital advertising channels, it still looks better than, than most of them.

[00:20:22] I think the friction that's happening is with so many networks and with Amazon as the default buy starting to see that return on ad spend going down. I think there's a lot more questioning of how do I allocate my budgets within and across different retail media networks. So, so there is some handwringing going on and trying to figure out where is the best place to allocate that next dollar.

[00:20:43] But broadly speaking, I think brands feel really good about putting their, their dollars into the bucket of retail media. And they're pretty happy with networks across the board and the metrics that they're getting.

[00:20:55] Ricardo Belmar: One thing I wonder a lot about this, is there a opportunity for agencies that manage ad spend for brands as they interact with more and more of these retail media networks to help them with that allocation? Is, is that helping on the agency side or is it more, more of an indifferent kind of change. 

[00:21:12] Andrew Lipsman: You know, agencies are getting really involved and they have to be because th this is in, in our research and other, other third party research has, has shown similar things. Brands can only manage so many platforms, right? They're already managing a bunch of different digital advertising platforms outside of retail media.

[00:21:27] And then now they have to go into new walled gardens and try and understand the idiosyncrasies of each one of those. And most of them are basically saying I can put my dollars in two to three retail media networks, and, and then it gets too hard. I'm spread too thin. So that's where agencies can help them spread it a little bit further into four or five, six different networks. But yeah, I think they need that, that handholding, if they're gonna be able to allocate it most appropriately.

[00:21:54] Ricardo Belmar: So, as we mentioned earlier, that we've seen so many additional networks pop up every week. I'm curious if you, are you keeping track of how many of these and I'll use the word official? Maybe there's such a thing as an unofficial retail media network, but are you tracking how many there are to date?

[00:22:09] Andrew Lipsman: Loosely. I, I would say if, if you asked me to, to write down as many as I could, I could knock out a fair amount of them. It's it's definitely dozens and dozens. There's, there's probably not really room for all of them. So I, I think the space is getting crowded now, in some sense, there's surprisingly more space than you would imagine because you have kind of the networks that cut across a lot of categories, thinking Amazon, Walmart, target Costco, a few of those ones.

[00:22:33] But then you have some category specific ones that are just highly, highly relevant to their categories that a best buy or a home Depot. So they have really viable, healthy, strong networks for their advertisers. It's it's, once you get out of that kind of category leadership position, you see the second and third players within a category, trying to start a network where you start to question the, the opportunity.

[00:22:55] I will say for everyone, if they have enough traffic on their sites and apps, there's kind of the low hanging fruit of just monetizing that search. And you can partner, with some platform partners the Criteo's and Citrus ads of the world to, to do the basic monetization that would be kind of low lift.

[00:23:10] I don't know if it's gonna add up to a lot, but I, if it's minimal effort and you can get something out of it, It may be very well be worth it for all these networks. I just don't think most of them will kind of ultimately emerge as having this more, walled garden status, where people are coming in, hands on keyboard, analyzing the data, doing different types of ad buys beyond just basic sponsored product listings.

[00:23:35] One RMN To Rule Them All?

[00:23:35] Jeff Roster: Well, Andrew, if, there's 600 tier one retailers, which , by my definition is greater than a billion dollars in revenue. And if we're assuming e-com is anywhere from, 10 to 20% of those that you know, that revenue there's a fair amount of traffic in all those websites. Wouldn't each one of those, players be wouldn't it be worth them to have some kind of a, network set up? If they have enough traffic, it's gotta, they obviously have to have traffic, but if they do?

[00:23:59] Andrew Lipsman: Yeah. Like I said, if, if it, if it's minimal investment and you can get something out of it, I just think most should not expect it to add up to a whole lot. So you mentioned, how would you say 600? 

[00:24:10] Jeff Roster: Well, it's between four to 600 retail, north American retailers that are graded a billion dollars in revenue.

[00:24:15] Andrew Lipsman: So I, I shared data that said it's about a 40 billion dollar market this year, next year, 50 billion. If you have a half, a percentage point of that market, that's 500 million in I'm sorry, if you have a full percentage point, that's 500 million in revenue. Not that many are gonna get to a full percentage point of that market. If your name isn't Amazon. It's a small handful. So let's say 0.1% of the market. Now you're talking about 50 million in revenue. If you're a billion dollar company is 50 billion in revenue, a big deal. 

[00:24:45] Jeff Roster: It's not moving though. It depends on if it's driving value to what you're trying to accomplish. And I guess that may be where, where we get into the definition of what we're, what we're actually doing.

[00:24:55] If we're just selling ads, it's probably not, but if we're somehow supporting the brand and I don't know, you know, all the good stuff may, maybe so I don't know. 

[00:25:03] Andrew Lipsman: Right. I, if you're, if you're able to more deeply engage your, brand partners within retail physical retail, I mean, I think this is where it starts to get more interesting is when you start to look at it in an omnichannel basis and think about the in-store impact.

[00:25:16] Yes. That, that can certainly help there. And then the other thing I would say is, traffic for, online e-commerce is what you need in order to have some sort of a viable business here. Most of these retailers have way, way, way more foot traffic than they do online traffic. And if you start to think about that in-store traffic as the audience the, the calculation can change for a lot of these companies.

[00:25:42] I mean, if you think, a CVS or a Walgreens, right, they may have 10 or 20 million, 30 million visitors online in a given month. They could have well over a hundred million in stores in a given month. So there are many examples where, where that in-store traffic is multiples higher than than that online traffic.

[00:25:59] And, and Jeff and Andrew is all great points knowing that the customer journey is so fragmented. And, and so, so that they're disparate between digital, physical channels. Now it's, it's almost saying it's intuitive people will actually go by default code to Amazon for the search results. So it's the first thing that comes up when you Google something.

[00:26:16] Brandon Rael: Amazon certainly has a foothold and it, the dominant leader in this, retail media, you know, what can a mid-level retail expect if they, when they, the foray try to compete with an Amazon or Walmart or, or target hurry as well, established in dominant? What, what can they do to branching themselves?

[00:26:31] Is it something, some other methods or storytelling or authentic way of reaching customers that these larger brand are doing? 

[00:26:38] Andrew Lipsman: I don't think anyone's gonna be particularly successful. If Amazon is the bar, Amazon's got 75 plus percent of the market. And as the market grows, they're gonna maintain mostly that percentage going forward for at least the next several years. They're innovating faster than anyone else. They've got bigger opportunities in front of them. I mentioned connected TV. They're just getting started there. They've got NFL Thursday night football, exclusive rights. They're building out their footprint of Amazon fresh stores. I mean, that, that is the single biggest thing that nobody's paying attention to with Amazon's advertising ambitions, cuz they're getting all this first party data on what people are buying in stores using that to target ads through any platform.

[00:27:18] And then they can measure the impact of those ads on on sales. Do people buy more of that once it's in store? Now Amazon is limited by their footprint in physical retail today, but they'll build it out to the critical mass needed to power that full closed loop. So I don't think anybody can really compete with Amazon.

[00:27:35] The question is can they build a big enough business that it starts to make a real difference to their financial prospects? And I think the answer is a resounding yes, for a few key players. And I think for most of the rest, the mid tail and the long tail, I would say probably barely worth their effort, but still, maybe worth their effort.

[00:27:53] But I think everybody's really chasing the dream of what Amazon has, which is reasonable, incremental revenue, which for Amazon is like, I don't know, five to 7% on their top line. But it, you know, crazy high margins. 

[00:28:04] Brandon Rael: Yeah. I think it's a losing some game to even think of competing directly with Amazon.

[00:28:08] Having, you have to find a way or niche that's not dominated by that, presence. Yeah, that's a great point. There's no reason to probably go head to head with these, these goliaths. 

[00:28:17] Ricardo Belmar: Yeah. And at the end of the day, right. They're not really in competition or are they, but I mean, I suppose if we're particularly talking about you know, as Brandon mentioned earlier, if you're like a midsize or maybe even a specialty retailer, your target isn't really to compete with Amazon's media network, is it?

[00:28:31] Andrew Lipsman: No, I, I think that what you wanna do is, is court more brand dollars. And, and as I mentioned, they're gonna come from several different places. The question is, how can you do that effectively? You have to have a value proposition that's really strong. If you're a category leader like a home Depot or a best buy, right.

[00:28:48] You know, you're already a destination for people who are in market for those categories. There's also, you know, different dynamics category by category where you could do something kind of interesting. The one that I'm looking at right now is so like Ulta was a recent one that you mentioned they got into the market, right?

[00:29:05] Beauty is, is kind of interesting because there's the potential to layer in product sampling in that category as part of the ad network buy. So not only can you, have advertising across different touchpoints along the path to purchase, but you could also then introduce that user to a free sample of some product and then see what the purchase patterns are like after that trial.

[00:29:29] And there's potentially a lot of value in that. I think product sampling is something you haven't heard a lot about in the space. Instacart and go puff have talked about it the most to this point in time, Amazon actually had a sampling initiative that they walked back a year or so ago. I think they'll probably reintroduce it at some point, but in, in consumer package goods and beauty, those are categories where I think product sampling can start to make things really interesting.

[00:29:51] And we just haven't seen that come into play in any meaningful way yet. 

[00:29:55] Ricardo Belmar: And as you say that, that really tells me that shouldn't we see more of this in grocery. So I know Kroger, has a pretty successful media network today. And Instacart obviously in that space, but would we expect then that just about all of the large groceries should be doing this if they're not already?

[00:30:11] Andrew Lipsman: Absolutely. Absolutely. They should. Yeah, it's it, it's, it's a no brainer and to me, this is like the next frontier of advertising, right. We always think about how do you formulate that brand impression, but it it's never coupled with then the product experience on the back end, right.

[00:30:25] Sampling exists, but it's completely isolated. And it's from a promotions budget or it's off to the side and there's rarely if ever a link between the person who is receiving the brand messages and also then experiencing the product. I think this could be transformative and anybody who's into marketing analytics, I think would just salivate it at getting that data back to understand right.

[00:30:46] How to optimize not just, trial and adoption, but lifetime value around brand purchase. 

[00:30:52] Ricardo Belmar: and I think what I'm really hearing is, the key here as this goes forward and grows as a medium, is the I'll use the word bundling of multiple mediums, if you will. It's not just about if I'm not Amazon, I'm not just trying to sell ad units on my e-commerce marketplace.

[00:31:07] It's really more about how am I combining this with physical placements in store or, or anywhere else. It's really the, the advertising analogy to an omnichannel experience, right. For, for the brand. It's how do I, as the retailer bring the brand in, in multiple places, bundled and wrapping it around that overall shopping journey using all of these ad units, right?

[00:31:27] Andrew Lipsman: Yep. From the furthest up the funnel, like TV or connected TV,

[00:31:32] Ricardo Belmar: right. 

[00:31:32] Andrew Lipsman: Display and video online working its way down the funnel to that search or if you're in a physical store at, at the shelf. 

[00:31:40] Ricardo Belmar: Yeah, exactly, exactly. So, coming back to how, how is a retailer gonna rate this a successful attempt, if you will, at a retail media network, they can't all be Amazon. They can't all be Walmart nor nor do they need to necessarily aspire to be that successful with, with their retail media network. What, what's good enough if you will, to, to kind of declare success.

[00:32:00] Andrew Lipsman: Good enough. I, for most, I would say is don't sink a ton of investment and think that you can do it by yourself. partner, you know, pay, pay to partner, structure the deal in a way that makes sense where you're not paying through the nose just to get something basic off the ground. In most cases, there's, there's not gonna be the density of advertiser interest to make it really worthwhile.

[00:32:23] You're just competing for too much attention. So as long as you can minimize your investment and take whatever happens from preexisting traffic as gravy. I think that's gonna be successful because it, you know, we'll move the needle. As I said, a little bit on revenue, but actually can, can make some meaningful and noticeable improvements on the bottom line.

[00:32:43] I mentioned Amazon, obviously not everyone's Amazon, but you know, Walmart has started to see at least in the end of 2021, they were starting to see some margin expansion that they were attributing to advertising as that ad business finally started to scale for them. 

[00:32:56] The Consumer Perspective

[00:32:56] Ricardo Belmar: So let's kind of move a little bit and look at this from the consumer's perspective, because one, one of the things, if there is a complaint or negative that I I've seen plenty of folks writing about, and we can use Amazon as the example , at what point is too many ads, just too many ads from the consumer's point of view, especially if we're talking about, and this maybe is more applicable of an argument in the digital space when we're looking at product search results. At what point is too many ads, just, just ruining the experience and hindering the shopping journey versus helping it from the consumer's perspective.

[00:33:27] Andrew Lipsman: Yeah. I mean, this is a huge issue that is not talked about nearly enough. Advertising in retail environments can create a customer experience, problem, both online and in store. Now what's interesting is Amazon, the ad loads on Amazon because there's so much more density of, of a advertisers on there is way higher than everyone else.

[00:33:48] I think on first page sponsored impressions is about eight to nine for Amazon. And you know, the next biggest players are between two and four at best. So there's a lot of ads. If, if you're doing searches for a lot of products in Amazon these days here, you'll see a lot of ads. What's interesting is consumers seem to be tolerating them pretty well.

[00:34:07] We did research. One of the things Amazon, I think has done very well is they have improved their advertising relevance. So as long as you're putting relevant ads in front of people, it's not taking them away from what they were searching for in the first place. I think that it's gonna be well tolerated. That said I've personally had experiences searching on Amazon where using specific terms, I've gotten bad ad impressions that just did not meet the criteria I was looking for at all. And did take me further from the purchase. So it does happen. I think there's an opportunity now, as Amazon has gotten very crowded, there's higher and growing return on ad spend on other networks.

[00:34:41] So this is now I, I look at this period of time as like the chance for the second wave, the second tier of retail media networks to really flourish. They've got competitive differentiation against Amazon to start to court those budgets. So I think we're in this, this phase where we are gonna start to see a lot more flowers bloom in a meaningful way.

[00:35:02] Ricardo Belmar: And are there particular retail segments that you think are there are less tapped today? And one, one in particular that I, I kinda keep coming back to in my head is what about, where are luxury brands fitting into this? Is there a luxury retailer that can leverage this to become more successful that we haven't seen yet?

[00:35:21] And then maybe the second part to this is if there's a category or group of retailers that maybe can use this in a, in a way to produce a better experience, maybe it's department stores, because they're kind of like that physical marketplace as it is today, but as a segment, right, let's face it.

[00:35:36] They're, they're kind of floundering. But my understanding for example, is that Macy's has been seeing some success with their retail media network. So you know, should we expect that department stores will see a lot of success with this? 

[00:35:46] Andrew Lipsman: I, I think you hit the nail on the head with department stores as a big opportunity and Macy's is doing a good job outta the gate.

[00:35:52] Nordstrom getting into the space. It makes a lot of sense there because you have categories with, healthier margins in general, you've got scale. You've got enough traffic. So I, I do think that application will work well. The luxury one depends how you define luxury, but I'll provide kind of an argument for and against the argument for is.

[00:36:11] Very high margins in luxury. So this is where ads can be really valuable. And you've got more margin for error. At the same time, luxury is the category where you least want to be interruptive of the, consumer experience. I don't know that luxury shoppers are gonna enjoy being barraged with overly promotional, advertising, driven things.

[00:36:31] They like, brand experience. So if you can use data from retail media to, to power, really high quality brand advertising, those applications may work really well. But beyond that, I just, you know, I can't think of like luxury and, and marketplace offerings. Like one is more commodity, one is more premium and I just don't know how well they intersect in this application.

[00:36:53] Casey Golden: Yeah. I mean, I know Farfetch has been. Obviously takes dollars for ad spend from the brands. But they've also been reselling their first party, the brand's first party or second party data back to them. So a brand can buy their customer data from Farfetch, 

[00:37:10] Andrew Lipsman: which is interesting, cuz that's one of the things because luxury has always been so analog.

[00:37:15] Right. I mean they were the last ones to, to have e-commerce sites at all, a 

[00:37:18] Casey Golden: amount of data on their own customers and they've been around the longest . 

[00:37:22] Andrew Lipsman: Yep. Yeah. Right. So that, that's actually an interesting way to kind of make it work is yes. They, they, they're sitting there with absolutely no first party data and this is a way to get access to it.

[00:37:32] Audience Q&A

[00:37:32] Ricardo Belmar: Hey, well this is probably a good time for me to let everyone in the audience know if you've got any questions for any, any of us up here on the stage. Now's a good time to raise your hand and we'll bring you up on stage. Yeah. And Cynthia, welcome to the stage. 

[00:37:44] Cynthia Hollen: Hey everybody. 

[00:37:45] Welcome back. 

[00:37:47] Ricardo Belmar: Thank you.

[00:37:48] Cynthia Hollen: Hey, I have a question on retail media network that I I think you guys can best answer, which is that I'm trying to differentiate between the retail media networks that we've had for a hundred years where we've paid extra to have a different position on a shelf or paid for an end cap or cetera, cetera, et cetera, paid for a, a co-op advertising in the newspaper or something.

[00:38:15] How are retailers thinking differently about that spend and why is it strategically different?

[00:38:22] Andrew Lipsman: Yeah, I mean, the rise of retail media, as we talk about it today really is about digital coming from the vantage point of digital. So I think what what's kind of happened is digital budgets. E-commerce budgets started moving towards its opportunity and it wasn't necessarily the same decision makers.

[00:38:40] Then as this opportunity started to mesh more in, omnichannel as, as, as retailers started to become more omnichannel in their thinking. I think that's why it created all these organizational issues and starting to wrestle over and rationalize budgets. I, I mean, I don't know that they're, that they are doing it in any uniform way or that there's consistency.

[00:39:03] I think it's actually been a really messy process from everything I've heard inside of companies. And it isn't just the like migration of preexisting retail media that as you said, has been around for a long time and starting to move that into digital. It, it it's been a very indirect path.

[00:39:18] Ricardo Belmar: Yeah, I think I, I would come back to what we were talking earlier, right? It's this ability to bundle in so many different channels and, and mediums right into one, one collective spend that the retailer offers to the brand. I, I kind of see that as being the, I'll use the word innovation. I don't know if Jeff May argue with me on using that term in this case, but I'm gonna call it the innovation in, in all of this is that sure.

[00:39:39] We've had different ways to have that advertising relationship between retail and brand before, but I think it's, it's just the ability to combine into so many different mediums and offer a more data around the, the consumer at the same time.

[00:39:50] Do we answer your question, Cynthia? Or are we not getting to it?

[00:39:52] Cynthia Hollen: No. I, I think that you're, you're definitely talking about both or organizationally and strategically inside the corporations it's different. And also that it allows for, that allows for different kinds of combinations or a different way of looking at it. I'm not sure that from the consumer standpoint, when we argue about is when is advertising going to be too much, if the consumer wasn't already being hit with, with all kinds of subtle and not subtle promotions in store, and if they're necessarily sensing the difference, except that they had kind of a refuge in digital for 10 years away from the barrage of, of retail media in store.

[00:40:37] And now it's coming back to digital. So on the consumer side, I, I wonder if the consumer sees it as differently as we see it. 

[00:40:47] Ricardo Belmar: Yeah. I think that's kind of what we were starting to get at to earlier. And that, at what point is it just too much from the consumer's point of view? I think you're right. That on the digital side, consumers probably didn't notice at first that they were getting more and more ads incrementally in different places.

[00:41:02] I think, you know, there was an understanding and when I did that Google search, yeah. It was going to get some ad placement at the top of my search results page. And then when I got to an e-commerce site, I think everyone assumed for a long while that the search I was getting was just the results of the search, right.

[00:41:15] Based on the retailer having indexed the product catalog. But then we started to see more and more ad placement by Amazon, and then other retailers saw that and all kind of snowballed into where we're at today. But it's a great question. I, I do ask that a lot is that what's too much.

[00:41:29] When does it become too many ads? And maybe the answer is a lot like what we've said in this room, in, in past sessions about integration of technology in general, in that shopping experience, that the more seamless and transparent you make it. So it's not quite in your face, the less noticed it will get that it is blatantly an advertisement, right to that consumer.

[00:41:49] Andrew Lipsman: Yeah. I think consumers are, are generally more tolerant of native ad units, which is what these are. The frog has been slowly boiling here and I, I think people tolerate it and have tolerated and will tolerate it. The question is what's that point at which they'll, finally, jump out. I frankly, am surprised with Amazon specifically, given what the ad loads are like today that all the research I've seen says that consumers don't have a problem with it, or minimally have a problem with it.

[00:42:17] So that suggests it's, they're highly tolerant of it. They, they expect it. They've gotten used to it. I mean, go do a Google search today. I mean, it's unbelievable from my standpoint, when you see how many ads you have to scroll through just to get to a basic search result now.

[00:42:33] Ricardo Belmar: yeah, absolutely.

[00:42:34] Andrew Lipsman: It's just, this is what's been happening over the years.

[00:42:36] So in context that, searching on Amazon probably doesn't seem any worse. Like I said, though, that the relevance is really what matters. Consumers don't care if somebody paid to put a product listing in front of you, if it's the product listing that warrants being in front of you, based on what you're searching for, if it's totally off base that's when consumers really get annoyed.

[00:42:57] Casey Golden: Andrew. What are your thoughts on, you know, as we're talking about, when is enough, enough, or too much, too much, a lot of TV shows or stations, you can go ahead and pay for an episode without ads. Do you think that eCommerce will kind of move potentially to have part of that model where you'll pay for your Google engine or you'll pay for shopping on a brand like Sans ad?

[00:43:27] Andrew Lipsman: There's always the possibility of something like that being introduced and it will always be a very, very tiny fragment. do that. Right. Like you can do that on Twitter today. I think right. You actually have an ad free experience there now. 

[00:43:41] Ricardo Belmar: Yeah. With Twitter blue, 

[00:43:42] Andrew Lipsman: Twitter blue. Like I,

[00:43:43] Casey Golden: I pay for Twitter, 

[00:43:44] Andrew Lipsman: not a whole lot of uptake on, on that offering.

[00:43:47] Casey Golden: Yeah. It's interesting. 

[00:43:48] Brandon Rael: Great question, Casey. At what point does it come overwhelming? So I'm curious, what's your sense, Andrew, and where things is going from a social selling perspective like Instagram and TikTok other platforms.

[00:43:57] Andrew Lipsman: Well, so I I'm, I'm comparing ads on entertainment experiences versus a shopping experience. I will say maybe I'm speaking for myself, but I think this is maybe broadly true be because shopping is often a more utilitarian experience. You're people don't have as much of a problem. It's already a commercial engagement.

[00:44:15] People probably have less issue with brand impressions. Whereas with media, we're accustomed to advertising around it, but it's interrupted to the content experience. So I just don't think that the, content experience for retail is as interruptible. Which is why ultimately like I said, I, I think consumers are tolerating these ads and maybe there's a future where it gets to a point where they've had enough, but I think it's pretty far out into the future.

[00:44:39] Ricardo Belmar: Yeah. I think it's probably telling that Netflix is considering adding a lower ad based tier. 

[00:44:44] Andrew Lipsman: Yeah.

[00:44:45] RMN vs Livestreaming vs Metaverse

[00:44:45] Ricardo Belmar: One question I've been saving here towards the end that I wanna go around the whole group of speakers. Let's do this in like a rapid fire response. I wanna know what everyone thinks of intersection between retail media networks and live streaming and the metaverse. Andrew, let's start with you. I'm curious what you're thinking. 

[00:45:01] Andrew Lipsman: Yeah. So I'm more skeptical on these trends, I think, than most people. Live streaming, I just don't think the US at least is anywhere close to what China is. So where live streaming is relevant on some sites you've seen Amazon live and some other instances yes, it's natural that advertising may be sprinkled into that.

[00:45:20] I don't think it's gonna be a key driver of, of those retail media engagements. Metaverse. I don't know. I just feel like this is so far out into the future and I actually don't think it's gonna be the next big platform at all. I think mobile is the next big platform. And I say that as a joke, I mean, I think mobile isn't going anywhere.

[00:45:37] And if the metaverse gets enough adoption and people spend enough time and becomes an advertising paradigm, then sure. Retail media will, will be a part of that. I don't expect us to ever get there. I tend to think of the metaverse as really just the extension of gaming. So why aren't we talking about in-game advertising more?

[00:45:55] that's 

[00:45:56] Ricardo Belmar: well, that's a good point. That's a good point. 

[00:45:57] Andrew Lipsman: Like that's that engagement's there today and there's been some innovation, Ricardo, you're Microsoft, you know, one of the best places to do it. I'm, I'm bullish on the opportunity for Microsoft in in-game advertising, but to me, right? Like let's, let's figure that out and, and see that ramp before we start talking about metaverse advertising. 

[00:46:15] Ricardo Belmar: Yeah. I think to, to your point, we've, we've seen recent announcements of more and more of that in game advertising. It seems like every week I see another major brand announcing that they're opening up a, storefront in Roblox.

[00:46:26] Andrew Lipsman: yeah. And that's real today. Like that's where our, 

[00:46:28] Ricardo Belmar: and that's happening today. No, that's a great point. Yeah. Great point, Jeff. What's your take. 

[00:46:32] Jeff Roster: So live streaming is really fascinating. Couldn't spell it about what a year ago. And since then really, spent a lot of time looking at what's happened in AsiaPac have done one interview with it and I have another one that's just gonna be insane.

[00:46:44] We are starting to see some very legit money being put from the VC community into efforts here in the us and north America. So is that gonna explode, you know, the next 18 months? No, but I, I think in three to five year increments, so I'm very, very bullish on north America and live streaming. As an event, I think that content will, that that is generated in livestream and will also become video assets that will be deployed all across digital signage and stores and, you know, blah, blah, blah, blah, blah.

[00:47:10] So we'll just get into this giant circle. So, I don't know if that turns into ad revenue, but it is going to be a major, major, major focus probably out in the next two years. The metaverse, I'm a little more bullish. If you're talking in, the three to five year window. You know, I'm a pilot, I'm multi engine pilot.

[00:47:24] I've used augmented reality for, for, for 20 years. There's nothing new about that. It's just, will it become viable? I have certain dietary requirements for my wife and I would love to use augmented reality to, to see what ingredients are appropriate and what aren't, that's kind of a metaverse scenario.

[00:47:40] So used correctly I'm super bullish on that. And I could validate that with a bunch of IT or a bunch of VC spend that direction, but again, that's a five year window that I'm talking about. 

[00:47:49] Ricardo Belmar: Okay. Okay. Casey, what's your thought. 

[00:47:51] Casey Golden: Live streaming and the metaverse. I'm obviously pro metaverse just for culture change for brands to be more experiential and learn how to fail.

[00:48:02] And I think it's gonna be a great place for product discovery and brand discovery for engagement. That's a little bit more meaningful than a live stream, which is one to many. I'm a big fan of two way conversations and two way engagement versus one. But I think there's a heavy level of consumer education or consumer attention span that it takes to stop multitasking, to pay attention to a live stream or join the metaverse.

[00:48:29] So I think it, the consumer adoption and their bandwidth and attention span will depict a lot of it on how fast or what is adopted. 

[00:48:37] Ricardo Belmar: That's a good point. Brendan, what are your thoughts? 

[00:48:39] Brandon Rael: Yes. So I'm in agreement with, Jeff and, and Casey.

[00:48:41] I, I think we're looking at a long term window of opportunity with the VC spending. I also think in terms of the target audience, you know, we're seeing all the strides that the luxury brands are made, especially Louis Vitton and Gucci, and now Nike and especially space in the metaverse. So there's a significant growth opportunity in revenue opportunity, but I think the target customers using that, virtual reality world, it already exists. You know, it's our, it's the gen Z or gen alpha whatever's coming next. That's gonna be that target customer who is already in that environment and already live in, in those worlds. 

[00:49:12] Ricardo Belmar: Okay. And just to close that thought out, I'm somewhere , in the middle, but as far as live streaming, I do think that like, Jeff and Casey, and Brandon I guess I am a little more bullish on that one.

[00:49:22] It may not be in the next year, but certainly with, I think Jeff, you said within the next, maybe one to two years or something like that, but ultimately it's just gonna become yet another sales channel and it's one that everyone's gonna take advantage of and have in their collection of sales channels.

[00:49:36] So I think it has a place. Metaverse I think is just earlier in that adoption curve.

[00:49:40] We're still in the experimentation phase. I think that we'll see more and more brands do it. I think Andrew, I think you're spot on, on your comment about gaming, advertising and product placement. We're gonna see a lot more of that before we see more consumer adoption and relevance in what I'll call the mainstream metaverse that everyone wants to hype up these days.

[00:49:58] So that will come first cuz it's already here. It's happening. That's gonna be the stepping stone for consumers to a broader metaverse through the, through the gaming. 

[00:50:06] Andrew Lipsman: Can I just make one final point here? By the way, I'm, fine swimming against the grain on, both of these behaviors. One of the reasons I'm a little bit more measured or skeptical on them is because they both require immersive engagement. 

[00:50:18] Ricardo Belmar: Mm-hmm okay. 

[00:50:19] Andrew Lipsman: Right. That there there's more effort involved. Now, if you can get over that hurdle on immersive engagement on live streaming, you've got something, cuz somebody's already in, in a commercial instance, we've seen it happen in Asia.

[00:50:30] We just haven't seen it move over here. That's one that I feel like I'm happy to be wrong about that I just, I haven't seen the movement on the consumer here yet. The metaverse though. I will say this all major advertising mediums, the biggest ones, TV, radio, and social media depend on ambient or passive engagement.

[00:50:50] That's where you rack up time spent. Time spent is, is what drives major brand advertising. I can't ever see a point where everybody is going into VR worlds. And spend where you'll have a segment of, of the audience. Like you have gamers today. And, and some people may spend quite a lot of time, but I can't ever see that being more than, you know, a meaningful sliver of the advertising market as opposed to the next dominant platform.

[00:51:12] That that's the biggest reason for my skepticism there. 

[00:51:17] Ricardo Belmar: Okay. Yeah, that's a fair 

[00:51:18] point. That's a fair point about passive versus actively engaged as, a medium. And I, probably do have to agree with you there that that certainly slows adoption for something that's not passive in that sense for, for becoming a large scale medium.

[00:51:31] But it's definitely gonna be interesting to see how this plays out. I think there's room for all of these things. It's, more a question of, what's the mix, what's the balance gonna be? And I think that really just comes down to speed of adoption for each of these different mediums.

[00:51:43] So with that, it's a good time for us to wrap up and close out the room. Andrew, it has been a pleasure having you. This has been a fantastic discussion. Thank you so much for joining us. 

[00:51:52] Andrew Lipsman: This was really fun. Thanks for having me. 

[00:51:54] Ricardo Belmar: I hope you come back and join us again.

[00:51:55] And wanna thank all the other Retail Avengers on stage . Thanks everybody here in the audience, thanks everyone. Have a great evening! 

[00:52:01] Casey Golden: Thanks Andrew! 

[00:52:02] Jeff Roster: See ya! 

[00:52:03] Andrew Lipsman Recap Interview

[00:52:03] Ricardo Belmar: Welcome back Retail Razor Show listeners. We hope you enjoyed another truly amazing Clubhouse discussion on retail media networks.

[00:52:15] Casey Golden: It's a super hot topic right now. And since that discussion happened a few months ago, we brought Andrew Lipsman back to the show to check in, see what's new and learn a little bit more. What's changed and what's yet to come. Welcome back, Andrew.

[00:52:30] Andrew Lipsman: Thanks for having me. 

[00:52:31] Ricardo Belmar: So Andrew, since we last spoke on this, it was about early June. So what has changed? I mean, what's changed in, the wonderful land of retail media, one of my favorite topics. And I guess I'll, I'll get a guess. Judging from recent earnings reports across different retailers, Amazon Walmart seemed to keep doing well with their media networks is, is, do things look as rosy as they did three months ago for this space.

[00:52:54] Andrew Lipsman: Yeah. In some ways a little bit better in some ways, maybe slightly worse. I, I haven't really changed my viewpoint on the space at all, because I, I think you have to take a long term view and there's such a huge opportunity still in front. So is it gonna be affected by some of the advertising headwinds?

[00:53:12] Yes. Right. If ad spend dries up, that's gonna pull from everywhere. These are, it seems like the, the most resistant. To those dollars being pulled, be in, in large part because there's clear return on ad spend and that closed loop. And I think dollars just migrate towards performance in more recessionary times.

[00:53:32] But what has also changed is that things looked a lot worse in Q2 than at this current moment. Right. I, I personally am a lot more optimistic about the state of the consumer economy and where it's at headed into the back half of the year. And what that means for eCommerce and as eCommerce goes, so goes retail, media advertising.

[00:53:50] So I think we can be a bit more optimistic for the back half of the year. And really no reason at all to change the long term view of retail media. You mentioned Amazon and Walmart. You know, those growth rates came down from what they had previously reported. And yet at the same time, they were clearly way, way better than everyone else in the digital advertising space.

[00:54:11] So I think that's kind of an appropriate way to look at.

[00:54:13] Ricardo Belmar: Well, so my quick follow up to that, in the clubhouse, one of our topics was how many new retail media networks are being announced from, different retailers. Do you still see that trending or is that slowed down at all?

[00:54:24] Andrew Lipsman: It's starting to slow down. Right. It just, it seemed like for the past 18 months or so it was one after another, after another. And I, I think fairly recently, somebody kind of predicted that Dick's sporting goods had to be the next one, cuz it seemed like the only white space. It was an obvious category leader.

[00:54:39] Ricardo Belmar: right 

[00:54:40] Andrew Lipsman: and oh, low and behold, there's Dick sporting goods, retail media network. So at this point I think a lot of the white space is covered. And we'll start to bleed more into, I guess, what people are putting under the banner of commerce media, which is kind of moving into other verticals, think Marriott media network, as an example, that's, you know, serving travel.

[00:54:58] So we'll start to, we'll see more of those, but I think at this point. This space is starting to get more saturated and frankly, listen, not all of them are gonna really, really succeed. So at some point in the future, I don't know how long it'll take, but some of these will probably kind of die on the vine and, and just not continue to be invested in, but we're probably a couple of years away from that happening.

[00:55:17] Casey Golden: Okay. So in our clubhouse session, we, we spoke of which type types of retailers are best suited for building media networks. At the time, Ulta had just announced theirs, any new, interesting announcements, as far as who is suitable? If it's getting saturated, like who are the players that should be playing or that you think are going to make it through the saturation?

[00:55:41] Andrew Lipsman: Yeah. I mean, I think you have to look at it from the brand's standpoint first, right? There's only so many retail media networks, walled garden types that they can operate with at, at one time they're already stretched pretty thin. So they're not necessarily inclined to go deeper and deeper into more channels.

[00:55:57] It has to really have relevance, which is why you see some category leaders carve out viable businesses, or you just have to have that scale, which is, you know, where the big marketplaces, the Amazons and Walmarts and, and others are gonna play. I, I think that's where, where this market sort of nets out.

[00:56:15] And I think where, where you start to see some of the shakeout is if you are a vertical retailer and you're not the clear number one in your space. If you're not dicks or you're not best buy or whomever else, I think those ones might have a tougher time.

[00:56:30] Ricardo Belmar: So on this subject, of which categories are the ones that make sense, for example, you just gave some, some good examples there. And I think in my mind, you know, we've been through all, all the mass merchandisers, right? The Walmarts, the Targets, they're the, the category leaders, right? Like a best buy you know, we, we had beauty was new at the time we did in the clubhouse with Ulta having announced then that seems like another natural one. Are, are we seeing these in categories? And I just can't remember now because it's so easy to lose track of all the announcements, but I'm thinking like pharmacy drug stores, you know, Walgreens, CVS, Rite aid. And, and then from what about would it be odd to think of convenience stores as another possibility?

[00:57:06] And then my favorite one that I still feel like other than Macy's we never see examples of is department stores.

[00:57:11] Andrew Lipsman: Yeah. Well, so department stores, you do have Kohl's, Nordstrom, Macy's. So I think they're viable players and, you know, Macy's has gotten off to a pretty good start with, with their network for sure. Drug stores, you know, Walmart and CVS are viable. I think anyone who has scale and serves consumer package goods broadly can play.

[00:57:30] So, so CVS and, and Walgreens, and it's easy to overlook. They have, they don't get as much website traffic, but their mobile traffic is really, really high. So that traffic, I think, will support their businesses. And the last segment you mentioned is convenience. I think that's also really interesting.

[00:57:47] So you've got go puff and then go puff can definitely be a viable player. And I've talked to a lot of CPG brands who are interested in that. Then you kind of get into Uber and DoorDash and then maybe the seven elevens of the world. That's where my question comes in is like seven 11, huge, huge footprint.

[00:58:02] I think that network though, Is viable, but I think it's gonna depend a lot more on store traffic and in store retail media than it will on that that app traffic essentially.

[00:58:15] Ricardo Belmar: yeah, that kinda makes sense for them. Yeah. And then what, what about grocery? Do we have all the major grocery players, have they all started in their retail media network?

[00:58:23] Andrew Lipsman: They're they're all in the game, except you have this one kind of outlier with Costco, which hasn't really built out anything. And yet, like it's, it's, it's very analog and, and yet, because they're so big people still play and it seems to be working. So that one is just kind of a funny outlier to me, but yeah, every major player in grocery is in the game now.

[00:58:43] Casey Golden: So based on your research, I think earlier in the year, you had forecasted around 40 billion this year growing to 60 billion by 2024, are those numbers still tracking for you or are you expecting a little bit more shakeout?

[00:58:58] Andrew Lipsman: Yeah. So I don't wanna speak completely on behalf of our forecasting team, but cuz we don't have an updated forecast, but I will say this like the numbers for Q2 tracked a little bit below what our expectations were for that quarter. But I could also see it making up that ground in Q3 and Q4.

[00:59:15] So I think wherever it nets out, it's it's not gonna be much of a difference from, from where we're at currently the fundamentals are are, as they were before.

[00:59:23] Casey Golden: When you guys are looking at these forecasts. Is there anything specific, like one thing that you're looking out for in this space?

[00:59:30] Andrew Lipsman: If there's one thing you have to look at what's happening with Amazon, just because Amazon is still currently three quarters of the market. So it's gonna drive the market. Very deliberately. And so, part, part of the bullishness, I guess, for Q3 and Q4 is Amazon has a prime day in both of those quarters this year.

[00:59:47] So they, the advertising really ratchets up for both of those events so that that's gonna drive. The the whole space maybe even give it some upside. But also, the next tier of players, I'm seeing a lot of evidence that they are really getting their feet underneath them. They're starting to scale the business.

[01:00:04] I'll use Walmart as an example, one of the things that they did recently is they instituted a second price auction. I mean, that was the big impediment that I kept hearing from brands. And once Walmart instituted that, that Auction model, it gave brands a lot more confidence to invest.

[01:00:20] So the interesting thing is in the very short term, CPCs on Walmart went down, right? So that actually hurts. It dings Walmart's ability to monetize in the short term, long term, those budgets are gonna flow a lot more freely. So it's really gonna be a smart, long term move for Walmart. So I, I think their trajectory is gonna be strong.

[01:00:38] Kroger seems to be doing really good things. Just a lot of these other players are, are executing better and better and starting to make up ground and providing all the tools that that advertisers want and need to fully invest. And at the same time, you look around at market conditions, there's all these macro factors affecting the marketing ecosystem that provide a lot of reason for budgets to move in this direction.

[01:01:00] I've said that retail media is digital advertising's third big wave. And I'm now convinced that it's destined to be the biggest of the three waves, eventually surpassing search and social. And the reason that I believe that is because to date, we've mostly monetized through search.

[01:01:16] There's still runway for search to grow, but there's so many other layers. To drive growth in the future, whether that's going up the funnel into connected TV, whether that's making better use of offline sales data or whether that's the rise of in-store media.

[01:01:31] Ricardo Belmar: And, and let me ask you, I don't think we got to touch on this too much in, in the clubhouse session. When I think about this, it seems like the key factors for success here in terms of what the, the retailer's media network is offering to brands. It's how they're taking the first party data they have, how they might be able to combine with other data sets to offer in some way, right. a more. guess I'm gonna choose my words carefully here, a more precise capability, right? To target that customer than the other retail networks that the brands may be considering putting their spend into. And maybe I have to put Amazon kind of to one side, cuz to your point, that's like three fourths of the spend right now.

[01:02:08] But, and I maintain that for other brands, the mission isn't to out Amazon, Amazon on this is just to look at your own media network and what can you do to make that offering special to the brands you support and, and not worry about whether you're stealing any share from, from Amazon or not, because that's not the, the most important piece, but is it really come down to differences in the technology that each retailer bases their media network on?

[01:02:33] Andrew Lipsman: It, I think it comes down to ultimately what data they have. This is fueled by first party data, first party purchase data, shopping and purchase data. And that can be used for better targeting. Right? If the status quo is behavioral targeting through Facebook and, and other behaviorally targeted networks.

[01:02:50] Now it's purchase based targeting. So that's more important. So you got that targeting and then you got the measurement on the back end, cuz you can see if it drives purchase. So that value proposition is really what unlocks budgets historically. Right? When you can see the return on ad spend, that's what brought dollars to Google initially. It's what Facebook then perfected it in its market. And Amazon has already kind of done that. But if you wanna know who's gonna do well in the future, look to where the data is. And Walmart is sitting on this huge piece of data because they've, they have in-store sales data. It hasn't been fully operationalized.

[01:03:25] And what I mean by that is campaigns don't really pull that information to see how an online ad might drive offline sales. Immediately, they do this stuff, but it needs to get faster and faster and more real time because digital ads get optimized in real time as that gap narrows and we get to real time optimization or near realtime optimization, that's where the spend just starts to really flow in.

[01:03:48] So. I'd say the mandate for the big brick and mortar retailers should be, get that data operationalized as fast as you possibly can and watch the budgets flow. But guess what? That's a big advantage for all of them over Amazon, because Amazon is still early in building out their footprint.

[01:04:03] Ricardo Belmar: and, I was gonna say then, in that sense, then the, key becomes how quickly can those brick and mortar retailers combine their in-store generated data, with any, other data sets they have to make that offering more unique. And so that you can actually start tracking conversion to in-store through all of the digital placements they may offer the brand.

[01:04:20] Andrew Lipsman: Absolutely. And, and the thing about in-store, you know, that's the other 85% of sales now linking online to in-store. I'm not gonna say that it's gonna drive the same percentage lift as online to online, right. You would expect online to be a bit more, maybe even significantly more effective at driving an online sale, but even if it's three times less effective, But it represents six times more dollars give or take.

[01:04:47] That's actually saying that offline is two times as important as online, right? I'm just doing some quick math there, but like there's a lot of leverage on that offline piece, even if it's a more subtle effect.

[01:04:56] Ricardo Belmar: Just when you're looking at the volume of sales to begin with.

[01:04:59] Well, Andrew, I wanna really thank you for coming back on the show. This is always enjoyable to talk to you about, one of my favorite topics with retail media, but honestly, it's always a pleasure to talk to you about any of these topics in retail with all the great insights that you bring from all the research that you're involved in.

[01:05:15] So thanks again so much for, for coming back with us.

[01:05:17] Andrew Lipsman: Thanks Ricardo. Thanks Casey.

[01:05:19] Casey Golden: If any of our listeners wanna learn more from you and your research at insider intelligence, how should they reach out? How do they follow?

[01:05:26] Andrew Lipsman: Yeah. So I am minimally on Twitter at alipsman. But the easier way is on LinkedIn. I think that's where a lot of the discussion happens and where I share most of my research. So, so come check me on LinkedIn.

[01:05:37] Casey Golden: Thanks again for joining us.

[01:05:39] Andrew Lipsman: My pleasure. Thanks.

[01:05:41]

[01:05:44] Clubhouse Thank You

[01:05:44] Ricardo Belmar: Before we close. We'd like to thank everyone who joined us on clubhouse to talk retail media networks and ask questions. So a special shout out to

[01:05:52] Casey Golden: Cynthia Holland, always insightful CEO of Mavi.io, retail on the go. 

[01:05:57] Ricardo Belmar: thank you, Cynthia.

[01:05:58] Casey Golden: So Ricardo, I think that's a wrap for our episode two

[01:06:01] Ricardo Belmar: Yes, indeed. It is.

[01:06:03] Show Close

[01:06:03] Casey Golden: We hope you enjoyed our show and we can't ask you enough to please give us a five star rating and review on apple podcast to help us grow and bring you more great episodes. If you don't wanna miss a minute of what's next, be sure to smash that subscribe button in your favorite podcast player. And don't forget to check out our show notes for handy links and more deets. I'm your host, Casey Golden. 

[01:06:31] Ricardo Belmar: And if you'd like to learn more about the two of us, follow us on Twitter at Casey c golden and Ricardo underscore Belmar, or find us on LinkedIn. Be sure to follow the show on LinkedIn and Twitter at retail razor. Plus our YouTube channel for videos of each episode and bonus content. I'm your host, Ricardo Belmar.

[01:06:47] Casey Golden: Thanks for joining us.

[01:06:49] Ricardo Belmar: And remember, there's never been a better time to be in retail. If you cut through the clutter until next time, this is the retail razor show.